Over the past ten years California’s four large investor-owned utilities (IOUs) have been rocked by disturbances. The 2010 San Bruno natural gas line explosion was followed by more than 2,000 wildfires in the ensuing decade, sparked by IOU equipment. The 2017 Camp Fire, caused by a Pacific Gas and Electric Company (PG&E) transmission line, was the worst conflagration in state history, with 53,360 acres burned, 18,804 structures destroyed, and 86 deaths.
In October PG&E notified state regulators that a transmission tower malfunctioned near the spot where the Kincade Fire ignited in northern Sonoma County. That fire consumed in excess of 78,000 acres – more than double the size of San Francisco – demolished 374 structures, including 174 residences, and forced hundreds of thousands to flee their homes.
The 2015 Aliso Canyon gas leak revealed vulnerabilities in Southern California Gas Company’s system. Southern California Edison Company’s (SCE) San Onofre nuclear facility closed in 2013; PG&E’s Diablo Canyon plant is expected to follow by 2025. This year, the one millionth solar roof system was installed in California, a fifty-fold increase since 2006. State energy and climate change policies have force-marched the IOUs towards dramatically reducing their polluting air emissions, putting intense pressure on institutions that grew-up turning large fossil fuel valves on and off.
Because of this stew of mishaps, disruptive technologies, and environmental and policy imperatives, California’s electricity prices are jumping. Already providing amongst the most expensive electricity service in the United States, all three electricity IOUs have asked the CPUC to raise their rates by upwards of 36 percent over the next two years.
At the same time, IOUs are trying to reduce the risk of electricity-sparked wildfires by implementing Public Safety Power Shutoffs, which has significantly degraded electric dependability. Higher rates and lower reliability are reinforcing existing energy inequities. Poorer communities and residents are less able to stay cool in the rising summer heat and pay for critical health, safety and community facilities and services. Ballooning electricity costs will ultimately muffle California’s economic growth, particularly in sectors, such as food processing, that require significant refrigeration.
The economic impacts of shutoffs are also significant. Last fall, amid peak fire season and forecasts of wind gusts of up to 90 miles an hour, PG&E cut power multiple times to upwards of one million meters, totaling about three million people. The preventative measure — which forced businesses and schools to close, and municipalities to scramble to maintain essential infrastructure — may have cost the California economy in the range of $2.5 billion for each power shutoff, based on Lawrence Berkeley National Laboratory data. Preventing fires may justify forced power outages, at least until the grid is sufficiently modified to stand on its own, but they’re costly, disruptive and potentially deadly when they impact people’s access to emergency services.
These recurring and worsening events have illuminated the vulnerabilities of antiquated “spoke and wheels” energy monopolies, in which large California utilities control electricity conveyance through massive centralized power plants and multiple-miles-long transmission networks. This state-sponsored structure, which is steadily being hollowed-out by distributed generation (DG), such as photovoltaics, is misaligned with the low-carbon, resilient, energy future Californians want and need, and no longer matches the underlying technology available to provide power.
Emerging as an alternative to monopolistic and inflexible IOUs are local governments (LG). Local governments, responsible for land use planning and building permitting, are well positioned to encourage the transition to all-electric buildings, speed adoption of resilient microgrids, and deploy necessary infrastructure to support the coming herds of electric vehicles. Over the past 20 years LGs have developed significant expertise and capacity to market and implement energy efficiency and distributed energy resources (DERs) – such as LEDs and storage – to vulnerable and complicated populations and are well positioned to help craft the next generation of energy savings and management assistance programs that focus on changes in our electricity consumption patterns.
As the electricity grid and energy supplies evolve from monopolies to a diversity of DERs and providers, functions that were once core to utilities’ operations and profitability are now being taken up by local governments and private sector third parties. These include government-led regional energy networks, which deliver energy efficiency services; and community choice aggregators (CCAs) which buy and sell retail energy and develop DG. Since the launch of Marin Clean Energy in 2010, 19 CCAs have formed throughout the state, with more on the way. The California Public Utility Commission estimates that as much as 85 percent of utility customers will receive power through CCAs, third party providers, or DG rather than an IOU well before the end of the next decade. Distribution is increasingly important; large generating facilities and transmission lines less so.
LGs should continue to help usher in the new clean energy era by performing functions which IOUs are no longer best suited for or even want to do. For example, LGs are already accountable for park and open space maintenance and the care of street trees and are well-positioned to supplement or replace utility vegetation management. This is particularly true for forested jurisdictions, which are grappling with, and paying for, similar wildfire mitigation strategies as the IOUs are being asked to implement by state regulators.
A handful of LGs are considering joining the 46 publicly owned utilities in California. San Francisco wants to takeover PG&E’s distribution system in its jurisdiction. Valley Clean Energy Alliance offered the utility $300 million to acquire distribution infrastructure in Yolo County. The mayors of Oakland, Sacramento and more than a dozen other municipalities, led by San Jose, want to purchase PG&E and turn it into a giant customer-owned cooperative.
Bills tend to be lower for customers served by municipal utilities than by IOUs. For instance, a household using 500 kilowatt hours of electricity in the fall of 2015 would have paid $58 to Sacramento Municipal Utility District; $79 to Los Angeles Municipal Utility District; $93 to PG&E; $97 to SCE; and $116 to SDG&E.
Californians look to their local governments to help them weather storms and earthquakes, fires and power outages, and to ensure fair access to needed services. LGs have demonstrated their ability to collaborate with one another, the IOUs, civic groups, and others to deliver outsized benefits to their communities. In the face of economic, equity, and environmental challenges, it’s time for local governments to replace regional monopolies as our primary purveyors of electricity.
