Commodites update: TGOD shares sink; PG&E cuts power in Cali
The unprecedented power shutdown by California’s PG&E Corp. has spread deeper into densely populated cities near San Francisco, ensnaring millions of people and raising the prospect that much of a major metropolitan area could go without electricity for days.
The bankrupt utility said late Wednesday that it had begun a second round of power cuts that will plunge another 234,000 customers in cities including Berkeley and Oakland into darkness. It’s part of the biggest blackout ever orchestrated to prevent strong winds from knocking down electrical lines and igniting fires. Half a million homes and businesses in Northern California were already in the dark, cut off by PG&E overnight.
Meanwhile in Southern California, Edison International was cutting power to dozens of customers and has warned of more, while San Diego’s main utility is also considering shutoffs. Altogether, more than 3 million people may eventually be affected, or almost 8% of the state’s population, based on city estimates and the average household size. The economic impact may reach $2.6 billion.
After being forced into bankruptcy from wildfires its equipment caused over the past two years, PG&E is using the massive power cuts in an attempt to prevent another deadly disaster. While San Francisco and Silicon Valley will be spared, the extensive reach of the outages threatens to roil the area’s economy by disrupting workers, shutting stores and forcing companies and agencies to shell out for costly back-up generators to keep operations limping along.
Determining just how deep the impact will be is difficult. PG&E had already restored power to some 50,000 customers in the Sierra Nevada foothills as of late Wednesday and were looking to return service to 80,000 by Thursday morning, the company said in its statement, released around 11 p.m. local time Wednesday. But outages could persist into next week as the utility sends crews to inspect all of its lines. Santa Clara County warned a shutoff could last seven days.
Parts of Northern California’s East and South Bays were set to lose power later in the evening under the second phase. After that, PG&E will weigh a third round of cuts for portions of Kern County, which may affect about 4,000 customers. The utility earlier predicted impact to 43,000.
A prolonged blackout will strain the region’s economy, said Michael Wara, director of the Climate and Energy Policy Program at Stanford University. Blackouts lasting hours or a single day close offices and schools, and prompt runs on grocery stores. At five days, cupboards start running bare, diesel for backup generators start selling out and gasoline runs short as stations won’t have power.
“If you lose power for five hours, you may have to throw out some milk,” Wara said. “If you lose power for five days, you need to throw anything that’s perishable away, and you are likely eating out of a can.”
Wara estimated PG&E’s blackout could cost $2.6 billion if it lasts two days, using a planning tool developed by Lawrence Berkeley National Laboratory. Two of the researchers who developed that tool, however, cautioned that it’s designed to calculate the impact of much shorter blackouts -- less than 24 hours.
Running on Generators
In areas where electricity was already out early Wednesday, many stores and businesses sat closed, while others worked off back-up power. Wells Fargo shuttered some branches. A few dozen Safeway supermarkets were affected as of midday, and the company was providing backup generators and refrigerated trailers upon availability.
Cities also turned to generators to power some facilities on Wednesday and simply closed others. Santa Rosa used generators to keep tap water flowing to residents and the lights on in fire stations. It shut down City Hall, according to its website. Public buses were running but not collecting fares -- its own expense.
For wineries, the blackout hit at a crucial time: harvest. Michael Haney, executive director of Sonoma County Vintners, said many wineries have either bought or rented backup generators. Some smaller growers have struck agreements to have their grapes stored at other facilities where there’s power.
“Wineries have had to pay out money for backup power,” he said. “The sad thing is some of our smaller wineries can’t afford it.”
Elsewhere in Sonoma County, the Russian River Brewing Company rented a 2-megawatt generator to power its brewery. The company -- famed for its Pliny the Younger cult beer -- wanted something smaller, but wineries had already snapped up most, said co-owner Natalie Cilurzo. It’s instead paying about $27,000 to rent its backup unit for a month, and fueling it with diesel probably costs between US$8,000 and US$10,000 every day it runs, Cilurzo said.
In San Francisco, companies prepared for the impact to employees, even while offices went unaffected. Twitter Inc. told employees whose commutes were affected by the outages that they could work from home. Down in Silicon Valley, Hewlett Packard Enterprise Co. similarly encouraged telecommuting.
The region’s main commuter rail system -- Bay Area Rapid Transit, or BART -- expected no disruption, in part because the service had already deployed generators, some from PG&E, to vulnerable spots. PG&E also supplied four generators to a keep a heavily traveled freeway tunnel open beneath the East Bay hills, a major artery to San Francisco.
The widespread impact angered Californians -- and some elected officials. State Senator Scott Wiener, a San Francisco Democrat, called the outage “a completely unacceptable state of affairs.” Governor Gavin Newsom was more measured, saying the blackout was “appropriate under the circumstances,” but added: “No one is happy about it.”
--With assistance from Romy Varghese, Matthew Boyle, Kurt Wagner, Nico Grant and Christopher Palmeri.