On the day that I spoke with Katherine Blunt, the author of California Burning: The Fall of Pacific Gas and Electric—And What It Means for America’s Power Grid, firefighters attacked a 1.1-acre blaze that had broken out the day before north of Boulder Creek, in the Santa Cruz Mountains.
The Hartman Fire devoured a single residential structure; it would take at least six different agencies nearly 24 hours to put it out.
But that was not the only wildfire that sparked around then, at the tail end of August. The Gulch Fire, in Los Angeles County, started on Aug. 29 and burned 113 acres—the same day the McCovey Fire began its run through 25 acres in Humboldt County. On Aug. 31, two larger fires began: the Route Fire (5,208 acres in Los Angeles County) and the Border 32 Incident (4,456 acres in San Diego County). And those are just a few of the more than 6,382 incidents in 2022 that were logged by Cal Fire by mid-September.
In the Hartman Fire, there was no immediate indication that electrical wires were to blame. And PG&E was not at fault for the 2020 CZU Lightning Complex, which destroyed more than 900 homes in the Santa Cruz Mountains. But its equipment has sparked other conflagrations in recent years—including the Zogg Fire, the Camp Fire (the state’s deadliest) and the Dixie Fire (its largest single fire).
In tracing this trail of controversies in California Burning, Katherine Blunt has merged an exhaustive corporate compendium, criminal procedural and courtroom drama into a single narrative. It sucks you in with inviting prose, while dishing detailed explanations about one of the greatest miracles of modern life—illumination.
Blunt is a wizard with repetition. She helpfully reminds you of personalities, events and concepts while never stepping over the line into redundancy. For example, she takes great care in helping the layperson come to grips with a key concept: electricity firms make profits in California through capital investments, not maintenance work on aging equipment.
A journalist based in the Bay Area, Blunt covers renewable energy and utilities for The Wall Street Journal, and her team’s reporting on PG&E has won a Barlett & Steele award for business investigative journalism, the Thomas L. Stokes award for energy and environmental reporting and also been named a finalist for the Pulitzer Prize.
She’s awash in podcast appearances, interview requests and radio hits, but is particularly pleased that PG&E has said the book will be required reading, internally.
“It’s nice to feel that it could have that kind of value, you know?” says Blunt. “PG&E’s response has been very gracious.”
California Burning is also likely to strike a chord with anyone who lives near the fire-prone wildland urban interface, who are increasingly concerned with both wildfire prevention and power-company transparency amid PG&E’s acknowledgement of failure to communicate with its customers. Blunt has deftly laid out the delicate balance PG&E is now trying to strike in attempting to protect lives and wilderness while delivering the electricity that we all rely upon. She speaks about the book in an interview that has been edited for length and clarity.
Your book is a methodical look into the web of decisions made over the previous century, as we’ve figured out how to bring gas and electricity into our homes. Why did you feel it was necessary to go to that granular level of detail for the reader to be able to understand PG&E’s history?
KATHERINE BLUNT: I think it’s reflective of my style and the way that I think about things. But I also think it is important to spell out how complicated the story is. I mean, when PG&E evokes such ire right across the state of California, it’s lost the trust of a lot of people. And, you know, people might say, “This company has been putting profits over safety for years.” In some ways, that is true. But it is much more complicated than that statement conveys. And I wanted to explain what that actually means in practice for a company like this, and how you can see that sort of systemic breakdown. It’s not the fault of any individual. But by the same token, it’s the responsibility and the fault of all individuals. I think it’s really important, so that you can truly understand what it means for this company to have failed.
A lot of people in the state have been touched by fires. What do you hope that California residents can get out of your book?
Well, a few things. I hope it does justice to the really challenging elements of this story. A lot of people lost homes. They lost loved ones. The loss was really devastating. I think telling that story is important, to remind everyone of the consequences of this sort of failure. That’s one thing. But, I suppose, like with everyone, I hope it helps them develop a more nuanced understanding of PG&E and why it failed. These people feel very victimized, sort of like, the company did this knowingly and intentionally. And that’s sort of true, as we’ve seen with the criminal charges. But it is a company that’s full of hard-working people who don’t mean any harm. And then they are trying to do better going forward. So, it’s doing justice to the stories—the victims—and maybe helping introduce some new elements into the conversation about PG&E.
Your book is a blow-by-blow account of how our energy landscape emerged—with a particular focus on PG&E’s origin story. Despite how it catalogs bureaucratic shifts and the minutiae of deregulation, it was still surprisingly easy to read. What was the key for you to weaving snappy quotes into the book?
The key to writing a book like this is that you do want to make it accessible. And when you’re looking for quotes and other things—like you referenced—it’s, What is representative of the bigger picture that you’re trying to put forward, instead of getting bogged down with the details. And being selective in choosing the sorts of details that keep it interesting. Keep the reader engaged, but also, make the bigger point. Because this is a book that’s meant to zoom out and explain what’s happened, holistically. So, I’m glad you felt it was effective.
One of the points that you hammered on a couple times is how PG&E makes money by buying infrastructure or investing in capital projects, rather than in putting money into maintenance.
It’s a really, really important point, not just to understanding PG&E, but in understanding utilities across the country. In most cases, electricity is provided by what are known as investor-owned utilities. They are regulated entities, but they are also beholden to shareholders. They’re publicly traded corporations. And the way these utility companies make money is unusual. Basically, the regulatory body allows them to make an “authorized rate of return” on what amounts to the value of their overall system. So, it’s what’s known as “rate base.” It’s the sum total of power lines, power plants that they own, gas pipelines. So, by investing capital in the system, it increases the overall value, and therefore, that’s how they earn that “rate of return.”
There’s a different category of spending known as “operations and maintenance.” Collectively, these are expenses, and the company does not earn a return on the day-to-day stuff, like pipeline inspections, powerline inspections, replacing little tiny pieces of hardware. That doesn’t amount to a big capital project. And so, it doesn’t increase the overall value of the system, and therefore they don’t earn a return on it.
The best financial performers in the industry are good at keeping expenses pretty low—since that just comes out of the bottom line—and using the savings to invest as capital. In theory, this should work well. It can work well, but it can be about the tough balance to strike. And PG&E has done pretty poorly at striking this balance over the last 20 years.
One of the most frustrating moments in the book is after PG&E is convicted for the first time, in the San Bruno gas explosion case in 2010, where eight people died. And then suddenly the prosecution drops its ask from half a billion dollars to $3 million. How should we make sense of this?
Basically, the way to make sense of it is: the Penal Code is written for people. It’s not written for corporations. So the statutory maximum fines for a lot of the crimes that a corporation has the capacity to commit, as it turns out, they’re meant to be significant fines for individual people. But if you’ve got a multibillion-dollar corporation, $3 million really doesn’t mean anything. And trying to impose an alternative fine can be really hard. Because you basically have to prove, beyond a reasonable doubt, how much the company’s misdeeds cost the public. And that’s tough. I’d like to look into whether or not there has been much success on this front in terms of prosecuting other companies and imposing alternative fines. But in this case, it was tough. I think that’s why they dropped it. So ultimately, the statutory maximum fines for the crime ended up being just a few million dollars. And it didn’t have much of an effect on the company.
There have been several instances of power outages throughout the Santa Cruz Mountains that, according to PG&E, are a result of new equipment that puts customers’ safety above all else. I’m wondering how you think about the balance that not just PG&E needs to strike, but also other utility companies.
What is remarkable is that after the major fires of 2017 and 2018, PG&E really began employing a new strategy at scale in which, as you say, it preemptively would cut power if big, strong winds picked up and increased the risk of its line sparking. And this strategy in and of itself is a tacit admission that the company cannot provide electricity safely and reliably all the time. Historically, that has been the expectation of all of our utility companies: to provide safe and reliable power at the same time, constantly. And so, you’re beginning to see that relationship break down. I think that there may be a future in which we do have to accept some of these inconveniences for safety, but I don’t think it should be used at scale. I don’t think it should be used with great frequency, because I just don’t think it’s sustainable long term. I think that customers are going to expect more, and rightfully so. I think the challenge here is finding solutions that eliminate—or at least substantially reduce—the need to employ that strategy.
One of the things that PG&E is doing right now is working to underground a large section or swath of IT system—10,000 miles of distribution wire that would really change the risk profile. It would basically eliminate fire risk on the circuits, and make it so that, when the wind picked up, they wouldn’t have to shut off power to those that were running underground. Whether they still need to do public safety power shutoffs elsewhere remains to be seen. They probably will. But yes, I think it’s going to be incumbent upon PG&E and other utilities to really minimize the use of this strategy going forward, to the best of their ability.
Is that a lot, though, 10,000 miles of distribution wire? And also, does that count toward their capital thing too? Or is that under their operations budget?
It is “capital,” so they will earn a return on doing that. 10,000 miles is pretty substantial. And it’s going to be limited to the high-risk fire areas. So, I think it could do a lot. But cost management is going to be a challenge. You know, it’s expensive to do this. And rates in California, as we all know, are very high.
The book is, to some extent, a character drama. Tell me about some of your favorite characters.
Well, yeah, they’re all really interesting. I really enjoyed talking to James Haggerty, who helped lead the federal investigation of a big natural gas pipeline explosion south of San Bruno. It was really personal to him, you know? It happened on his birthday, right in his childhood neighborhood. And just the amount of passion with which he approached his undertaking was really kind of inspiring, and helped me understand the consequences of the case in a way that I might not have otherwise.
I certainly enjoyed talking to Nick Stavropoulos, who helped rehabilitate the gas division after San Bruno. He’s a colorful guy, he’s a lot of fun to talk to. And I think he’s really proud of his work. And it’s a nice reminder that the companies can make progress on improving issues throughout their systems—if they have the right leadership in place, and the right strategy.
I liked that you went through the history of California governors, including the role that Arnold Schwarzenegger played in putting climate change at the forefront. Do you still have hope that California can lead the way into a green energy future?
There’s a lot of near-term challenges. Managing the pace of the transition has proven to be difficult. Just managing the retirement of certain plants, notably Diablo Canyon, with the addition of wind and solar farms and batteries to store the output for use when production declines. We’re at a period right now, this kind of inflationary, challenging environment with supply-chain problems, that’s made it so it’s been harder to bring some of that new generation online quickly enough to make sure that supply and demand are always in balance. I think the next few years are going to be tough to navigate. But I think some of these challenges will ease with time. And I do think that there’s certainly a longer-term story of hope for California.