California Faces Another Blackout Amid State of Emergency

(Bloomberg) -- As wildfires trigger a state of emergency, California is bracing for its potentially biggest and longest deliberate blackout yet.

California Governor Gavin Newsom declared a state of emergency Friday in parts of both Northern and Southern California as blazes destroy tens of thousands of acres and send residents fleeing. To keep power lines from sparking more fires, utility giant PG&E Corp. plans to cut electricity to potentially millions of people Saturday as violent winds hit the region.

“None of us wants to be living without power,” PG&E Chief Executive Officer Bill Johnson said at a media briefing. “But we have a single, simple and I think really important objective at work here, which is to avoid catastrophic wildfire.”

California utilities are resorting to bigger and bigger blackouts to prevent fires since PG&E’s equipment sparked a series of blazes in 2017 and 2018, saddling the company with an estimated $30 billion in liabilities and forcing it into bankruptcy. Leaving millions in the dark, however, has led to debate over how far California must go to prevent fires during windstorms. And despite the shutoffs, fires continue to burn.

PG&E is warning that this weekend’s shutoffs could rival those of Oct. 9, when a record 2 million people lost service for about a day. This time, though, the company is warning counties that the power may be out for two days. PG&E has begun notifying local authorities it is planning to cut power, including to nearly 57,000 homes and businesses in Alameda County, home to Berkeley and Oakland.

Other parts of heavily populated cities across the San Francisco Bay area could also lose electricity, including San Jose. The city of San Francisco itself, so far, appears to be spared.

Meanwhile, wildfires are raging at both ends of California. Near Los Angeles, blazes have prompted authorities to order 40,000 evacuations. And above San Francisco, a blaze is raging amid the vineyards of Sonoma County.

The fire in the north, called the Kincade fire, prompted authorities to order more than 2,000 people to evacuate. As of Friday afternoon, it had ripped through about 22,000 acres and was just 5% contained. PG&E reported that a power line went down minutes before the blaze erupted.

As the fire spread, PG&E’s shares plummeted 31% to $5.00, a record low. Shares of Edison International fell 8.5%, the most in 11 months, as fires burned in its service territory in Southern California.

While many of the fires are burning open hillsides and scrub lands, others threaten populated areas. All told, there’s about $12 billion worth of property within a mile of the active fires, said Chuck Watson, a disaster modeler with Enki 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.

While winds have ebbed in much of the state, they are forecast to return with vengeance on Saturday and Sunday. In Northern California, gusts could be as high as 55 miles (88 kilometers) per hour, according to the National Weather Service.

Utilities in Southern California are cutting power, too. Both Edison and Sempra Energy, which serves the San Diego area, had about 20,000 homes and businesses without electricity as of noon local time.

--With assistance from Will Wade, Rick Green and Nic Querolo.

To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net;David R. Baker in San Francisco at dbaker116@bloomberg.net;Brian K. Sullivan in Boston at bsullivan10@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, ;Tina Davis at tinadavis@bloomberg.net, Joe Ryan, Will Wade

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