Do California’s Blackouts Make Sense?

https://www.wsj.com/articles/do-californias-blackouts-make-sense-11570832232?mod=rsswn

by Bostonian • 7 years ago

24 66 7 years ago

wsj.com

robertcope• 7 years ago

When you get fined $30 billion dollars for a fire, yes, it makes sense.

ecf• 7 years ago

When you neglect maintenance and cry fowl when a state wants to charge for your negligence.

mdorazio• 7 years ago

There’s a difference between getting fined for lax maintenance and “you’re bankrupt now”. To put this in software terms it’s equivalent to if you miss one bug, anywhere in your code you post on GitHub, and the government comes and takes your house. Because that’s about how easy it is to accidentally start fires in California in the dry season. How much code do you think you would publish in that case?

H8crilA• 7 years ago

The real question is whether a monopoly utility company should be a private for-profit effort. Like what's the benefit here. You can't rely on the usual survival-of-the-fittest quality proposition because those are monopolies.

baq• 7 years ago

Especially if most of the profit is correlated with amount of carbon emitted.

rayiner2• 7 years ago

The benefit is that for profit companies have incentives for quality that public entities do not. In New York, at least ConEd gets you reliable power. The New York subway by contrast is literally struggling to hit 70% on time performance.

It’s a simple calculation. Would you want your local (almost certainly public) transit operator to take over your electric service? I’d suspect in the vast majority of places, the answer would be no.

Buttons840• 7 years ago

What are the incentives?

You answer the question of what are the "benefits" with essentially another vocab word, and a single word at that, "incentives".

vojta_letal• 7 years ago

In the Czech Republic and the neighboring countries the grid operators are state owned, the power plants are mostly private. Works like a charm. We have like minutes of blackouts per year on average. Compare to hours in the US.

trdtaylor1• 7 years ago

There are many nonprofit electric co-ops providing high quality service in America.

Public transit in America most often the answer would be no. But public transit of say the rest of the world with multi-billions of dollars invested over the years into the public transit infrastructure leading to public owned and operated highly functional transit systems.

A for profit company will invest when it makes sense from a bottom line perspective. A public non-profit without corruption will invest when it makes sense from a public good perspective.

amelius• 7 years ago

The benefit is that for profit companies have incentives for quality that public entities do not.

Not if they are a monopoly.

peteretep2• 7 years ago

Would you want your local (almost certainly public) transit operator to take over your electric service?

I would love Transport for London to take over electric and water and internet provision in London, yep. And I feel like most everyone in the UK would prefer the trains to be renationalised.

enraged_camel2• 7 years ago

Why are you ignoring the large number of scenarios where public utilities not only work, but work well?

Also, surely you understand that the New York subway system’s problems cannot simply be chalked up to it being public?

PeterStuer• 7 years ago

For profit companies have an incentive for making profits. That incentive might accidentally be aligned with providing a quality service, but more often it is not.

A public entity is not restricted by the need to maximize profits and can fully concentrate on providing the best possible service within the budget.

Both public and private organizations can have efficiency challenges, which for the most part correlate with their size.

A private company that is granted a monopoly will tend to exhibit the worst of both worlds, maximizing private profits while providing minimal service and putting all risks onto the public sector.

TazeTSchnitzel• 7 years ago

The New York subway by contrast is literally struggling to hit 70% on time performance.

Because politicians cut its budget while requiring 24/7 operation, not because the subway operator doesn't have ~profit motive~

astura• 7 years ago

I have municipal electricity, I've had it for more than a decade over three different apartments/houses. I flippin' love it! The service has been absolutely top notch and cost has been reasonable. The surrounding area is serviced by the publicly traded company and the difference is noticable.

When I was a kid I got most places using public transportation and it was fine.

drawkbox2• 7 years ago

This point was raised many times in the last rolling blackout gamed events in California nearly two decades ago.

S. David Freeman, who was appointed Chair of the California Power Authority in the midst of the crisis, made the following statements about Enron's involvement in testimony submitted before the Subcommittee on Consumer Affairs, Foreign Commerce and Tourism of the Senate Committee on Commerce, Science and Transportation on May 15, 2002: [1]
"There is one fundamental lesson we must learn from this experience: electricity is really different from everything else. It cannot be stored, it cannot be seen, and we cannot do without it, which makes opportunities to take advantage of a deregulated market endless. It is a public good that must be protected from private abuse. If Murphy's Law were written for a market approach to electricity, then the law would state 'any system that can be gamed, will be gamed, and at the worst possible time.' And a market approach for electricity is inherently gameable. Never again can we allow private interests to create artificial or even real shortages and to be in control. [1]
"Enron stood for secrecy and a lack of responsibility. In electric power, we must have openness and companies that are responsible for keeping the lights on. We need to go back to companies that own power plants with clear responsibilities for selling real power under long-term contracts. There is no place for companies like Enron that own the equivalent of an electronic telephone book and game the system to extract an unnecessary middleman’s profits. Companies with power plants can compete for contracts to provide the bulk of our power at reasonable prices that reflect costs. People say that Governor Davis has been vindicated by the Enron confession."[1]

Hopefully stored battery energy on households can help prevent rolling blackouts impact, but until then any company running a crucial service needed for survival should be under heavy scrutiny, and switched to state/public run if they feel the need to game it.

In the Enron triggered emergencies, they were 'overscheduling' on purpose and 'megawatt laundering' [2]

"There is a single connection between northern and southern California's power grids. I heard that Enron traders purposely overbooked that line, then caused others to need it. Next, by California's free-market rules, Enron was allowed to price-gouge at will." [2]

[1] https://en.wikipedia.org/wiki/California_electricity_crisis#...

[2] https://en.wikipedia.org/wiki/California_electricity_crisis#...

ransom1538• 7 years ago

Most of California is a tinderbox. In late summer, when you walk in brush or in the woods, the ground 'cracks' as you walk - from dry sticks and pine needles. California burns every year. Fires have started from car exhaust pipes, people dropping a cigarette, knocking over a camping gas stove, etc. The solution isn't to ban "camping gas stoves" - the solution is to have fire breaks BEFORE the fire. Fires get out of control in California because of it's massive size and fuel source. Why do people blame PG&E? Would we all feel better if it was a kid playing with a magnifying glass? The solution is to destroy the main electrical company? We would all be happier if they were government owned electrical lines that caused the fire? I don't follow the logic.

I am sure PG&E will enjoy slashing all their current (and past??) employee retirement benefits. Who wins here?

dilap• 7 years ago

The answer I’ve heard is they are supposed to clear the area around their equipment, to lower the chances of fires starting, which they have not been doing.

sieabahlpark• 7 years ago

Why do that when you can just not and keep the money with no consequences. It's not like California has a history of corrupt utility providers or anything.

enraged_camel2• 7 years ago

I learned the other day that the reason California is so prone to massive fires is because they do not allow fires to occur naturally, and instead do a lot of fire prevention work. Over time, ironically, this results in a ton of dead, dried vegetation accumulating.

The general consensus among experts seems to be that nature needs a regular “release” for a lot of stuff, otherwise “pressure” builds up and results in what we humans consider disasters.

mensetmanusman2• 7 years ago

This is true, and ironically the more money that is invested in fire fighting, the more vegetation is allowed to build up for a future fire until the size overwhelms the current capital investment for firefighting. This funding policy guarantees larger and larger fires.

Meanwhile, no one is seriously discussing this issue, and everyone is blaming it on climate change, which will only make the voters of California feel hopeless, and therefore do nothing about it.

yardie• 7 years ago

If you let the fires burn out then you’re violating the people’s god given right to build a house in the middle of a forest full of kindling.

In this country we can accept just about anything except for nature to run its course.

throw0101a4• 7 years ago

... California is so prone to massive fires is because they do not allow fires to occur naturally ...

This was "national policy" in US and it applied to all states, and not CA specifically. It was the scientific consensus and various agencies followed that advice.

* https://en.wikipedia.org/wiki/History_of_wildfire_suppressio...

We now know better, so the current scientific consensus is that the past consensus was wrong. Welcome to falsifiability.

koboll• 7 years ago

Why do people blame PG&E?

People blame PG&E because investigations have traced several colossal fires back to electrical equipment.

Shutting off the power isn't a panacea. But California's electrical grid was built for the climate of the past, and is increasingly looking dangerous on high-fire-danger days in the climate of the future. So shutting it off on those days is going to have to become a component of prevention, unfortunately.

I have many friends in an area devastated by one of the large fires a few years ago, and the sentiment I've seen over the past few days is largely gratefulness. A recognition that, as bad as blackouts are, if they can prevent a catastrophe, they're worth it.

jfnixon4• 7 years ago

Built for the climate of the past? Which one, the one over thousands of years in which CA routinely undergoes multi-decade droughts, or the more recent one of a few hundred years in which the dry periods last just a few years?

I think the problem is the people of CA are not willing to engineer water infrastructure necessary to support the population based on the longterm climate record.

neildahlke• 7 years ago

This is an absolutely horrible response by someone who clearly doesn’t live in the area.

PG&E has constantly prioritized shareholder profits over renovating their aging infrastructure. They caused the biggest wildfire in the history of California and are now _finally_ facing a reckoning for their reckless and destructive behavior.

Fix your goddamned infrastructure and get a smaller bonus. That’s what we want.

jfnixon4• 7 years ago

So the State government has no influence over the choices of PG&E? And here I thought it was a regulated utility. Who knew?

dap• 7 years ago

What a disappointing and disingenuous piece. To take an egregious example, the article points out that 90% of fires aren’t caused by electrical equipment, but fails to mention that the most destructive ones have been.

As for the idea of homeowners in fire prone regions shouldering all of the risk, is that reasonable when the frequency and magnitude of the fires appears to be changing so significantly? (I’m not sure, but I think areas of risk have also expanded significantly.). There are also huge externalities: it’s not just homeowners’ problem when smoke blankets regions housing millions of people hundreds of miles away from the fire.

sjg0072• 7 years ago

Yes. We should have zoning requirements for fire resistant construction and have minimum setbacks from tree lines etc... whatever makes sense.

lscotte• 7 years ago

Another paywalled story that is not free to read...

glerk• 7 years ago

https://archive.li/DFdeQ

mrfusion• 7 years ago

Here are some common sense questions I’ve wanted to ask on this topic:

Why can’t they do a controlled burn along the power lines?

How about spraying water or a fire suppressant along the power lines from a plane or helicopter.

How about closely monitoring along the power lines and send out fire planes at the first sign of fire? You could already have them loaded and in the air.

Long term maybe just pave the areas directly under the power lines

Or long term run a water pipe along the lines and spray out a little water every day.

sjg0072• 7 years ago

Long term the ideal is to bury the lines.

Overtonwindow• 7 years ago

I suspect this has more to do with civil liability then has to do with preventing wildfires. If a fire breaks out, and the power company has shut down the power, then they can’t be blamed like last time. It’s a very nasty way of avoiding lawsuits.

drawkbox2• 7 years ago

Do California’s Blackouts Make Sense?

Doesn't make much sense until you understand the disaster capitalism angle.

The disaster capitalists[1][2] are in charge again as they have been in this authoritarian administration and the last one when CA was being messed with before two decades ago.[3]

The last time CA had blackouts it was due to gaming the market, mostly Enron, and schemes to make money off of emergencies and create false fixed markets [3].

One of the energy wholesalers that became notorious for "gaming the market" and reaping huge speculative profits was Enron Corporation. Enron CEO Kenneth Lay mocked the efforts by the California state government to thwart the practices of the energy wholesalers, saying, "In the final analysis, it doesn't matter what you crazy people in California do, because I got smart guys who can always figure out how to make money." The original statement was made in a phone conversation between S. David Freeman (Chairman of the California Power Authority) and Kenneth Lay in 2000, according to the statements made by Freeman to the Senate Subcommittee on Consumer Affairs, Foreign Commerce and Tourism in April and May 2002[3]

Utilities should simply not be able to operate privately and switch to state owned if they have to have massive blackouts like this and it would prevent gaming. You just can't have utilities like water, power, network and more at the whims of some money and media manipulators, the temptation is too great. Everything else but required services is fair game. However it says something that growth is so tapped in the US that the best way for these big fish to make money is to burn down necessary services, creating disasters and emergencies, and rebuild it, gaming it all the way down and up, Great Recession style.

This outlook was echoed in the last rolling blackouts CA shock events:

S. David Freeman, who was appointed Chair of the California Power Authority in the midst of the crisis, made the following statements about Enron's involvement in testimony submitted before the Subcommittee on Consumer Affairs, Foreign Commerce and Tourism of the Senate Committee on Commerce, Science and Transportation on May 15, 2002:[3]
"There is one fundamental lesson we must learn from this experience: electricity is really different from everything else. It cannot be stored, it cannot be seen, and we cannot do without it, which makes opportunities to take advantage of a deregulated market endless. It is a public good that must be protected from private abuse. If Murphy's Law were written for a market approach to electricity, then the law would state 'any system that can be gamed, will be gamed, and at the worst possible time.' And a market approach for electricity is inherently gameable. Never again can we allow private interests to create artificial or even real shortages and to be in control.[3]
"Enron stood for secrecy and a lack of responsibility. In electric power, we must have openness and companies that are responsible for keeping the lights on. We need to go back to companies that own power plants with clear responsibilities for selling real power under long-term contracts. There is no place for companies like Enron that own the equivalent of an electronic telephone book and game the system to extract an unnecessary middleman’s profits. Companies with power plants can compete for contracts to provide the bulk of our power at reasonable prices that reflect costs. People say that Governor Davis has been vindicated by the Enron confession."[3]

In the Enron triggered emergencies, they were 'overscheduling' on purpose and 'megawatt laundering' [5]

"There is a single connection between northern and southern California's power grids. I heard that Enron traders purposely overbooked that line, then caused others to need it. Next, by California's free-market rules, Enron was allowed to price-gouge at will." [5]

In my conjectured opinion on this subject in regards to the new rolling blackout game triggered by the massive 2018 California fires [4], the fires were started this summer as a sabotage effort to get the game started again, and as a very useful distraction. The fires started in many points at once [4], affecting areas that got major coverage (wealthy areas) and was supposedly started by power lines/stations that had dry overgrowth? Two months before the 2018 election? Shouldn't this happen every year in CA then this widespread? I just don't believe it. I do believe that this part of the ongoing battles between authoritarianism and CA standing up to it, the CA market attracts this type of gaming because of its size and leading place in setting business, specifically regulation, trends. I expect to see lots more gaming over the next 5+ years.

The 2018 California fires were massive and the cause was listed as part of climate change and dry vegetation, so many fires, so widespread. It was predicted in August 2018 there would be more fires and that is a perfect opportunity for a disaster capitalist to game it [4].

Many different factors led to the 2018 California wildfire season becoming so destructive. A combination of an increased amount of natural fuel and compounding atmospheric conditions linked to global warming led to a series of destructive fires. Recent research on wildfires in California, published in August 2018, predicted an increase in the number of wildfires as a consequence of climate change. Humans have been recorded as the main cause of wildfires in California. Various causes, both intentional and accidental, such as arson, unattended campfires, fireworks, cigarettes, cars, and power lines have contributed to this increase in the number of fires. Updating equipment, ensuring forest maintenance is being completed, and having oversight by state and federal governments are some of the mitigating actions that can reduce the risk of wildfires. [4]

The disaster capitalists[1][2] are in charge again, to the chagrin of fair market capitalists who see these types of players as rogue agents that are looking to break down markets in the worst way because they know emergency money gets approved easier and can just as easily be looted and when you break a market you know which way it is going and can short and distort play it. Disaster capitalist approach is all over our current economy from Puerto Rico to the trade war to everything internally from policy to regulation. 9/11 set a bad precedent with how we react to these events and a dark disaster/emergency market cadence has emerged.

[1] https://www.youtube.com/watch?v=JG9CM_J00bw

[2] https://www.theguardian.com/world/2018/aug/08/naomi-klein-in...

[3] https://en.wikipedia.org/wiki/California_electricity_crisis#...

[4] https://en.wikipedia.org/wiki/2018_California_wildfires

[5] https://en.wikipedia.org/wiki/California_electricity_crisis#...

reddog• 7 years ago

I am gobsmacked that the state of California is allowing PG&E to downgrade their power infrastructure to near third world status.

Next time there's an Amazon HQ2 type competition between regions look for killer bullet points like "Texas: at least we have electricity!"

hn_throwaway_992• 7 years ago

While I see lots of problems with PG&E, the fact that they can basically face unlimited liability from something that is nowhere near entirely their fault (i.e. PG&E may be responsible for their equipment but the fact that climate change means one small spark is more likely to cause billions in damages and widespread destruction isn't PG&E's fault) means the system is broken.

This is a case where normal tort liability makes for a failed system. Would be much better if there was a regulated system describing what PG&E is responsible for, and for building up a reserve for the fires that are inevitable.

Someone1234• 7 years ago

So PG&E get to make unlimited profits but the public has to eat the cost of their liabilities?

They should just be a public utility in that case. Since someone is going to wind up eating the costs, and if not PG&E, then the public/taxpayer. Therefore may have well cut out the profit inefficiency and use that money to maintain their equipment correctly (or pay for damages).

Private entities running natural monopolies never made sense to me anyway. PG&E don't even pretend to do it well.

cgriswald• 7 years ago

That’s like saying a drunk driver isn’t entirely to blame for killing pedestrians because there are more people walking about these days.

The conditions under which these fires have started were not impossible in the past. Nor are those conditions even necessary for a fire. Any increased likelihood now is irrelevant since proper maintenance ought always have been done.

tomohawk2• 7 years ago

Through their actions, CA has practically required it.

Who is John Galt?

tzs• 7 years ago

Next time there's an Amazon HQ2 type competition between regions look for killer bullet points like "Texas: at least we have electricity!"

...just be sure to budget for the occasional 36000% price spike [1]!

[1] https://www.dallasnews.com/business/energy/2019/08/12/searin...

maliker• 7 years ago

The rest of the electric utility industry sees California as a troubled place ever since the days of rolling blackouts from Enron's market manipulation. I'm not sure if it's the regulatory environment or the market or utility management or what, but they've had a lot of problems.

It will also be interesting to see how California deals with blackouts as they pursue their renewable energy targets. The average day with renewables is not a problem, but once we get to a majority renewable grid and there's a multi-day stretch of low solar and wind output, it will be interesting to see whether they can deploy enough gas, storage and conservation to cover the demand. ERCOT (Texas) almost had blackouts this summer when low wind and high demand led to a $90/kWh energy price.

Blackouts aren't the end of the world, but more of them will force us to deploy backup power much more aggressively than we do now.

ctdonath2• 7 years ago

Maybe PG&E should just declare bankruptcy, decommission equipment, gather up the power lines, and sell it all as scrap.

PG&E would no longer be an issue, and everyone would have an incentive to install home solar or other locally renewable energy sources. ... maybe that’s the plan.

jshaqaw• 7 years ago

PG&E has declared bankruptcy.

ctdonath2• 7 years ago

Read the rest of the sentence: “decommission equipment, gather up the power lines, and sell it all as scrap.”

jusob• 7 years ago

My electricity was shut down for 15 hours. There was no wind, no heat and I live in a city. At least in the South Bay, there was no wind at all.

Do California’s Blackouts Make Sense?

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