PG&E Cuts Power to 2.8 Million Californians as Fires Burn

(Bloomberg) -- Mass power shutoffs by PG&E Corp. left more than 2.8 million Californians in the dark Sunday, the state’s largest deliberate blackout ever, as the bankrupt utility tries to keep its equipment from igniting wildfires during the strongest wind storm in years.

As of 1:45 p.m. local time, PG&E had shut off the lights to 941,000 homes and businesses in Northern California, including parts of Oakland and Berkeley, and almost all of affluent Marin County north of San Francisco. The city of San Francisco itself was spared. High winds are expected to lash the region through Monday morning, with another set of gusts forecast for Tuesday and Wednesday -- raising the prospect that some areas will be blacked out for several days.

The scope of the current outage was unprecedented, with 38 of California’s 58 counties expected to be affected. The largest number of shutoffs were in Sonoma County, where the Kincade fire triggered a massive exodus Saturday and Sunday. With that blaze and others burning, Governor Gavin Newsom declared a state of emergency.

“What we find ourselves experiencing is a historic wind event,” Andy Vesey, head of the Pacific Gas & Electric utility unit, said at a press conference Saturday night. The shutoff is a “last resort to make sure that in these conditions our operations will not create a major public safety issue. That’s why we do it.”

PG&E has said it expected to begin restoring power Monday, when the winds are forecast to subside, after it inspects every line of its equipment for damage. But the company warned Sunday that a separate set of gales expected to descend on the state could lead to another round of shutdowns in 32 counties on Tuesday and Wednesday. Some customers who are currently out of power may remain so throughout that time.

In the suburbs of Marin County, street lights were out, gas stations were closed and stores were shuttered. People who charged their phones and computers before the outage hit woke to slow internet connections as they searched for updates on the blaze and blackouts. In Oakland, long stretches of banks, pharmacies, restaurants, shops and markets were dark. Police patrol cars parked at intersections to help navigate vehicles through darkened traffic lights.

It’s the third time this month that PG&E has resorted to mass blackouts to avoid wildfires. The San Francisco-based company has been taking more extreme measures since its equipment sparked blazes in 2017 and 2018, saddling it with an estimated $30 billion in liabilities and forcing it into bankruptcy. The shutoffs have triggered a debate over how far California is willing to go to prevent fires in an increasingly warm and dry climate. Despite the power cuts, blazes continue to burn.

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Read More: The Cost of Doing Business in California Is One Blackout a Week

The outages are extending to Southern (NYSE:SO) California, where Edison International (NYSE:EIX) has cut power to 364 customers and said 302,900 more face shutdowns. Sempra Energy’s San Diego Gas & Electric said it has no emergency shutoff plans at present.

Wildfires have already broken out at both ends of California. The Tick blaze near Los Angeles forced tens of thousands of evacuations. And north of San Francisco, the Kincade fire is still raging. It had burned more than 30,000 acres, destroyed at least 79 structures and was threatening another 31,175 buildings as of Sunday morning. Almost 200,000 people were forced to evacuate.

“I’ve heard some people express concerns that we’re evacuating too many people,” Sonoma County Sheriff Mark Essick said Sunday. “I think those concerns are not valid at this point.”

The Kincade fire was reported minutes after a PG&E transmission line in the area malfunctioned late Wednesday. Firefighters have not determined the cause of the blaze. PG&E’s shares plummeted 31% Friday to $5, a record low. Shares of Edison fell 8.5% as fires burned in its Southern California service territory.

All told, there’s about $12 billion worth of property within a mile of the active fires, said Chuck Watson, a disaster modeler with Evenki Research.

The prospect of more liabilities from wildfires is especially vexing for PG&E. Since filing for Chapter 11 in January, the judge overseeing the case has warned that another big blaze would upend the utility’s bankruptcy and potentially wipe out shareholders. Any claims from new fires sparked by PG&E would have to be paid out first -- and in full -- before those from previous blazes get a dime.

The winds are arriving at a precarious moment. California receives almost no rain during its summer, and a five-year drought earlier this decade killed millions of trees that can now easily ignite. Recent winds have dried out grasses and shrubs even further.

(Updates with additional wind storm starting in second paragraph.)