What is the Economic Impact of PG&E's Planned Power Outages?

Today marks the beginning of multiple planned power outages by PG&E in California. All told, the outages could impact as many as 800,000 “customers” — which translates to over 2 million actual people along with their homes and businesses.

All of this is billed as a preventative measure to avoid a repeat of the wildfires sparked by PG&E’s fallen power lines that drove the company into bankruptcy after the devastating wildfires of 2017. With dry fall conditions and strong winds forecasted, the company seems to be erring on the side of extreme caution to preempt a similar calamity and the consequent legal liability. Two years, almost to the day, of the wildfires in Northern California, it’s easy to see this as an understandably precautionary decision.

But setting aside the company’s rhetoric about acting in the interest of public safety, the economic reality of their action is that PG&E is making their customers pay to avoid the potential risk of their own further legal liability. Shutting off power, potentially for multiple days, to millions of people and businesses has an incalculable but real economic impact on the very communities they are ostensibly protecting.

The most immediate economic impact is on day-to-day business activity. People don’t go to work. Shops and restaurants are closed. Factories are idle. But a second financial consequence is the loss of goods and services that are reliant on power. Food spoils. Netflix and Apple TV are not watched. Anything we would have purchased or consumed, doesn’t happen and the value of that product is forever lost.

These economic impacts may each be small on their own, but the aggregate is enormous. And, though paid by millions of individuals, these costs are real — not the theoretical costs of another legal liability for wildfires that haven’t yet occurred. Essentially, PG&E is saying: we’d rather have all of our customers bear small costs and inconveniences, rather than risk us facing another bankruptcy-inducing legal liability.

And bear it we are. With our candles ready and our iPhones and laptops fully charged. But I can’t help but think this is an expense that could be avoided. In this age of AI and real-time analytics, is it really that hard or expensive to monitor PG&E’s electrical grid? To know if, when and where a line has fallen? To have the capacity to respond to such incidents before they become wildfires?

For that matter, is it that hard to assess the existing infrastructure, as the company has proactively informed us they are doing dozens of times in the last two years, and make the necessary improvements to ensure power lines won’t fall and become fire hazards? Maybe it is. Or maybe it’s just more costly to do so than a bankrupt company can afford. And so we, the customers, will pay each in our respective ways.