Splitting the $10 Billion Dollar Bill: California's Fire-Resistant Infrastructure Project
- Feb 28, 2022 11:26 pm GMT
Utilities face seasonal storms from freezing conditions to extreme heat. In 2020, 58,950 wildfires burned 10.1 million acres and nearly 40% of these acres were in California.
In January, San Diego Gas & Electric (SDG&E) and the Cleveland National Forest announced the completion of the Cleveland National Forest Fire Hardening and Safety (CNF) Project that made wood-to-steel pole conversions, replacement and undergrounding of equipment on 880 square miles. Not everyone can afford to get excited about hardening lines in San Diego because of the costs it incurs.
"Poles don't cause the fires,” said Bill Powers, an engineer with power system experience. “It's the wires that hit each other and touch tree limbs and that type of thing.” In defense, SDG&E commented that after their lines sparked wildfires in 2007, the utility hardened lines and have not been responsible for igniting any fires since.
Reducing wildfires is crucial but the cost is still a concern. SDG&E's project will cost $3 billion and will be spread among ratepayers. “The ratepayers are going to pay for all of this, but the shareholders are going to benefit from it because profit comes out of these types of projects,” said Powers.
Similarly, Pacific Gas and Electric Company (PG&E) announced plans to harden lines across 3,600 miles. Determined to put an end to the annual devastation, PG&E Chief Executive Officer Patti Poppe said, “PG&E has taken a stand that catastrophic wildfires shall stop. Our Wildfire Mitigation Plan for 2022 details the work we are doing right now to make that stand a reality.”
The project is expected to cost $10 billion. Customer monthly bills would increase by about $30 a month under this new proposal. “This is the largest effort in the nation to underground power lines as a wildfire risk reduction measure,” PG&E stated. Despite their best efforts to explain the importance of these projects, the reaction is the same. “Mindboggling PG&E increases are a punch in the gut to millions of California residents hurting economically from the pandemic and struggling to get back on their feet,” said Mark Toney, TURN’s executive director.
A meeting between FERC commissioners and officials from California, Massachusetts, Michigan, Pennsylvania, and other states discussed who benefits from new projects and who should pay for them. Some are concerned that with a longer list of benefits comes the ability to spread costs to more consumers—potentially justifying projects that carry few tangible benefits, said FERC commissioner Mark Christie, a former Virginia utility commissioner. “It’s a bit like splitting costs of a large, expensive dinner party without a fully itemized bill,” said Jason Stanek, a member of the Maryland Public Service Commission. “I think the answers will be more important to some regions, some states and some utilities than others, especially if you’re the party who ordered the side salad and water and everyone else at the table ordered filet mignon,” Stanek said.
Much like separate checks in the dinner party analogy, state commissioners are hoping FERC will grant some flexibility so utility commissioners and regional planning officials can pursue projects that work best for their region. Navigating between regulators and customer outcry, how is your utility preparing for the next figurative and literal storm?
Get Published - Build a Following
The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.
If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.