The Power Utilities and the Climate Emergency

Steel pole, file photo.

What is happening in Texas is not unusual at all. The rolling blackouts are not rare, and this is the way our power grid operators are dealing with the climate emergency.

First, American utilities were public at one point, but now many were privatized. In my state, they were privatized in 1998 in my state. And my state, California, suffered early through the hubris of the private sector which intended to maximize profits. The rolling power outages of the early 200os were bad and the crisis led, ultimately, to Enron’s demise. It also was directly related to a recall of the governor.

Enron ultimately failed and went bankrupt. But one of the reasons for that was the deaths in the state of senior citizens and the tapes that emerged showing they did not care. The country turned against them.

Newly discovered tapes have revealed how the energy corporation Enron shut down at least one power plant on false pretences, deliberately aggravating California’s crippling 2001 blackouts with the aim of raising prices.

The tapes also show that Enron, whose bankruptcy three years ago was the biggest corporate scandal of recent times, manipulated energy markets in Canada and was planning to rig the Californian market even before deregulation in 1998, for which the Texan corporation actively campaigned.

The most damning revelations concern Enron’s secret role in creating artificial power shortages in California, helping to trigger an energy crisis in 2000 and 2001 which cost residents billions of dollars in surcharges.

Many of us have not forgotten that, and some of us were not surprised when our utilities started turning the power off every time we have the threat of a major wildfire. Part of it is that they are tired of getting sued every time their equipment is directly tied to a wildfire. The last of these events was in Northern California, and Pacific Gas and Electric has filed for bankruptcy, again.

“Under the Plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California’s clean energy goals,” said Bill Johnson, PG&E Corporation’s Chief Executive Officer and President. “Throughout this process, we remain focused on the guiding principles of safely and reliably delivering energy to our customers, further reducing the risk of wildfires, and continuing to support the state’s clean energy goals. I am confident that we can, and will, provide better service to our customers and communities, and our Plan of Reorganization is another step in this process.”

Remember, they were found responsible for the fire that destroyed the town of Paradise. They are not alone, my local utility fought responsibility for the fires in 2007 until they lost. They kept fighting to pass the cost to the consumers. They finally lost that fight, but statements made to the Judge during the process were damming. They are almost Enron-like.

The utility has filed an appeal with the state’s 4th District Court of Appeal in San Diego, calling on the court to review a decision by the California Public Utilities Commission that rejected SDG&E’s request last November. The commission also denied the utility a rehearing on the case last month.

>SDG&E’s attorneys said last year’s decision “will have severe adverse practical consequences for privately owned utilities” in California and, by extension, threatens to have “ripple effects throughout the state’s economy.”(My bold)

The CPUC has put utilities in a “whipsaw,” the 84-page filing argued. SDG&E wants the appeals court to vacate the commission’s 5–0 vote and “rule that SDG&E is entitled to recover payments” from the 2007 San Diego wildfires.

https://www.sandiegouniontribune.com/business/energy-green/sd-fi-sdge-appealscase-20180817-story.html

Notice what the lawyers said. It is critical to what is happening here. Privately owned utilities and the effect on them. In other words, the cost of the climate emergency may actually drive them out of business. Did I mention that San Diegans pay some of the highest rates in electricity in the nation?

SDG&E often has the highest rates by a wide margin. For example, in the first quarter of this year, the cost for 1000 kilowatt-hours at San Diego Gas was $272.02. The second highest was $202.81. Seven years ago, the local utility was first at $211.52 and the second highest was $157.28.

Last year, Richard Rider, chairman of San Diego Tax Fighters, looked at one of the JEA residential rate surveys. “San Diego Gas & Electric residential rates are 62 percent higher than the median-priced utility in the survey,” complained Rider. That quarter was one of the few times that San Diego Gas’s rates were only the fourth highest in the nation.

They keep asking to raise the fees, but what they are really not doing is investing in hardening the network against the climate emergency. They have done things like changing the poles in the backcountry from wood to steel. But they refuse to bury the lines, and now when we get even close to Santa Anna's conditions, they shut down the power. Burying the lines is on average ten times as expensive as keeping them over the air, per mile. In some areas, it is more expensive, in others less. And yes, there is some substrate where this would not be possible. But that is not the majority of it.

We have officially become a third-world utility that cannot deal with the necessary resiliency for the emergency because profits would go down.

We all know what is going on in Texas. The story is similar. First off, they are going to blame green energy for the crisis, and some of it can be blamed because of how it has designed its grid.

But there are some hurdles in the way of the state’s wind power development too. One of them, according to Walt Baum of the Association of Electric Companies of Texas, **is that the state doesn’t have a “capacity market.” That means that no party in the power system can pay for somebody else to store power.**

“Texas has an energy-only market,” said Baum, executive vice president of the association. “So you only get paid if you sell your energy onto the grid.”

But storage capacity is an important piece of any renewable energy portfolio, he said.

They also did not put cold weather packages in their wind turbines. They do exist, but they simply were not installed. It is a cost issue at this point and profits.

However, the Texas energy system is not one hundred percent renewable. It is not even close. At best it is 30 percent of energy generation capacity, though they have not invested in energy storage capacity, which is a problem. As of 2018:

New information from state grid operator ERCOT shows that carbon-free resources made up more than 30 percent of its 2018 energy consumption, and a slightly larger percentage of its 2019 generation capacity. In both cases, the largest share of credit goes to the state’s massive wind farms, which provided 18.6 percent of 2018 energy and make up 23.4 percent of 2019 capacity, followed by nuclear power, which served 10.9 percent of last year’s needs and will provide 5.4 percent of this year’s capacity.

Solar, meanwhile, only made up a sliver of the 1.3 percent of last year’s energy use served by “other” resources such as hydropower, biomass and fuel oil. But solar will make up 2.1 percent of this year’s generation capacity, in a testament to the small but fast-growing utility-scale solar market developing in the state.

If this sounds familiar to California, it should. Profits and the pursuit of them by private providers are leading to poor climate resiliency planning. Things like burying the lines are simply not done because it would be a hit to the profits in the short term.

Every year in California, utilities have to rebuild grids in rural areas where lines go down during a wildfire event. We see this in other places where lines go down due to icy conditions. It would make sense to bury the lines, and if we are going to build green energy, to build storage. Or for that matter, to put cold weather packages on turbines.

Some conservatives make the case that we should blame renewables, but as the lawyers for San Diego Gas and Electric put it, not passing the costs to consumers will have a bad effect on investors. Translation: it will reduce profits. Some conservatives have even said, nobody will do this if there is no profit. They are making the case for taking these companies away from the private sector. Fans of privatization said that the private sector would do it cheaper, more efficiently, and better. So far they have failed all these tests.

We need to look at history. The Tennessee Valley Authority is a good example of where we are. The TVA was a result of the need to electrify rural America, during the New Deal. It was not a private company. The cost of doing this was very high and no private sector company could have done it. Electrifying the valley did not only better the lives of people living in deep rural areas, but set the ground for new industries.

In short, without the TVA, the region would still be as poor, or poorer than it was. There have been conversations about privatizing it over the course of both the Obama and Trump administrations and one reason against it is the increase in prices to the end-user that we have seen with privatized systems since the late 1990s. There are others of course, which include the greening of the energy system and the cost of doing such. Private investors may be more hesitant to do so if they are not forced to do so. Maintenance, as PG&E showed us, as well as the Texas system, is a problem as well.

If anything, what is happening in California every year, and in Texas right now, points to the benefit of a publicly held electric system. When profit is added to the mix, the kind of investments needed to make the grid climate-resilient will only happen slowly under private ownership. Their goals are set by quarterly profits, not looking into the future, even decades into the future. This is the level of planning and investment needed. The private sector is showing that it is not willing to do the work. Perhaps, it is unable.

Historian by training. Former day to day reporter. Sometimes a geek who enjoys a good miniatures game.

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