Charles Mizrahi: Katherine, thanks so much for coming on the show. I greatly appreciate it. I’ve been looking forward to it since we spoke and since I finished your book. Really great job.

Katherine Blunt: Thank you so much. Happy to be here.

Charles: Folks, the name of the book is California Burning: The Fall of Pacific Gas and Electric — And What it Means for America’s Power Grid. Katherine, I want to tell you right off the bat, I did not think I would enjoy reading a book about a utility.

Katherine: Yep. I hope for anyone out there who might have some reservations hopefully this might cut through them a little bit.

Charles: So I read this book over a weekend and I listened to some of your podcast interviews. Really great stuff. I do remember when this was happening. I think you were reporting on it for the Journal at that point, right?

Katherine: Yes. We spent much of 2019 focused almost exclusively on PG&E and worked with a couple very talented colleagues on that work.

Charles: This is really a story of a utility. An aging utility that, I don’t know, wasn’t doing the right thing for a pretty long time. Regulation in California, climate change and an amazingly growing population in a certain area over the last 100 years. It seemed like a confluence of events just went up in smoke.

Katherine: That’s right. I often say in talking about this story to people that you need to have some understanding of 100 years of history because the component on a power line that failed in 2018 and ultimately led to the Camp Fire, that component was 100 years old. That transmission line was 100 years old.

Some of the earliest infrastructure in California. But then over the last 20 years in particular, you saw the convergence of a lot of different factors and risks that do a lot to explain why the company is in such challenging circumstances right now.

Charles: Right. This was an accident waiting to happen. It was just a matter of how bad it was going to be and how it could have been prevented. But before we get into all those details, let’s go back to 2018 when this happened. Right, this was 2018?

Katherine: That’s right. The Camp Fire ignited in November 2018.

Charles: OK, it wasn’t a campfire. It’s called the Camp Fire. I was reading it in the book and it was a series of wildfires. It killed more than 100 people and raised — what was it? Hundreds of thousands of acres of vineyards and forests?

Katherine: There are two major fire events for PG&E over the last decade or so. In 2017 in October there was a spate of wildfires that ignited, largely because tree branches hit live wires. There were almost 20 of those fires that killed more than 20 people, destroyed tens of thousands of acres, single-family homes and businesses.

Then in 2018 in November, the Camp Fire occurred when a hook on a transmission tower broke clean, dropped a live wire and caused a single fire that killed 84 people and destroyed the town of Paradise in the Sierra Foothills and several nearby towns.

Charles: Let’s go back to the beginning because there’s really — you know, I was looking at this and reading this and I was learning so much about the utility industry and all sorts of regulation that was put in place. Also, climate change, where people are living and the need for power and all that.

There’s really not one villain in this story. It’s several, no?

Katherine: Correct. Certainly none of this, no single person is culpable for the extent of what happened. There’s been a number of people who perhaps exacerbated the circumstances or made decisions that didn’t help. Or, potentially even made things worse.

There’s a few people you can point to, but your point stands. There are a few villains, so to speak. Also, there aren’t that many heroes either. This is a tricky story where PG&E itself is the character. There are compelling people who come and go, but — yeah.

Charles: OK. So I think you start back all the way in the 1880s or so. You have back in the day when Edison comes out with electricity, he licenses generators and a whole bunch of other things. These businessmen get together and say, “We want to string these things up in California.”

There’s a lot of forests, right? They are going to bring electricity to that part of the country. It’s a business. It’s a great business. Owning a utility is owning a monopoly. At the time, they are stringing this up, let’s go to 1920 or so. What happens there is these lines are brought across forests in the middle of the boondocks really.

Katherine: Sure, rural areas.

Charles: Rural areas. What holds these together — just let me get this right. This sounds like that old poem that for lack of the shoe the nail was lost. For lack of the shoe the horse was lost. Then the rider. Then the whole battle. All that.

Katherine: I haven’t heard that in a while. Right.

Charles: This really comes down to a hook that you have here that you researched or it was researched already by the company. A hook that was made back in 1924. It was just worn out over time. It basically breaks in half. The live wire falls and happens to be on trees.

The fire spreads so quickly that — I don’t know how to describe it — just in a matter of moments it’s traveling at enormous speeds. Take us from that part.

Katherine: From the point in which the fire ignited or the early history?

Charles: I was ambiguous. My fault. Take us from the part of getting this one piece, I think it was 1920. By the way, you mentioned this and it was really amazing, they changed the manufacturing of this hook a few years later because of the problem.

So take us back to 1924. They are buying these hooks. The hooks are nothing more than hooks to hold a wire, right? It’s nothing more complicated than that.

Katherine: Right. I think some historical context is important here. You were getting at it quite a bit in your lead up to the question. Of course when you think about the early 1910s and 1920s, the companies that are building electric infrastructure are new. The ability to transmit power over long distances is relatively new, still somewhat experimental.

These companies are doing a huge amount to promote economic prosperity. Not just in California, but elsewhere. These are the earliest days of the industry. You didn’t even have full consolidation of some of these companies. You still had competition.

The idea of a natural monopoly is beginning to evolve during this time. But the only real competitor PG&E ever really had was a company called Great Western Power. That company was trying to build a vast transmission system to harness hydropower in the Sierra Foothills and carry it all the way to San Francisco.

So it was this company that built this particular transmission line, circa 1920. They bought a malleable cast iron hook, which was the material of the day that they had to string up these high voltage power lines. They built this particular line down the Feather River Canyon, which is super remote and hard to get to.

But they thought it was the most economical option they had at the time. PG&E and Great Western ultimately merged in 1930, creating the great Northern California monopoly we know today as PG&E. With this, PG&E inherited this other transmission system that it had no role in building.

Of course over the many decades some of the records and pieces of paper and documentation associated with this system simply got lost. It’s hard to maintain over the course of time. Of course over the years the components available to build transmission lines got better and stronger.

Meanwhile, this old power line supported by this very old hook hung in the wind for almost exactly a century, wearing down little by little with every wind storm, rain storm and snow storm. Until, finally, one day during a very strong wind storm it broke in half.

That live wire fell against the tower. An arc of electricity surged from it. The brush below the tower was incredibly dry. The fire spread with speed at which it would have been absolutely impossible to contain.

Charles: You mentioned that not only was it impossible to contain, but it was impossible to get to. It was so remote. Firefighters couldn’t even get there.

Katherine: That’s right. The fire station was on the other side of the canyon. This particular transmission tower was along this very remote access route called Camp Creek Road, which is where the name Camp Fire comes from. You wouldn’t have been able to get an engine up there even if you had one able to make that ascent.

It was already too late. Within 15 minutes of the fire starting it was already too late.

Charles: You show a picture in the book of — was it in the book? I thought I saw it here. Maybe I saw it online somewhere. Right after, a few minutes or maybe an hour later, there’s a picture of the fire smoldering from a distance.

Now, it’s in a remote area. You have this live wire. It’s causing a huge fire. Because of climate change, it’s much drier in California that year. The previous year I think there was a drought, right?

Katherine: Climate change and drought, I think, is a huge part of this story. Historically speaking, wildfire risk has been most acute in Southern California because it has been traditionally hotter and drier. But within the last decade or so that’s changed substantially.

In Northern California, there have been several periods of intense drought. Scientists say conclusively that these intense periods of drought have been made worse by climate change. As a result, tens of millions of trees have died, which have made the potential consequence of power line failure even greater. That fire has the potential to spread much more quickly.

Charles: There were, I don’t know how many, zillions of these towers held together by these hooks that were all manufactured in 1924 and all were subject to this same risk. It just happened to be this one. It’s amazing, all it took was one hook to break to take something in the modern age and cause an inferno and so much devastations in such a compact period of time.

Katherine: Absolutely. A lot of this transmission infrastructure in particular is in the remote reaches of the Sierra Foothills.

Charles: Makes sense, right?

Katherine: Yeah, it makes perfect sense because this was early infrastructure built to carry hydroelectric power. It was some of the earliest generation built in California. In particular, these lines are older than some others you might find throughout the service territory.

It so happens that the Sierra Foothills are very risky. They are forested. They are dry. You’ve had a greater number of people move there in recent years, which also heightens the potential destructiveness of a fire that might result of a faulty powerline.

Charles: I’m not equating it, but if you have people move to areas where there were never huge population centers, you have had over time lightning strike these areas and create fires and burn up all the growth. The forest would be reborn. We’ve seen so many cases of that.

Now you have people, the same way they are living on shorelines in the middle of hurricane paths, where people decide to live has enormous repercussions on these events. If you’re in the path of this, something will happen. I don’t think anyone thought that through.

Maybe they did. Maybe their insurance rates are through the roof. I don’t know.

Katherine: Insurance is a huge challenge. Not just in fire prone areas on the West Coast, but for all kinds of different reasons. Especially as severe events become more likely or stronger and more destructive. It has a huge bearing on that. You’re beginning to see some conversation.

It’s not particularly popular necessarily, but it’s this idea that if you have a town in an area at high risk of fire and it’s destroyed or parts of it are destroyed, to what extent should it be rebuilt? That’s a tough question. Especially in California because some of the more population dense centers such as San Francisco, aren’t at quite as high risk of fire, but it’s extremely expensive.

So if you want to live in California, oftentimes people find themselves in these more remote areas. There’s a great deal of risk that comes with that.

Charles: I was just reading something the other morning about Fort Myers with the hurricane and all. People are looking to rebuild, but those people don’t have means. So they can’t rebuild. The houses that withstood were houses owned by more wealthy people who were able to take precautions and build up to code.

These people feel left out that they can’t rebuild. But you have no right to be living there if you can’t have a structure that can support hurricane-style winds and huge amounts of water. I hear you, but let’s be real.

Katherine: Whether someone has a right to do anything is a fraught question. It certainly presents a lot of challenges that we need to confront as a society.

Charles: That why I think with insurance companies it’s so hard to get flood insurance. Rightfully so. If you want to live on the shore, you want to live in a remote area, you are going to have to pay the price. You’re putting yourself in harm’s way. I don’t understand how people think nothing will happen or let someone else pick up the risk.

Be that as it may, you have a situation here where the fire spreads within hours. I think you have over here that some of these places were destroyed in the past. Forgive me, let me retract that. What happened here is you have people calling 911. You record here a 911 phone call.

There’s nothing that can be done. I think it’s the Heffern family.

Katherine: This is really one of the more chilling moments that emerged after the fire. It was a recording of a 911 call. Three generations of women. A grandmother, her daughter and her granddaughter. They were trapped in their house as the flames approached.

They tried to shelter in the bathtub. They were on the phone with authorities pleading for help. Eventually the line goes silent. That’s how quickly the fire was spreading. Actually, that particular audio clip was plays for members of the PG&E board who toured the destruction.

It was meant to underscore the severity of what happened. You can’t unhear that when you’ve been given the chance to.

Charles: After all is said and done, the terrible devastation and the lives lost, PG&E go out and survey all these hooks which they replace, fix or whatever. It only takes a few months or so.

Katherine: After the 2018 Camp Fire, the company startled into action. They send people out to look at every piece of equipment in areas as high risk of fire. They are really condensed a year’s worth of work into six months or maybe a little longer.

They find a lot of hazards, especially in the Sierra Foothills with some of the remote, old infrastructure we were talking about earlier, but elsewhere throughout the system as well. It really demonstrated for them the extent to which a lot of efforts over the years had fallen short and they had a lot of work to do.

Charles: Yeah, but you know, you look at it and it just keeps compounding generation after generation. You’re not talking about a company that’s been in business 20 years. It’s a company that went through transformation in terms of mergers and stuff like that. It’s 135 or 140 years old. Who ever thinks about these things until they happen?

Katherine: One of the more chilling realties within the utility industry — other industries as well — is that it often takes a disaster to reveal the extent of the problem. For example, a hook isnt’ OK one day and not OK the next day. It doesn’t fail that quickly.

If something’s been neglected, the wear patterns and failure modes you see are the result of ignoring it for years. Little decisions here and there that shift attention or shift inspection methods or the amount of time spent looking at anything, all of this accrues very slowly until failure ultimately happens.

That’s a scary thing. At any given time with any given utility company, there could be a risk like this that’s slowly becoming more acute day by day. We’re talking about a 20 or 30 year time period. It’s kind of challenging to understand, but it’s critical in understanding how this failure happened ultimately.

Charles: Should this have been on PG&E’s checklist of things to check and it wasn’t checked? Or no one ever thought it was an issue?

Katherine: It should have been on the list.

Charles: But it wasn’t on the list, right?

Katherine: It wasn’t to say that it wasn’t on the list, but they didn’t do enough to make sure that list item was getting the attention it needed. They were generally aware that, of course, little pieces of hardware such as the hook we are talking about have the potential to fail.

There were some studies done on hardware in the 80s because there were concerns about failure. Ultimately, what happened was simple. There were a few periods of time, I think 1995, 2005, 2010, different periods in the company’s history in which they begin to — for a while transmission lines like this were inspected with three inspections a year.

You had inspectors walking beneath the lines to get a good assessment of how everything was looking. There would be flown ones by helicopter. And then they would climb a portion of the towers every year. The reason for that is so they can get a close look at these little pieces of hardware.

Ultimately, inspection requirements changed. They were doing fewer inspections, they were doing them more quickly and they weren’t climbing the towers anymore. They really didn’t have a great means of looking at these little pieces of hardware. They knew they existed.

They knew they may pose some risk, but they didn’t realize the extent of it. They didn’t get close enough to realize the extent at which they were wearing out. Until one gave way in a really dramatic fashion.

Charles: Was there any papers or any smoking gun ever found? I’m thinking of the space shuttle in 1986 with the O-ring. There were calls by engineers saying the O-ring with below freezing will cause an issue. There were a lot, well there was one or two — I shouldn’t say a lot — of warnings that went unheeded.

Was that the same case with this?

Katherine: Not with the hook in particular. It wasn’t as though there were engineers within the company that knew these hooks were about to wear out and kept sounding the alarm and got nowhere.

Generally speaking, there were a lot of engineers who felt as though the transmission structure in this region broadly speaking had risks that needed to be addressed and they weren’t doing enough to address those risks, especially as they faced pressure to cut costs coming from the top.

There wasn’t really a smoking gun in which someone knew this was going to happen or had the potential to happen and it happened anyway. This was just the company collectively among certain employees knew they weren’t doing enough to address a lot of risks in this area and they didn’t have the resources to do so.

It’s a little more complicated than that. There’s not a smoking gun per say. But it’s worth noting that the company was ultimately convicted on 84 counts of involuntary manslaughter for each of the deaths resulting from this fire. The basis for that is they had to prove the company was recklessly negligent.

They knew there were risks and didn’t do enough to address them.

Charles: Let me ask you this. You’ve researched this, you know a lot about utilities, you know how companies run, you’re a smart person with all this. My question is this. Let’s say this never happened. Do you think they would have stumbled upon this? Even if they checked the towers, would anybody have ever thought to?

There have probably been zillions of engineers who worked for the company over the past century. Do you think anyone would have come up with this and said, “You know what, let’s check these hooks.”

Katherine: You know what’s interesting is that in the weeks prior to the Camp Fire, for the first time in years a supervisor actually called for someone to climb the towers. These towers had gone unclimbed for a long time. The company couldn’t figure out why someone made this decision.

They just said it was old infrastructure and it would probably behoove us to climb it. It’s a long line. It’s a long transmission line with lots of towers. Some of it is on the valley floor. Some of it is along the Sierra Foothills. These inspectors are…

Charles: How many? I was trying to visualize this in my brain. I don’t know California. I don’t know the forest. How many are we talking about? 100? 50? 10? How many of these towers?

Katherine: Thousands of towers. Any line might have more than 100 towers, more than 200 towers. It depends on the line. But there are thousands of towers throughout the service territory. Possibly tens of thousands. They’re not all the same vintage, but the ones in the Sierra Foothills are all pretty much old.

Charles: If we narrowed it down and you and I are the supervisors and inspectors, we would say, “You know what, you’re smart on this. What do you think about these? These were manufactured in 1924.” We gotta check them. But it’s not like it’s something that was on the top of our to-do list.

Katherine: It wasn’t on the top of the to-do list for a long time. But as I was mentioning, for whatever reason there was climbing work ordered on these towers. They started on the ones on the valley floor. They would have continued onto the ones on the river canyon.

But the timing, you can’t make this up. The timing was terrible. They were about to start it and then one failed. It was clearly too little too late — a dramatic understatement.

Charles: That’s just coincidence. Then again, if California didn’t have a drought that year or the year before or someone trimmed the trees or the areas around them, who knows. It might not have been as bad as it was. It seems like the perfect storm. It just keeps exponentially getting worse and worse the way it seems.

Katherine: There are some within the company that felt the risk of this line failing was highest in the winter, probably during a snowstorm or rain storm in which the fire risk is much lower. They failed to anticipate or understand the fact that seasonal winds, which are strongest in California in October and November, created real fire hazards because of how worn out the infrastructure had become.

Charles: Isn’t that amazing? All the things. We focus on A and it’s D and E take place. There’s only so much you can do. Wow, that’s something.

In California, can you please explain this to me, if you and I have a utility and any damage caused through any behavior of ours — even if we’re doing the right thing — we’re totally responsible as a company for any type of damage, property loss and human loss?

Katherine: Yeah. Maybe with a few caveats for type of damage. For the most part, yes. The idea is this is not all utilities. This is somewhat unique to California, even though you are beginning to hear it discussed in other western states.

If you think about eminent domain, if the government wants to build something that’s in the public interest, it has the right to condemn your land so as you are justly compensated for that. The flip side of that is if the thing that’s built to serve the public good somehow does damage to your property, you are also entitled to compensation.

The wonky term is “inverse condemnation.” For a while this only applied to government-owned utilities. In California it was expanded to include the privately owned publicly traded big utilities.

Charles: So it’s the state also. So if the state owned it, they’d be just as liable right?

Katherine: Yep. Right. Of course managing fire risk is a very big deal for these utilities. If their power lines ignite a fire, that’s a big disaster in and of itself. But they are also liable for all the damage as a result.

Charles: Crazy. Owning a utility is a like an open-ended liability.

Katherine: The state in recent years has had to take a number of measures to help with this so it doesn’t look as though the liability is completely unlimited. Obviously the state has an interest in keeping these utilities financially healthy so they can keep attracting the necessary investment they need in order to assess and make them safer.

But, yes, utilities in California carry a lot of risk if you are an investor.

Charles: Whoa, that’s good to know. Here’s a question for you. I’m in New York and we have Con Edison. We have blackouts, which aren’t often. Thank God for that. I have, I don’t know, $1,000 worth of meat in my freezer and it goes bad. I remember reading you can’t do anything about that.

It is what it is. I’m not asking you, I mean you don’t know every state. I remember reading of people who lost thousands of dollars of medication that needed to be refrigerated or food or what have you. There’s no recourse. In California the onus is on the company.

In New York it seems that when these things happens — I don’t know how many millions of dollars of product or hardship. I don’t know if we can sue or get that money back.

Katherine: It’s an interesting question. If you’re talking about Con Ed, what you’re talking about are accidental outages so to speak. There’s some sort of equipment failure, it’s relatively easy to address, maybe the outage lasts a few hours. But in California, what’s been interesting over the last couple of years is PG&E, and to a lesser extent the other utilities in the state, have been proactively turning off the power when the winds pick up.

So if there is equipment failure during that time, no power no spark. They are trying to get ahead of it. With that, you have the utility making the deliberate choice to shut off the power for some stretch of time. They’ve gotten shorter, but one of the worst periods of this occurred in 2019 in which some people were in the dark for several days.

More than once over the course of that month. So of course you are going to incur major losses there. There was a lot of debate about this as to whether the utility was in any way obligated to help with this. For the most part, the answer was no. It’s interesting considering what we were just talking about with inverse condemnation.

Charles: It’s like heads you lose, tails you lose a little more. I just wonder how these companies — I mean, I’m sure they do make money, but it’s becoming harder and harder to do so. Especially when you are dealing with aging infrastructure. Calvin Coolidge was president when these things were going up.

Katherine: That’s amazing to think about.

Charles: It’s absolutely staggering. Another thing for you that was bothering me. How much, in your opinion, because you probably read a zillion documents dealing with utilities in every aspect because this case was very public and there were a whole bunch of documents…

Katherine: So many documents, yes.

Charles: How much do you think, in terms of percentages — alright, let me rephrase the question because that’s not fair. How much responsibility would you put on California and the regulation that created this type of environment to exist?

Katherine: It’s hard to quantify. You can say definitively, beyond a reasonable doubt, that of course the regulator had a role to play in all this. What’s interesting to think about is — and we haven’t talked about this at all — PG&E has been through bankruptcy twice at this point.

The first time was after the California energy crisis of 2001. Complicated situation. Suffice it to say, it resulted in the first bankruptcy of the company. The company emerges intent on pleasing Wall Street, which creates certain problems internally. But, at the same time…

Charles: Hang on. One thing on that. Sorry to interrupt. That was also Enron days.

Katherine: That was Enron days.

Charles: Deregulation of energy. That was a free-for-all marketplace. I remember back in the day, California was having rolling blackouts throughout the day. A friend of mine had some factories in California producing garments. He said, “I can’t get my goods.” He told me it was like a third world country.

Katherine: It was unfortunate. Enron and others manipulated this new power market in a way where demand threatened to exceed supply, which is when you have rolling blackouts. Utilities racked up a lot of debt. PG&E was the one to seek bankruptcy.

As PG&E is getting out of bankruptcy, something else is happening in parallel. California starts setting ambitious renewable energy targets. It’s up to the regulatory body — in this case, the California Public Utilities Commission — to oversee the contracting of the new wind and solar resources.

Charles: Let me just put a fine point on this for our listeners. The renewable energy thing. California was way ahead of everyone else with getting wind and solar in place. But if one recalls back in the day, in the early 2000s, it was extremely expensive for wind and solar.

The prices have come down dramatically, but when they were doing it that was a huge capital investment.

Katherine: It wasn’t actually a capital investment, it was an expense. As a result of deregulation, the companies no longer had the same role in building power plants. So they were simply contracting with developers for that power, which added another layer of pressure.

They are not making any money on this. It’s just money out the door. Yes, because California was a very early mover on this, the utilities are signing these very expensive contracts for wind and solar. Prices were so much higher at that time. This adds to expense pressure over time, which we can certainly unpack.

In terms of the role of the regulator, if you worked in the California Public Utilities Commission, you wanted to be involved in overseeing those contracts. That was the place to be. That had the glamour. It had the forward-looking excitement.

Charles: It had the headlines. You made headlines with this. This was so cool. Wow, we are so ahead with renewable energy. I remember that clearly. We were excited. I was excited. A whole new world here. We’re going to have a different source of energy. I don’t have to pay my bills anymore.

It’s 2005, ’06. It was around then, right? Earlier on?

Katherine: Yes, the first really ambitious target was set in 2005 and it ramped up from there.

Charles: Great headline. Exciting.

Katherine: It’s the place to be. That’s the fun place to be for the smart policy person. Whereas, if you’re in the safety division it just didn’t have as much cachet. It didn’t’ have as many resources. Those within the safety division generally didn’t have enough resources, not enough manpower to really drill into not just PG&E but the other utilities in the state.

The safety division had so much work to do and not enough people, not enough time and not enough money. They just didn’t have the means of running a meaningful inspection program or being able to know for sure the extent to which the utilities were doing what they were supposed to do.

So there wasn’t a great deal of safety oversight or enforcement for quite a while. There was this auditor that third-party consultants brought in to look at this dynamic within the PUC and they found it was as simple as that. Safety wasn’t glamorous. Whereas, the policy side was and that’s where most of the resources went.

Charles: Amazing. You know what I find so chilling about this is that if I ever hear of something like this happen again I would not be surprise. It seems like the table is set. We have such aging infrastructure in this country. Our grids are god knows how old. Nuclear energy is something we should have.

It works clean. More people died from this fire than did from nuclear accidents in the United States. It’s our emotions that get in the way of making good policy decisions. People want to be elected so on and so forth. Doesn’t this put nuclear energy on the front burner of energy? Shouldn’t we be thinking that way?

Katherine: I don’t see a connection there to be honest. I think we have real issues with where we’re going to get our clean energy supplies. That’s kind of a different conversation than how we maintain the wires that transport power over distances. Right here we’re talking about issues with overseeing these old pieces of infrastructure.

Charles: Let me rephrase the question. We have an aging system, right? Let’s use PG&E’s zillion towers with all these hooks. You know the next accident is going to happen from something we didn’t expect but should have expected to happen.

It’s going to happen from the X factor of didn’t anyone check the metal on the third rung should have been this? No. We didn’t. OK, so it’s going to happen from that. Not my point, I’m just thinking out loud. The problem is an aging infrastructure that’s over 100 years old.

No matter how much oversight, safety, regulation we put into it, it’s bound to be just the way it’s configured — we’re putting electricity in the middle of the forest that can break off and getting surprised when hundreds of thousands of acres go up. We say, “We should have known.” We could have known.

1. Shouldn’t the conversation — I shouldn’t be so presumptuous. I’m thinking when I read something like this my first thought is why aren’t we trying to morph all this over time and start moving forward? What we’re doing here is fixing a used car. Eventually if it’s not A it’s going to be B.

Something is going to go wrong. I want to just hear your thoughts on that.

Katherine: Right. Sure. What we’re talking about here would be bringing the sources of generation, whatever it might be, closer to the customer. A lot of people point to the prospect of rooftop solar being able to help with this because the customer has the potential to generate the power themselves and use it on site, potentially reducing the need for all these wires.

Or building community solar installations. Anything that brings it closer and eliminates the need for the wires. If you’re talking about nuclear power, the only thing you could talk about in that context would be a small, modular reactor. There’s a lot of conversation about this around cost, feasibility, whether this is going to be part of the solution potentially.

If we’re talking about more big reactors, you still need big wires to transport that power over long distances because you’re not going to get anyone to live next door to that plant, right? I agree the nuclear industry is safe. I also don’t’ want to live next door to the plant.

Charles: I know there should be prisons for bad people, I just don’t want to live near them. Not in my backyard. Everyone is for that. I’m with you. Totally with you.

Katherine: I think the whole conversation about distributed energy, whatever it is, small nuclear, rooftop solar, anything, it certainly has a role to play. But when you think about everything across the United States, there are some regions that lend themselves to this and others that don’t.

To some extent, we are always going to need some of that infrastructure with those wires.

Charles: Agreed. But here we are talking about California. The land mass is humongous. You have amazing natural resources. Trees. Forest. Put people out of the forest. We throw them all out. We don’t let them live there. But just the damage to the environment is enormous.

If we were starting today with an energy source, would this be the best idea we have? Stringing wires across areas where people can’t get to in the face of wind, rain and elements and hope these things don’t break off and spark tremendous fires?

Katherine: No. It’s not the best idea. You can look at it from that perspective. But here’s what’s in place. How quickly can this be phased out with the new technologies we have? At what cost? In the interim as certain lines are being phased out in favor of solutions, for as long as it takes to do that the stuff has to be maintained.

It’s not ideal at this juncture given all the risks.

Charles: But 15 or 20 years from now if we don’t do anything about this now we are going to be faced with the same issues.

Katherine: Yeah, if we don’t do anything about it now we will be faced with the same issues. Work is underway. These are complex systems. It can’t be transformed within a day, week or year. This is just unfortunate. It’s true that some of the potential solutions get bogged down in the regulatory process.

By nature this industry moves very slowly. That is scary because, seemingly, new risk modes are emerging very quickly.

Charles: You’re in California? Are you based in California?

Katherine: I am in San Francisco.

Charles: You have boots on the ground there. You know what it’s like. What is the mood there? What do people think? After this event happened and the potential for it to happen again — I’m so removed from it. I’m literally on the other side of the country. The only green thing we see is Central Park.

There is so much around California. What’s the conversation about?

Katherine: PG&E has lost the trust of its customers almost completely. It’s going to take a long time to regain that, if it’s even possible at this point. People who understand the complexities of this story — let me put it this way, there are people who I think understand the complexities of this story and it’s not all PG&E’s fault.

There has been the convergence of a lot of different risks, a lot of different players in the state of California bear culpability. But for the most part, most people simply see a company that has started a lot of deadly fires over the last few years.

Charles: When I picked up this book and I saw The Fall of Pacific Gas and Electric, you are really balanced. I want to tell you, it’s really a balanced book. I wanted to hate them. But you know, I don’t hate them so much after reading this. I understand what happened.

That’s the problem with this. I wish there was a smoking gun. I wish there was someone I could really hate because it makes me feel better that it won’t happen again but this is an accident waiting to happen.

Katherine: It’s the truth of the matter. There’s not a person to whom you can really assign blame for any of this. It’s one of the reasons it can be confusing to consider that this is a company that’s been twice convicted on charges of failing to maintain its infrastructure, involuntary manslaughter after the Camp Fire and we didn’t even talk about the San Bruno explosion in 2010.

A big pipeline exploded. There were ultimately convicted on charges of failing to follow federal pipeline laws.

Charles: A dozen people or so died? Something like that.

Katherine: Eight people died. A neighborhood was partially destroyed. It was a disaster. It’s confusing to understand how in both cases the company itself faced the charges, not individuals within the company. In both cases what the evidence revealed is there are a lot of people who knew something, but nobody knew everything.

Charles: It’s like a puzzle. Everyone has a little piece. You put it together and in hindsight it’s so obvious. My whole point is, during the current situation where nothing is at risk or it seems to be, you see all the pieces there. I don’t think we can put them together.

We take for granted turning on our light, getting electricity and all the things utilities do, which are just amazing. Seventy years ago we didn’t have any of this. Tennessee Valley didn’t have any electricity until LBJ came in. It was FDR and then LBJ. Part of the country didn’t have anything.

This was in the lifetime of my parents and my grandparents for sure. You don’t get your internet working at top speed in 30 seconds and you’re pissed off. A lot has changed. A lot is taken for granted. After the fact, there’s always something with such a highly regulated industry.

I don’t have investments in utilities. I’m just telling you. There’s always going to be a regulation that should have been followed and it wasn’t. You cannot do this. It’s impossible.

Katherine: Right. We talk a lot about transmission risks because the Camp Fire was do traumatic and so devastating when you think about the hook that breaks. But really, most of the fires that PG&E has ignited over the course of years is when branches hit live wires.

You can do a lot to keep those trees away from those wires, but what happens when a strong wind picks up a branch from 50 yards away and it gets tangled in the wire? I don’t know how you prevent against that other than to have settings that make it so it immediately trips off or the line is already off.

That’s a reliability compromise. That means someone somewhere is without power. So it’s very difficult.

Charles: Right, it trips it off and you’re pissed because you can’t get on Zoom and you can’t have you conference or whatnot. Look, once we have something we want it forever and we expect it to work perfectly. As soon as it’s taken away, even for a nanosecond, we freak.

Katherine: It’s not even just in California. We have seen so many reliability issues across the grid. I think most significantly what happened in Texas with the Texas freeze. Millions without power for several days. This was a different set of issues than what we are seeing in California.

I know everywhere there has been power outages in Michigan as a result of storms. Some of the hurricane activity has been significant in terms of power grid issues. People are thinking about it in a way they haven’t because we’re seeing more risks have the ability to affect the health of this infrastructure that’s only getting older by the day.

While we once might have flipped on the light without thinking about it, maybe we’re thinking about it a little more now.

Charles: Katherine, like I said in the start of this conversation, I picked up this book and said, “Ugh, a book about utilities, how exciting.” But as you read it, it’s like what the heck. It’s scary. It really is scary. When I put the book down I kept thinking, “What’s the next disaster that’s going to happen?”

It’s not going to be the hook. It will be something else.

Katherine: It will be something else. Thank you for your honesty and I’m very glad I was able to change your mind.

Charles: That’s great. Folks, the name of the book is California Burning: The Fall of Pacific Gas and Electric — And What it Means for America’s Power Grid. Katherine, you did an amazing — first of all, God bless you for reading through zillions of pages of hearings, regulations and everything.

I don’t know how strong the coffee was, but you had to stay up just reading these boilerplate things. It’s just amazing. And this is what you cover right? This is what you cover for the Journal?

Katherine: It is. I write about utilities. The document dives were deep.

Charles: You were the exciting person on campus. Great.

Katherine: Thanks so much. It was a pleasure to talk to you.

Charles: Likewise. Thank you.