As one massive blackout ends, California is bracing for next

An unprecedented blackout that plunged millions of Californians into the darkness for days is over.

And nobody can say when the next will hit.

Even as PG&E Corp declared an end to last week’s shutoffs - a deliberate move to keep power lines from sparking the kind of blazes that forced the utility into bankruptcy - the company warned that more will come. “It’s a future we must be ready for given the conditions and risks that we face,” Chief Executive Officer Bill Johnson said in a press conference with reporters.

California still has six weeks left in its traditional wildfire season - a time punctuated by dry, hot weather and high winds that have for years been the fuel for deadly and devastating blazes. While both PG&E and California state officials alike acknowledged that the shutoffs that began on Wednesday could have been better orchestrated (and with more communication), neither questioned their need.

Climate change has made for more extreme conditions. In November 2018, a PG&E power line sparked the deadliest blaze in California history. And the year before that, a series of wildfires devastated the state’s wine country. That, state and company officials said, necessitates more extreme measures.

Mother Nature’s Call

By Friday, PG&E had restored power to 97% of those affected by the blackouts. On Sunday, 100% of customers had their lights back on. In all, roughly 738,000 homes and businesses went down in more than half of the state’s 58 counties. When they’ll go dark again is essentially Mother Nature’s call, Johnson said: “It really is weather-dependent - where the wind is, where the conditions are.”

Even as the lights flickered back on, California firefighters were battling several infernos in Southern California. One that began in the hills north of the San Fernando Valley in the Los Angeles area - now called the Saddleridge fire - had burned about 8,000 acres as of Sunday and was less than 50% contained, destroying or damaging 32 structures. Another at the edge of the Sierra Nevada mountains had scorched more than 5,500 acres.

“We are actively investigating the cause of the Saddleridge fire,” Nicholas Prange, a spokesman for the Los Angeles Fire Department, said by phone Sunday. “We haven’t determined anything yet. We take in any eyewitness reports and any evidence during the course of the investigation.”

Edison Tower Sparks?

Sparks were seen at a transmission tower owned by Edison International’s Southern California Edison utility, local media reports cited eyewitnesses as saying. Prange said in response to queries on the eyewitness accounts that it would take at least a week for anything substantial to be determined.

“Determining the cause and origin of the fire is a lengthy process,” Southern California Edison also said in a statement Sunday, confirming that it owns the tower identified in the reports as being near the start of the fire. “SCE will fully cooperate with investigations.”

The impact on Edison is expected to be minimal, according to a report by Citigroup Inc. analysts including Praful Mehta. The utility has $750 million of wildfire specific insurance for the year ending June 2020, and its valid safety certification allows for cost recovery through the wildfire fund, they said.

Investor concerns over the Saddleridge fire drove the stock 5.6% lower in the past week, the biggest weekly decline in about six months.

Undervalued Stock

“Even with a relatively conservative approach on valuing wildfire risk, we believe EIX is undervalued,” the Citigroup analysts said, reiterating their buy rating on the stock. “Recent underperformance and worries related to the Saddleridge Fire are overblown.”

For PG&E, in the course of inspecting lines following high winds, the utility found 50 instances of weather-related damage to its system. “There’s some vindication - that’s not the right word,” Johnson said late Friday, but the fact that the utility discovered so many safety issues that could have ignited a wildfire made the blackout well worth it, he said.

One thing PG&E is promising going forward is better communication. For days, both ahead of the blackout and during it, the company’s website was down, overwhelmed by people trying to find out whether they would be cut off and for how long. Call centres were similarly flooded. Text messages to homes and businesses affected were few and far between.

The operational act of turning off and on power actually “went really well,” Johnson said. But he committed to better notifications, more phone alerts, shorter call wait times and a website “that works no matter how much traffic is on it.”

California officials will have their own say on what more should be done. Governor Gavin Newsom has blasted PG&E over the shutoffs, saying the company should have been more surgical - and never would’ve been in this situation if it had invested in its infrastructure more heavily. He also called on state utility regulators to review PG&E’s actions.

A spokeswoman for the California Public Utilities Commission said the agency, as a policy, reviewed all intentional outages by California utilities. PG&E said it will file a report with the agency detailing the damages it discovered.

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