Next PG&E Blackout Will Cut Lights to 1.8 Million Californians

(Bloomberg) -- More than 1.8 million Californians will go dark starting Tuesday in the latest mass blackout that bankrupt utility giant PG&E Corp. is orchestrating to keep its power lines from starting wildfires.

PG&E will start cutting the lights to as many as 605,000 customers in parts of the San Francisco Bay Area, California’s iconic wine country and near Sacramento, to keep high winds from knocking down its equipment and sparking blazes. Gusts are forecast to pick up early Tuesday and die down by Wednesday.

The company is preparing for the blackout even as more than 3 million people are recovering from its last. Over the weekend, the utility carried out its largest shutoff yet, affecting as much as one-sixth of its total customers. Much of the region remained dark on Monday, including large swaths of the Bay Area, and many may not get their service restored by the time the next outage hits.

The blackouts and fires follow a string of deadly blazes in 2017 and 2018 that saddled PG&E with an estimated $30 billion in liabilities, forcing it into bankruptcy. The company has since been taking increasingly extreme measures to avoid more fires. Its strategy of intentionally cutting power to millions has drawn widespread outrage from both customers and state lawmakers. And still, fires keep coming.

Next PG&E Blackout Will Cut Lights to 1.8 Million Californians

Almost 200,000 people were forced to evacuate in Sonoma County’s famed wine country while fast-spreading blazes are also prompting residents in tony parts of Los Angeles to flee. Governor Gavin Newsom has declared an emergency, and wind gusts are expected to whip the scarred landscape through at least Thursday.

“Leave,” Los Angeles Mayor Eric Garcetti said at a press conference Monday morning. “The only thing you cannot replace is you and your family. So get your loved ones, your pets and leave.”

On Monday, PG&E filed a report with state regulators saying its equipment may have ignited a fire that destroyed a tennis club in the San Francisco suburb of Lafayette. Fire officials in the Silicon Valley town of Milpitas told the utility they’re investigating whether one of its lines caused sparked a blaze that damaged four homes. And the blaze in Sonoma County, called the Kincade fire, was reported minutes after a PG&E line in the area malfunctioned. Firefighters have not determined the cause of any of those blazes.

PG&E shares sank 24% Monday to $3.80, a record low. Its bonds plummeted as investors feared more disaster-related charges are looming for the company.

Fires are also raging in Southern California. Near Los Angeles, a brush fire that’s burned more than 600 acres forced evacuations from Mulholland Drive south to the Pacific Ocean. The nearby Getty Center art museum has thus far been spared. A second blaze in the region, called the Tick fire, has forced tens of thousands to flee.

As fires engulfed hillsides, scrub land and vineyards, smoke is blanketing some cities. Commuters walked through San Francisco wearing face masks Monday. At one point, Oakland had the fourth-worst air quality in the U.S.

Next PG&E Blackout Will Cut Lights to 1.8 Million Californians

State regulators said Monday they would open a probe into the mass blackouts to make sure rules were followed and if any violations occurred.

“The state cannot continue to experience PSPS events on the scope and scale Californians have experienced this month, nor should Californians be subject to the poor execution that PG&E in particular has exhibited,” said President Marybel Batjer.

The fires have already damaged about $25.4 billion in property, said Chuck Watson, disaster modeler at Enki Research. The Kincade fire has cost $10.6 billion. In Southern California, the tally is $14.8 billion, mainly from the Tick, Getty and Saddle Ridge blazes.

While PG&E executives said they would try to restore power to everyone who lost it before the next blackout began, they warned that they might not have time. Some customers, they said, might stay in the dark for days.

The outages are extending to Southern California, where Edison International said about 25,000 customers were without power and another 350,000 homes and businesses could follow.

Next PG&E Blackout Will Cut Lights to 1.8 Million Californians

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.

©2019 Bloomberg L.P.

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