PG&E Outage Redux

In what seems like an annual event that dovetails with the holiday season, Pacific Gas & Electric has started an internal investigation into a big blackout. After admitting that a delayed response contributed to the severity of a December 20 power outage, PG&E this week offered few new details on the delays and causes for the outage, which cut power to 120,000 customers. PG&E officials revealed that it took personnel close to two hours to respond to a substation fire alarm. Power was restored over the following 30 hours, PG&E reported. PG&E is continuing an investigation to make sure it has a ?complete story to tell, not only to find out what happened, but to keep it from happening again,? said Paul Moreno, utility spokesperson. While far less severe, the recent outage recalls blackouts of the previous holiday season and earlier promises to improve outage performance. A year ago, state legislators and regulators resolved to take action after a series of holiday storms knocked out power throughout the state. Among customers of the state?s three investor-owned utilities, PG&E?s were hit especially hard?close to 2.7 million lost power, some for up to several weeks. Although legislators have called utility officials on the carpet and the California Public Utilities Commission has been investigating on its own, these calls to action on different fronts beg the question of how much progress has been made. Soon after the December 2002 outages, PG&E was put on the hot seat in state legislative hearings about its handling of that year?s massive blackouts. Assembly Utilities and Commerce Committee chair Sarah Reyes (D-Fresno) stated that her intent in those hearings was to ?develop some solutions to make sure this does not occur again.? Reyes?s office did not respond to repeated requests for comment on interim developments. Also last January, the CPUC launched a probe into PG&E?s storm performance. Soon after, the probe was folded into the utility?s general rate case (GRC), which analyzes overall costs of service and operations. On top of its handling of the outage, the case has looked at resources PG&E invests in system reliability. Separately, part of PG&E?s general rate case is set to address outage responsibility. The various reliability proposals will be part of a draft decision in a still-pending part of the GRC due out next month. Under a settlement agreement on many GRC issues, the utility seeks a $4.33 billion annual revenue requirement, representing a $326 million boost over current numbers. (This figure excludes $27.5 million in outage-related reliability costs.) PG&E hammered out a compromise proposal with the Coalition of California Utility Employees (CUE) that is supposed to provide incentives or penalties for PG&E to improve outage performance. CUE, which had originally proposed offering incentives of $72 million annually, scaled back numbers and expectations to agree on potential incentives of $27.5 million per year. ?It?s a no-lose situation for ratepayers,? said Marc Joseph, attorney representing CUE. ?If reliability doesn?t improve, they get the money back through penalties,? he said. According to testimony provided by CUE, personnel cuts are linked with lengthier outages. In 1990, PG&E had 42 percent more field employees than it did in 2002; average restoration time has increased by 45 percent. But CUE, which represents utility employees, stressed it is not pushing the utility to beef up hiring, just pointing out factors linked with reliability problems. However, The Utility Reform Network, the Office of Ratepayer Advocates, and the Aglet Consumer Alliance opposed the proposal. TURN attorney Matt Freedman called the deal a potential ?cash cow? for PG&E and maintained that the utility should meet performance targets without additional funding. PG&E and ORA forged a joint proposal that would hold the utility to annual reliability reporting requirements, including a requirement to explain failure to meet targets. PG&E may need to make investments to boost reliability, but these choices involve policy calls because ?consumers ultimately pay the bills? for improvements, said CPUC member Carl Wood. The utility overall faces more severe weather conditions than the other two investor-owned utilities, he observed. The CPUC?s Energy Division also conducted an analysis last winter of some problem circuits on PG&E?s distribution system. Fixes were found for some problems, such as replacing old poles.

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PG&E Outage Redux

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