Kurt Miller, Executive Director, Northwest Public Power Association
(Vancouver, WA) -- On April 29, one thousand wildfire
victims filed new claims against PacifiCorp in an Oregon state court totaling
$30 billion related to damages and emotional distress caused by 2020 wildfires
that involved the utility’s equipment. According
to Reuters, these lawsuits alone represent four times the maximum
financial exposure PacifiCorp’s owner, Berkshire Hathaway, had anticipated.
While the
sum may be greater than expected, Berkshire Hathaway’s famous leader, Warren
Buffet now seems more prescient than ever in his February letter
to investors. In his letter, Buffet cast doubt on the future of
investor-owned utilities (IOUs) due to untold financial risks related to
wildfires in the West. Simply put, Buffet wondered aloud whether investors will
be willing to “send good money after bad,” and he emphatically stated that he
is not. Buffet concluded that consumer-owned utilities might the only ones left
standing as investors back away.
As
someone who has worked for an IOU and for consumer-owned utilities (i.e.,
“public power”) I’m a huge advocate for the public power model. It removes the
confusion of who the utility is beholden too—investors or the communities they
serve. With public power utilities, the investors are the communities served.
That
said, the financial risk associated with wildfires is bad for everyone. Over
half of the 153 utilities my organization represents have 10,000 or fewer
customers. They can’t afford even a small fraction of the potential liability
PacifiCorp is facing.
Of
course, you may say that utilities should take steps to avoid causing fires. We
can all agree to that, and most, if not all, utilities are already taking
steps. But some measures could be prohibitively costly. For instance,
under-grounding power lines can be five to 10 times as high as providing
traditional service connections, and that cost would be borne by customers.
Meanwhile, many people have a hard time making ends meet as it is.
Even
then, it is almost impossible to deliver electricity without some risk. Extreme
weather, changing environmental conditions, and inadequate management of
federal lands are often the true determinants of wildfire harm. A transmission
line may provide the spark, but the fuel is what determines the extent of the
damage.
None of
this is to say that the hardships wildfire victims experience aren’t horrible
or that if a utility is negligent that it should be immune to consequences.
These losses are real and can be devastating. My father’s childhood home in
Salem burned to the ground, and he often recounted how traumatizing it was to
him and his family.
However,
if Buffet’s prediction comes true and consumer-owned utilities are the only
ones left standing, we’ll get to the point where we’re really just suing each
other’s communities when a wildfire is sparked. Our only real crime will be
that we needed electricity to power our homes in an era when climate change has
made the entire Western US a tinderbox.
If we
want to avoid such a future, we need to enact meaningful reforms to our fire
management systems, including:
- Allowing utilities to perform corridor maintenance on federal lands
- Streamlining environmental reviews for wildfire prevention activities
- Reforming liability provisions
- Providing funding for efforts to identify and address major wildfire threats
- Requiring federal landowners to actively manage and mitigate forests identified as high-risk
- Partnering with states and tribes to work collaboratively on reducing fire risks
The
benefit of many of these measures is that they will help reduce
wildfire-related damages even when utility equipment isn’t involved.
(Utility-involved wildfires represent less than 10% of all wildfire
incidences.)
Addressing
these challenges demands a concerted effort from local, state, and federal
governments. Prioritizing these issues is imperative to safeguard communities
and ensure the provision of essential services in the face of mounting
environmental risks.
Public
power is up to the task of meeting the urgent demands of our time. For over a
century, community-owned utilities have done what others couldn’t or wouldn’t
do, often with lower costs than their IOU counterparts. We stand ready to
collaborate with community leaders, tribes, businesses, and policymakers to
make meaningful change.
We’ve already lost too much due to uncontrolled wildfires. Let’s learn the lessons those fires taught us and apply them now, before it is too late.
