Californians Pay Billions for Power Companies’ Wildfire Prevention Efforts. Are They Cost-Effective?

“It just takes the wrong ignition … under the right conditions, to have a catastrophic fire,” Thomas Jacobs said. “But are we in a better place? The numbers seem to indicate we’re moving in the right direction.”

PG&E has installed more than 1,500 weather stations and 600 AI-enabled cameras to detect severe weather and ignitions, Singh said. Enhanced safety systems now cut power to lines within a tenth of a second. The utility has also cleared vegetation, ordered power shutoffs during high-risk times, insulated lines and buried some lines underground.

“Where do we see the greatest risk?” Singh said the company asks itself, and “What is the most cost-effective way to be able to reduce that risk for every dollar that’s spent?”

Southern California Edison said since its investments began in 2019, the risk of catastrophic wildfire in its system has dropped between 85% and 90%. The company plans to bury 600 miles of lines in high-risk areas but it is relying much more on less-expensive insulating technology, which has already been used on more than 6,000 miles of lines.

SDG&E began prioritizing wildfire prevention, including underground and insulated lines, a decade ahead of the other two utilities after its lines sparked three major fires in 2007. The company has avoided a catastrophic fire since 2007 despite operating in one of the nation’s most fire-prone regions.

“We continue to double down and do and do more tomorrow than we did yesterday,” said Brian D’Agostino, the utility’s vice president of wildfire and climate science. “We don’t take a single day without a fire for granted.”

Wildfire spending — ‘an odd system’

Critics say the scramble to address the wildfire crisis has left the state vulnerable to overspending by utilities.

About two months before the Camp and Woolsey fires, outgoing Gov. Jerry Brown in 2018 signed a $1 billion plan to thin forests and clear out the tinderbox of California’s dead and dying trees. That measure came too late to prevent the devastation.

However, it opened the door to increased spending by utilities beyond limits set in the highly deliberative process known as their general rate cases, which determine what Californians pay.

Newsom and the Legislature in 2019 created a $21 billion wildfire fund paid for by Wall Street investors and California ratepayers to help PG&E exit bankruptcy and protect utilities from being financially threatened by the wildfires they cause. The utilities cannot access the state’s $21 billion fund unless the energy safety office approves their wildfire plans.

One problem, critics say, is that the safety plans are approved by one government entity while the spending to carry them out is approved by another.

“We now have this very odd system,” said Lynch, who served on the utilities commission from 2000 through 2004. “The Office of Energy Infrastructure Safety reviews the plans, puts out guidelines, but then the (commission) still has to ratify the plans so that the utilities can take money from their ratepayers.”

Wildfire safety goes underground

On a temperate, clear morning in the Sierra Nevada foothills east of Placerville in October, a PG&E construction crew donned yellow jackets and safety helmets and went about the work of burying power lines along a narrow, wooded road. Overhead lines snaked through thick trees in this area — prime fire risk territory. The workers buried the lines in a trench that had been dug using a heavy piece of equipment designed to cut hard concrete and soil.

Once those power lines are buried and activated, their risk of fires is all but eliminated.

Burying lines in high-risk areas improves reliability amid rising wildfire risks and extreme weather, PG&E’s Singh said. Though it’s pricier up front, it eliminates the yearly expense of trimming trees and vegetation, which makes it a better, long-run value for customers, he said.

“Underground is a no-brainer when you look at it from that lens,” Singh said.

However, the high cost and the time it takes to do the work have left some skeptical. The company has buried 800 miles of wires underground since 2021 and plans to bury more than 1,600 by the end of 2026. It aims to get the cost per mile down to $2.8 million by the end of 2026 from $3 million at the end of 2023.

Michael Campbell, assistant deputy director of energy for the public advocates office, a state entity that represents utility customers, said PG&E should consider other means of preventing wildfire, like insulated wires, otherwise known as “covered conductors.” This can be deployed more quickly and at a lower cost, he said and is effective when combined with operational techniques like fast trip settings and power safety shutoffs.

“In some areas, (burying power lines) really is the correct approach to minimize risk. But it’s also very slow and very expensive, and so there’s a need to address safety in as many miles as quickly as possible, to reduce overall risk,” Campbell said.

The utilities commission has taken a proof-of-concept approach: The commission scaled back PG&E’s plan to bury 2,000 miles through 2026 to 1,230. The commission approved installing covered conductors, or insulated power lines, over 778 miles.

Lynch is skeptical of utilities and their big projects because they can profit from them, and Mark Toney, executive director of The Utility Reform Network, says too much spending is going unchecked.

The sense of urgency following fires paved the way for the multi-billion surge in spending. The commission authorized PG&E, for instance, to spend $4.66 billion on wildfire costs from 2020 through 2022, but the company ultimately spent $11.7 billion and is seeking payment through utility bills, according to The Utility Reform Network.

Audits of nearly $2.5 billion in 2019 and 2020 wildfire spending found some costs from PG&E, Southern California Edison and SDG&E may already have been covered by previously approved rates, or more documentation was needed to confirm they had not been covered.

The utilities challenged many of the findings, saying they didn’t plan to claim some of the costs, and disputed the auditor’s conclusions as well as some of their calculations. In interviews with CalMatters, representatives for all three utilities said the process in place to oversee wildfire spending at the utilities commission was robust and thorough.

Geraghty, of SDG&E, said the process is transparent, with public comment periods and hearings. Regarding critics who say wildfire prevention should be cheaper and faster, “every one of them had that voice, had that say, had that transparency through this entire process,” he said.

Some expenses, such as operating costs, have an immediate impact on how much people pay in their bills. But other costs, such as long-term investments in insulating or burying power lines, are stretched out over years, meaning they add to bills for decades to come.

Over time, these capital costs are growing due to factors like depreciation and the returns utilities are allowed to generate. This creates a compounding effect, meaning wildfire-related capital costs will take up an increasing share of what California customers are charged in the future.

Feeling the pinch in Oakland, the fear near Malibu

The burden of the rising bills is hitting many Californians hard. Roshonda Wilson, of Oakland, couldn’t afford to pay her power bill even though she said she watches television only after sunset, refrains from running unnecessary appliances and is hyper-aware of every energy-consuming action in her household. At one point, PG&E turned her power off this year. “I couldn’t catch up,” she said.

On the other hand, Moss — who has weathered not just the trauma of losing her home near Malibu but also the difficult process of rebuilding — says the expensive wildfire prevention work is critical to prevent more tragedies.

“Even though (burying power lines) is costly and time-consuming, the cost and time of not doing it is starting to seem more devastating to a broader swath of people,” Moss said.

Nevertheless, the rate hikes have alarmed climate activists who fear rising power bills in California may trigger a backlash against the state’s effort to switch to renewable energy and influence other states, too.

“The state, we fear, will start to lose the political will to keep pushing on,” said Mohit Chhabra, a senior scientist with the Natural Resources Defense Council. “The problem with that is not that California will be a few years late — we can handle that. But the impact on all the other states who are looking at California.”

Natasha Uzcátegui-Liggett and Miguel Gutierrez Jr. contributed to this report.