(Bloomberg) -- Bankrupt utility giant PG&E Corp. will carry out the next round of unprecedented blackouts across Northern California later on Wednesday.
Half a million homes and businesses in Northern California have already lost power as PG&E carries out its biggest-ever intentional power shutoff to keep its lines from sparking blazes. The company was previously scheduled to shut service to another 234,000 customers in cities including Berkeley and Oakland at noon local time, but said on Twitter that those cutoffs would occur later on Wednesday and into the evening as dry winds pick up, leaving the region at high risk of fire.
Utilities in the Los Angeles and San Diego areas are also warning of service cuts. More than 3 million people may be eventually affected, based on city estimates and the average household size. The economic impact may reach $2.6 billion.
Never before have California utilities intentionally cut power to so many people for their own safety -- and never has a shutoff affected such major metropolitan areas. The city of San Francisco and Silicon Valley are expected to be spared. The undertaking is key to fairly new strategy by PG&E for preventing power lines from sparking another deadly -- and costly -- conflagration.
“This is unprecedented in terms of what all of us are facing as a community,” PG&E Vice President Sumeet Singh said at a media briefing Tuesday night. “We are doing everything we can to minimize the impact on our customers’ lives.”
The shutoff was scheduled to occur in three phases, eventually affecting almost 800,000 homes and businesses, including in the San Francisco Bay Area and Napa County. The next phase will include parts of Mendocino and Calaveras counties that hadn’t been turned off in the first round, the company said. After that, PG&E will weigh a third stage for the southernmost portions of its service area, affecting 42,000. In all, about 15% of the utility’s customers may go dark.
“The biggest threat looks to be today and continuing into the day tomorrow,” Marc Chenard, a senior branch forecaster with the U.S. Weather Prediction Center in College Park, Maryland, said of the fire risk.
As California’s climate warms and dries, the massive blackouts could become a new, annual ordeal. The shutoff warning came two years after wildfires tore through Napa and Sonoma counties, and 11 months after one of PG&E’s transmission lines triggered the Camp Fire, which leveled the town of Paradise and killed 86 people.
What Bloomberg Intelligence Says
“Insured losses from this power shutdown by PG&E will likely be minimal. As it is planned versus unexpected I wouldn’t expect it to trigger business interruption policies. Insurers do engage in proactive cost control, but any payments would be highly dependent on the policy language and in my view not very material to insurers.”
-- Matthew Palazola, senior insurance analyst
Click here to read the research
Near Los Angeles, Edison International’s Southern California Edison utility said it was also considering cutting power to almost 174,000 homes and businesses. Sempra Energy’s San Diego Gas & Electric warned that it could shut power to about 30,000 customers within the next two days.
PG&E shares were up 0.7% at 2:11 p.m. in New York. Edison was down 0.7%, and Sempra Energy rose 0.8%.
Unfortunately for customers, PG&E won’t be able to switch the power back on once the winds stop. Crews must inspect every inch of lines to ensure they’re safe to carry electricity again. Cities have warned residents to brace for six days without power.
“It’s not just a matter of, ’red flag’s over, I can turn the lights back on,”’ said Gregg Edeson, a utility consultant. “The utility really does have to go out there and look.”
“We have a grid that was built to manage a set of circumstances that don’t exist anymore,” said Michael Wara, director of the Climate and Energy Policy Program at Stanford University. “We are having to adapt to new circumstances brought about by climate change.”
He estimated that if PG&E’s blackout lasts two days, it could have an economic impact of as much as $2.6 billion, using a planning tool developed by Lawrence Berkeley National Laboratory.
Within the blackout zones, residents were rushing Tuesday to buy food, water and electric generators -- almost as if a hurricane were approaching. Stores including Rite Aid and Target across Oakland had run out of flashlights and most batteries. Public officials tried to assure residents that essential services would still be available, while asking them be prepared regardless.
The section of PG&E’s website where people can check their home’s status was so inundated that it was inaccessible Wednesday.
‘No One is Happy’
Governor Gavin Newsom, at a public appearance Tuesday, called PG&E’s actions warranted while acknowledging the massive disruption the blackout represented.
“No one is happy about it, no one is satisfied, but no one should be surprised, because we have been anticipating this moment for a year,” Newsom said. The blackout, he said, “shows that PG&E finally woke up to their responsibility to keep people safe.”
The region’s main commuter rail system -- Bay Area Rapid Transit, or BART -- said it expected no impact on its electrified trains or its stations, in part because it had already deployed backup generators to stations that needed them.
In Emeryville, just across the Bay Bridge from San Francisco, the Home Depot was nearly sold out of back-up generators by Tuesday morning. Andy Kovacevic of Oakland snapped up one of the last units. The 73-year-old said he had rushed down to the store after he got a robo-call from Alameda County, warning him that he could be without power for days.
“I’m not happy about it,” Kovacevic said. “I’m not sure it’s really necessary.”
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