Utilities, wildfire, and disorganized climate adaptation

Abstract

The bankruptcy of PG&E, the nation’s largest investor owned utility, in 2018, was a milestone for wildfire and climate related impacts. This was the first major corporation to face reorganization due to events attributable to climate change. Wildfire related costs, the bankruptcy, and subsequent reorganization place significant constraints on the future of energy policy in California, even as the state prioritizes electrification of vehicles and buildings. Utility caused wildfires are not new. They are as old as utilities. But unwise fuels management, development in the WUI, and subtle changes in fall California climate have undermined the assumptions that govern utility distribution system design, operation, and maintenance in California and likely most of the western US. The response has been fourfold: deployment of weather stations, vegetation management, hardening and sectionalization of distribution infrastructure, and a willingness to turn off power when wind and fuel conditions create substantial risk. All of this significantly raises the cost of serving wildfire prone areas and is leading to double digit rate increases across the IOUs and significant decreases in customer reliability. In addition, in order to stabilize the utility financial situation in 2019, the State created the Wildfire Fund. Ultimately, if California is to maintain energy access for middle and low-income residents, and invest in grid upgrades necessary to enable vehicle and building electrification, utilities must spend less on wildfire. The best solution will likely emerge from a full consideration of the cost-effectiveness of different portfolios of community mitigation investment that include grid hardening, fuels reduction adjacent to homes, home hardening, and power shutoffs paired with backup generation. In the end, the deep lesson from the wildfire-utility crisis in California is that secondary and unanticipated effects of a warming climate can surprise even those that are looking hard for climate impacts, forcing “disorganized” adjustment of practices and markets, with substantially higher costs of climate adaptation. 

Biography

Michael Wara is a lawyer and scholar focused on climate and energy policy. Wara is Director of the Climate and Energy Policy Program and a senior research scholar at the Stanford Woods Institute for the Environment, where he provides fact-based, bipartisan, technical and legal assistance to policymakers engaged in the development of novel climate and energy law and regulation. He also facilitates the connection of Stanford faculty with cutting edge policy debates on climate and energy, leveraging Stanford’s energy and climate expertise to craft real world solutions to these challenges. Wara’s legal and policy scholarship focuses on wildfire, carbon pricing, energy innovation, and regulated industries. He collaborates with economists, engineers and scientists in research on the design and evaluation of technical and regulatory solutions to climate and energy challenges. He is also an expert on international environmental law with a particular focus on the ozone and climate treaty regimes.

Wara was appointed in 2019 to the California Wildfire Commission which made recommendations to the state on better managing utility caused wildfires and currently serves on the California Catastrophe Response Council, the oversight board of the Wildfire Fund. 

Prior to joining Woods, Wara was an associate professor at Stanford Law School and an associate in Holland & Knight’s government practice. He received his J.D. from Stanford Law School and his Ph.D. in Ocean Sciences from the University of California at Santa Cruz.

  

Seminar Recording