Open Forum: Cost of undergrounding power lines is no excuse for PG&E

By Jeffrey Pfeffer

Published in the San Francisco Chronicle on March 4, 2019

During the mid-February wind and rainstorm, we lost power at my home for 37 hours and so did about 84,000 other people. A few weeks earlier, during another storm when we went without power for 19 hours, a PG&E representative said that 80,000 people were without power. Power failures affecting many people throughout Northern California are routine for Pacific Gas and Electric Co., California’s largest public utility, which recently entered bankruptcy for the second time. And it’s not just loss of power that bedevils the utility’s customers. Since 2014, PG&E’s equipment has been blamed for causing more than 1,500 Northern California wildfires.

PG&E invariably blames the blackouts on the weather and the wildfires on climate change. Ducking responsibility represents a frequently successful attempt to absolve the company from having to pay any damages.

PG&E customers suffer from power failures and wildfires because the utility has not done what it should to put its electrical lines underground.

Research going back decades finds that companies often engage in self-serving attributions for performance, with management taking credit for good outcomes and blaming unfavorable results on external and uncontrollable factors. A study of public utilities found that management took credit for good outcomes and shifted blame for the bad, but that this behavior was associated with less earnings per share growth than in utilities where management engaged in less self-serving behavior. Another study found that companies that made self-serving attributions for performance problems had statistically significantly lower stock prices one year later. The causal logic: Managers come to believe their own rhetoric, and thinking that poor performance is outside of their control, rationally do not make much effort to remedy the situation. If things are truly uncontrollable, why try?

Even as PG&E tries to shift blame for its many problems to uncontrollable external factors, few people seem to ask what to me seems like an obvious question: Why does bad weather cause so many blackouts for the company? One plausible explanation is because the utility has so many of its power lines above ground.

Underground power lines don’t start wildfires. Underground power lines aren’t susceptible to being knocked down by falling trees or blown over by the wind during storms. Moreover, most people don’t find utility poles particularly attractive. That’s why people prefer underground utilities.

The facts about PG&E and undergrounding show that the utility is responsible for power failures. For instance, between 2007 and 2017, PG&E spent only 68.4 percent of the small amount it budgeted for placing power lines underground. In not one year during that time did the company spend its full undergrounding budget. Moreover, while another California utility, San Diego Gas and Electric has almost 65 percent of its lines now underground, PG&E has buried less than 25 percent.

To explore these issues, I recently spoke with Dr. Michael Potter, a co-founder of the nonprofit Geeks Without Frontiers and a telecom business and social entrepreneur who has advised the Federal Communications Commission’s Broadband Deployment Advisory Committee. Among the initiatives sponsored by the organization is one aptly called, Dig Once The premise is almost painfully common sense: When utilities repair gas lines, when municipalities repair roads—in short, when any significant excavation or trenching is getting done—use that opportunity to lay conduit and put not just fiber-optic cable and phone lines underground but also power lines. Digging once is an idea with tremendous appeal because, by some estimates, 85 percent of the cost of putting utility infrastructure underground is the expense of digging trenches and then repairing what was disturbed in the process.

Potter described in frustrating detail how difficult it is to get utilities to work together or to embrace the idea of making utility infrastructure more resistant to natural disasters. Again, PG&E provides the perfect illustration. When it repaired gas lines damaged by the Santa Rosa fires by trenching, it nonetheless replaced the damaged electrical infrastructure in some neighborhoods by once again stringing overhead wires on poles.

Potter’s point: The estimated costs of putting power or other utilities such as telephone lines underground are tremendously overstated. Yes, it costs a small fortune to dig a trench. But every day all over Northern California, roads are being dug up and repaired, gas lines are being replaced, water mains are being upgraded, cable is being laid, and so forth. If municipalities forced utilities to coordinate and, to use a phrase, dig once and enhance infrastructure resilience in a coordinated fashion, the total cost would be substantially less than repairing, replacing and undergrounding utilities one at a time.

The citizens of California would enjoy more robust and modern infrastructure less susceptible to natural disasters.

All that would be required to have better utility service is a little common sense and coordination, things that seem to be in short supply these days.

Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior in the Graduate School of Business at Stanford University.

Published in the San Francisco Chronicle on March 4, 2019