CALIFORNIA BURNING

An account of the failure of a major utility company and how it serves as “a harbinger of challenges to come as climate change exacerbates the vulnerability of the [power] grid.”

In this intensely researched, deeply unsettling chronicle of Pacific Gas and Electric, Blunt, a San Francisco–based Wall Street Journal reporter who covers energy and utilities, digs deep into the company’s erosion and collapse. The author begins in the 19th century when the electric light and a massive migration west attracted entrepreneurs, including the founders of PG&E, who built dams to serve California’s exploding population. Even though most states gave utility companies monopolies in their areas, they were still private businesses with stockholders. Guaranteed a modest profit, they remained a stodgy but reliable investment. In 1996, reacting to America’s conservative swing, California’s legislature deregulated the power industry. Suddenly, investors could make big money in the power market, and many sleazy operators did so (see: Enron). Matters improved after a few years, but the industry remained fragmented and fiercely competitive. As always, profit ruled. Investing in capital improvements increases profits, while investment in maintenance is “money out the door”—as such, the infrastructure continued to deteriorate. Over the past decade, warming temperatures, drought, and deteriorating power lines have produced record numbers of catastrophic wildfires, killing hundreds and destroying thousands of homes and millions of acres of forest. Multibillion-dollar lawsuits drove PG&E into bankruptcy in 2019, from which it is now emerging. Most industries suffering massive liabilities go out of business, selling buildings, machinery, and inventory to pay creditors. A utility, legally bound to supply power, can’t do this. It must either borrow money, which customers eventually repay, or bill customers directly. California electric rates are rising steadily, and Blunt delivers detailed accounts of complex, ongoing political, business, and courtroom maneuvers that would overwhelm readers if not for her abundant journalistic skills. But even this plugged-in author cannot deny that PG&E’s problems may be insoluble.

A compelling and heart-wrenching study.