California Burning: The Fall of Pacific Gas and Electric -- And What It Means for America’s Power Grid by Katherine Blunt

PG&E

According to the popular understanding, wildfires are often caused by accident or arson. But a new book by Katherine Blunt, a journalist at the Wall Street Journal, places much of the blame somewhere else: Pacific Gas and Electric (PG&E), a big company which supplies power to 16 million people in central and northern California.⁷ The company is often in the news, having gone bankrupt twice in recent years and been entwined in the Enron scandal of the early 2000s. But it turns out to play an even bigger role in climate politics than most people acknowledge. The book is a gripping story of short-term capitalism and ineffective politicians -- and how all that affects the climate.

The core of Ms Blunt’s argument is simple. Time and again, she shows, PG&E has done too little to prevent wildfires from starting. Distribution lines, poorly maintained, crack, break and spark in high winds, lighting up the tinder box of California’s forests. In the 1990s PG&E power lines caused “several destructive wildfires in the Sierra foothills north of Sacramento.” From 2014 to 2017 PG&E’s equipment “started some 1,500 fires.” In 2018, in strong winds, a worn hook hanging from an old transmission tower broke off, dropping a high-voltage wire onto dry brush -- and causing what came to be known as the Camp Fire, the deadliest fire in Californian history. In July 2021 a tree fell on a PG&E distribution line in the Feather River Canyon. The resulting fire spread with devastating speed, ultimately consuming nearly a million acres.

“It’s hard to say exactly when PG&E Corporation began its fall,” Ms Blunt argues. But the fundamental conflict at the company seems to be between the short-term needs of shareholders, on the one hand, and environmental stewardship on the other. In the mid-2000s the company promised to increase earnings per share by at least 7.5% a year for the next five years, “far outpacing most other utilities.” In the five years to early 2019 the company paid out close to $4.5 billion in dividends. This, unfortunately, appears to have come at the expense of making sure that wildfires do not start.

In 2012 15% of PG&E’s service territory was thought to be at high risk of fire. By the late 2010s that percentage had more than tripled. In an ideal world the company would spend big to ensure that trees were kept a safe distance from live wires -- four feet is a rule of thumb in the industry. But this is expensive. And the company’s record-keeping of such things has at times been an “utter mess,” making monitoring difficult.

“The very nature of the business,” Ms Blunt argues, “creates tension between private interests and the public good.” Bump up dividends or act responsibly? She is half-right in proposing this trade-off. Because, in fact, the company’s neglect of the public good has ended up damaging its private interests. Many investors now give the company a wide berth. Its share price is currently around one fourth of its peak in 2017.

How can the company reform? Ms Blunt’s book is thin on answers. That is not a criticism. Solutions genuinely seem thin on the ground. Efforts either to nationalise all or part of PG&E, or to turn it into a cooperative, have come to nothing. The company says it is acting without delay to prevent future wildfires. However, so far, hopes that the company can reform from within have largely been dashed. So the message of the book is a grim one. Unless PG&E can sort itself out, California will continue to struggle with wildfires -- with grave consequences for the climate.