Life on the lines
We’re spending billions to buy the power grid, but is it an asset or liability?
Much like an enraptured buyer of a stately Victorian home, ignoring disclosure of dry rot, failing plumbing and shoddy wiring, the state’s intended takeover of California’s electrical transmission grid could prove to be more work than it’s worth.
Governor Gray Davis has signed a $2.76 billion contract to purchase Southern California Edison’s portion of the grid, and is pursuing plans to buy the rest of the grid from Pacific Gas & Electric and Sempra Energy, San Diego Gas & Electric’s parent company.
Controlling the grid could give Davis more leverage with the Federal Energy Regulatory Commission and provide the state with approximately $1.4 billion a year in gross revenue from ratepayers. Yet, in many respects, the grid is more of a liability than an asset.
Maintaining the vast and aging network of transmission lines requires constant vigilance by an army of line workers, enormous maintenance costs for tree trimming and power line work, and huge risks and liabilities associated with summer fires and winter storms.
Just last month, PG&E and Edison attempted to cut staggering maintenance costs by laying off 3,000 utility line workers, a move blocked by the Public Utilities Commission due to concerns about service and reliability. A statement from the Coalition of Utility Employees said, “Such layoffs would deliver a devastating blow to California’s already beleaguered energy customers.”
In addition to financial costs, California will also acquire any public relations problems related to service and outages along the hundreds of thousands of miles of transmission and distribution lines once ownership of the power grid is transferred to the state.
PG&E’s portion of the grid in Central and Northern California receives power from generating plants that produce electricity through hydropower, gas-fired or geothermal steam and nuclear energy.
This electricity is carried on a superhighway of 500,000-volt transmission lines and delivered to substations where transformers “step down” voltage to distribution levels.
From substations, circuits serving neighborhoods carry reduced voltages of 12,000 to 21,000 volts, which is delivered through individual service drops and further reduced to 110 or 220 volts for residential and business customers.
“The thin wires on top [of a power pole] with gray insulators are high-voltage. The transformer, which looks like a gray garbage can, transforms voltages down [to household levels],” according to Landis Martilla, senior business representative of the International Brotherhood of Electrical Workers (IBEW) Local 1245 and a former PG&E lineman and tree-trimmer.
It’s those thin top wires that cause problems as tree limbs grow near. Martilla says that the low-voltage lines that link homes and businesses to the grid generally don’t start fires from tree contact. PG&E, the nation’s largest investor-owned utility, has had its problems with trees and wires meeting, as will the state, when it assumes ownership of the grid.
An internal PG&E memo, presented as evidence in court proceedings regarding the 1994 Trauner Fire in Nevada County, acknowledged responsibility for hundreds of fires caused by trees growing too close to the lines. Since then, the costs of maintaining the grid have risen substantially.
The Trauner Fire was started by an untrimmed tree branch that repeatedly rubbed against a 21,000-volt power line, causing sparks to ignite branches that fell onto dry grass and leaves. That fire destroyed 12 homes, 22 other structures, burned 500 acres and involved 103 claimants.
Shortly afterward, a random inspection nearby conducted by the California Department of Forestry (CDF) revealed 767 violations of the Public Resource Code in which trees were too close to power lines. Of those, 196 violations were “burners,” instances where lines had singed vegetation. As California assumes responsibility for the grid, maintenance and resultant liability become state problems.
PG&E was found guilty of 739 misdemeanor counts for criminal negligence in not maintaining fire-safe clearance around its poles and lines. The company was declared criminally responsible for causing the fire and fined nearly $2 million.
This was not an isolated incident. In 1993, CDF identified 2,000 violations in Butte and Placer Counties. Jenny Ross, the Nevada County deputy district attorney who prosecuted the Trauner Fire case, said that 75,000 violations were reported in PG&E’s Sierra Division, with 50,000 of them considered “burners.”
Adding fuel to the fire was the revelation that PG&E management repeatedly ignored pleas from two of their executives, as well as those from workers and contractors, to catch up on the backlog of vegetation maintenance work to prevent increasing fire danger.
Instead, CDF investigators charged that PG&E intentionally undercut its tree-trimming budget by $80 million over the course of 1987-1994, after it had asked for and received a 12.4 percent rate increase from the Public Utilities Commission in 1985 for tree trimming to prevent fire and power outages.
In addition, CDF agents discovered that PG&E management believed it was cheaper to pay for property damage claims resulting from fires, rather than do the required maintenance. Such a revelation would be even more problematic if state officials were involved, but avoiding that means higher maintenance costs.
Ultimately, PG&E’s tree-trimming contractor, Utility Tree, was ruled liable for all damage claims resulting from the Trauner Fire and paid upwards of $7 million.
Exactly one year after the Trauner Fire, and days after the utility was charged with criminal misconduct by the Nevada County District Attorney’s Office, PG&E’s tree-trimming budget was beefed up to $64 million. Last year, the budget topped out at $133 million, further costs that will be assumed by taxpayers after the grid becomes a state asset.
When the bough breaks
For a company that maintained gross profits of more than $1 billion since 1987, PG&E’s outlay of $390,000 to Placer County for 1,114 violations of vegetation-clearance laws is pocket change. Even the $8.3 million Assistant U.S. Attorney Michael Hirst recovered on a fire in the El Dorado National Forest, was probably cost-effective compared to vegetation trimming.
As the Trauner fire was being litigated, PG&E lobbyists were attempting to lessen the allowable space between trees and power lines down from the mandated 18 inches. A 1995 subpoenaed memo says, “PG&E believes 6 inches is a more reasonable clearance.”
After the criminal conviction in the Trauner Fire, PG&E settled similar claims in Sonoma, Placer, Monterey, Tuolumne and Butte counties. According to Mike Ferguson, Nevada County district attorney, “The PUC, based on the results of our investigation, applied it on a statewide basis and got a settlement of $20 to $30 million.”
Considering that PG&E’s system consists of more than 105,000 miles of distribution and transmission lines with 2.1 million poles and 5.8 million trees in proximity, keeping trees from touching wires becomes a Herculean task. And state ownership of the grid will transfer those costs and liabilities to taxpayers.
California PUC General Order 95 mandates that 18-inch clearance must be maintained at all times, with 4-foot clearance in some areas during fire season. Since fire season in California runs from May until November, some might wonder why Gray Davis so desperately wants to purchase the lines at all.
In Nevada County alone, there are 15 trimming crews and eight contract foresters who continuously patrol the lines. Annually, all 25 circuits totaling 1,547 miles are checked.
“We look at every single pole, cross-arm, and insulator,” lineman Jim Edwards says. “We have to make sure wire is a minimum 23 feet from the ground, cross-arms aren’t broken and poles aren’t rotten.”
Chuck Thomas, a PG&E supervisor in Marysville said, “Since 1996, we’ve taken a hard line on maintenance. We have done three to four times the maintenance per year as we’ve done in the past.”
CDF Battalion Chief Jim Hoffmier agrees. “Since the trial, their performance has been very good. More [tree-trimming] crews are kept on longer during the year [and] they’re tracking different tree species that grow faster.”
Yet Jerome Myers, owner of Arbor 11 Tree Service, says those aggressive and expensive efforts can create even more work over the long run: “You can get 3 feet of growth in a year if you cut a tree back drastically.”
In months when fire isn’t a concern, winter storms frequently down trees. This February, up to 4 feet of snow fell in Nevada City, the heaviest snowfall since 1990. Power outages, affecting up to 15,000 residents, resulted from transformer burnout, downed and arcing lines. Some people endured a week without power.
Countless fallen trees and branches crossed the lines. In one 7-mile stretch along a county road, more than 100 trees and branches had fallen across the wires.
Lisa Randle, PG&E’s media representative, said the numerous and prolonged outages resulted from low elevation snowfall: “We can be in compliance and trees [that tip over or break branches] can still come into contact with the lines.”
Due to back-to-back storms, there was little opportunity to get helicopters up to patrol lines. Randle said: “The access was difficult. We were restricted to patrolling lines with snowmobiles and by snowshoe. We moved in crews from Sacramento. Over 100 personnel were working to restore power.”
According to Randle, the main problem was oak trees, which can’t withstand snow and break easily. Conifers aren’t usually affected other than young pine trees, which can bend into a line.
“Severe wind, cold temperatures and freezing can cause problems with trees that don’t meet the criteria to be trimmed or removed. A healthy tree can freeze and branches snap off,” Hoffmier said.
Line worker Jim Edwards says that pole construction and lines are oversized in higher elevations to handle snowload. But during this year’s storm, “in Nevada City, the same line blew down three times due to snow, wind and trees.”
Still, even with the increased workload, Edwards says crews have been cut back.
“We used to have 13 to 14 line crews in Marysville with three or four men per crew. Now we’re down to four line crews. We can’t attack the storms like we used to. We used to work all night,” he said.
In this year’s storms, “our crews were sent home at night, then came back the next morning. I was in the Oregon Peak area. We had to patrol by helicopter. It took almost four days to get that line back in.”
The governor’s intended purchase comes with a huge maintenance bill. California cannot afford to follow the lead of PG&E’s past corporate policy of deferred maintenance, both for financial and public relations reasons.
Due diligence requires that all these expenses be factored into the purchase price so that taxpayers don’t suffer buyer’s remorse. In paying 2.3 times the book value for Edison’s asset, yielding the company a $1.5 billion profit, Davis may be guided more by enthusiasm and the desire to bail out a debt-ridden corporation than the ancient principle of caveat emptor, or buyer beware.