Public utilities fall short on wildfire mitigation, putting residents and shareholders at risk

Published

11 months ago

February 7, 2024

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Five years and 2,500 miles apart, fires devastated thriving communities — and major U.S. utility companies stood at the center of the infernos.

It’s a story increasingly familiar in the energy industry: Some utility companies don’t properly assess the risks wildfires pose to their operations. A failure to mitigate these risks can have disastrous consequences for both fire victims and utility investors.

Through interviews with experts and a review of public records, CNBC found evidence of safety shortcomings in the utility sector and a lack of state oversight.

Those factors are part of what exacerbated wildfires in Paradise, California, in 2018.

Michelle Glogovac lost her childhood home, though her parents were able to escape safely.

“It’s completely devastating to see what Paradise looks like now,” Glogovac said. “We were up there a year ago and literally drove past almost the street that I grew up on because there are no landmarks to recognize. The trees are all gone.”

Michelle Glogovac lost her childhood home in the Paradise, California, wildfires of 2018.

CNBC

The Paradise blaze burned for two weeks, displaced tens of thousands of residents and closed schools and offices as far away as the Bay Area, more than 150 miles south.

Utility giant PG&E later pleaded guilty to 84 counts of involuntary manslaughter and one count of unlawfully starting a fire in relation to the Paradise fire.

The company in 2019 settled a $13.5 billion lawsuit alleging its infrastructure caused several deadly wildfires. It ultimately filed for bankruptcy, emerging in June 2020.

Glogovac’s parents were fortunate that they had fire insurance on their home and were able to rebuild. But many PG&E fire victims are still waiting for relief. PG&E established a Fire Victim Trust after bankruptcy to compensate victims. To date, the trust has disbursed $11.11 billion to fire victims, but victims have received less than 60% of their total claims and are still waiting on payouts.

PG&E declined an interview for this story but said in a statement that since 2017 it has reduced wildfire risk from its equipment by 94% through measures such as burying power lines, vegetation management and, as a last resort, power shut-offs.

Mitigating wildfire risk

The experts CNBC spoke with said wildfire mitigation efforts can include a power shut-off plan — a predetermined course of action outlining when and how utility companies will intentionally cut off electricity to specific areas. The primary purpose is to prevent power lines from igniting a wildfire during periods of high fire danger. Such a fire could be triggered by factors such as strong winds, low humidity and dry vegetation.

In addition to power shut-off plans, utility companies can enhance wildfire mitigation efforts through measures such as burying power lines underground, clearing vegetation around their infrastructure to reduce fire ignition risks, and conducting regular inspections and replacements of aging infrastructure.

Those or similar efforts could have helped quell fires in Lahaina, Hawaii, last year, according to wildfire experts interviewed by CNBC. The flames were the most destructive and deadly human-made disaster in Hawaii history. By the afternoon of Aug. 8, intense winds had knocked down approximately 30 utility poles throughout Maui. The fires burned over 3,000 acres and caused an estimated $5.5 billion in damage, according to Maui County.

Laurie Allen, a Lahaina resident, ran through a burning field to escape the fire. She had found evacuation roads blocked by flames and a fallen tree, so she escaped by foot, according to an account from her nephew, Brent Jones. Allen spent 53 days in the hospital with 70% of her body burned before she died, becoming the 98th victim of the fire.

“There were a lot of days that were really very difficult,” Jones told CNBC. “She was in extreme amounts of pain.”

Brent Jones recounts the story of his aunt, Laurie Allen, who ran through a burning field to escape wildfires in Lahaina, Hawaii, in 2023. Allen later died.

CNBC

The cause of the Hawaii wildfire has yet to be determined by local, state, and federal officials, but Maui County says utility company Hawaiian Electric is responsible. The county filed a lawsuit, alleging the utility “knew that their electrical infrastructure was inadequate, aging, and/or vulnerable to foreseeable and known weather conditions” and had a “responsibility to maintain and continuously upkeep” that infrastructure.

The lawsuit also alleges the company “inexcusably kept their power lines energized during the forecasted high-fire danger conditions.” Hawaiian Electric has said that the fire that began at 6:30 a.m. Aug. 8 “appears to have been caused by power lines that fell in high winds.” However, it says, this first fire was contained and a second, afternoon fire — the cause of which is unknown — is what devastated Lahaina.

Hawaiian Electric’s 2023 wildfire mitigation plan did not include a predetermined strategy for power shut-offs. That was partly in light of word from California, which does implement that mitigation strategy, that the shut-offs upset customers, according to Michael Wara, director of the Climate and Energy Policy Program at Stanford University and an expert in wildfire mitigation plans.

Hawaiian Electric’s plans said that PG&E’s practice of shutting off the power preemptively was “not well-received by certain customers affected by the preemptive outages.” And when Hawaiian Electric CEO Shelee Kimura testified before Congress in September, she said the company decided that shutting down power as a predetermined precaution during high-risk conditions was not an “appropriate fit.”

Hawaiian Electric restores electric poles in the aftermath of the Maui wildfires, in Lahaina, Hawaii, Aug. 16, 2023.

Yuki Iwamura | AFP | Getty Images

Hawaiian Electric declined an interview with CNBC for this story, but in response to the lawsuit said that the company’s power lines to Lahaina had been de-energized in cooperation with state utility commissions for more than six hours when the afternoon fire that spread to Lahaina broke out.

The company further said in a statement to CNBC that it is evaluating whether to implement a public safety power shut-off program as a “tool of last resort,” pointing out that shutting off the power for a community can present its challenges in emergency situations, such as traffic signal outages or reduced digital access to emergency updates.

Protecting profits

The failure to assess and mitigate wildfire risk across the utility industry boils down to protecting profits, according to David Pomerantz, executive director of the Energy and Policy Institute — a watchdog of utility companies that is funded by philanthropic foundations that support climate actions, environmental conservation and environmental justice.

Utility companies make money by building new infrastructure, such as putting power lines underground, for example, and baking that cost into customers’ bills over time, pursuant to regulations, Pomerantz said.

David Pomerantz is the executive director of the Energy and Policy Institute, a utility company watchdog.

CNBC

Trimming back trees or getting rid of dry, dangerous grasses near power lines doesn’t make money for the companies or their shareholders, and utilities might be less motivated to spend on such expenses as a result, Pomerantz said.

In a statement to CNBC, Hawaiian Electric said that from 2018 to 2022 it spent $950 million on grid improvement and a separate $110 million on vegetation management efforts.

In November, PG&E got approval to bury 1,230 miles of power lines underground between 2023 and 2026 as a way of reducing ignitions due to severe weather and downed wires. In an interview on CNBC in December, PG&E CEO Patti Poppe called the project the “ultimate” way to minimize risk.

It’s also a massive capital investment for the utility, costing about $3 million per mile, according to a PG&E press release. PG&E estimates the plan will increase customers’ monthly bills by approximately 12.8% in 2024 and 1.8% in 2025, and then lower their bills by 2.8% in 2026.

But utilities are protecting profits in another way, according to Pomerantz: leaning on regulators that could ultimately help maintain favorable policies. In many states, utilities are the largest donor to politicians, he said.

“They are able to take all this money from ratepayers and use it to fund these incredibly powerful political machines,” he said.

A burned neighborhood in Paradise, California, Nov. 15, 2018.

JOSH EDELSON | AFP | Getty Images

There are no federal or state laws that prohibit a utility company from making political contributions. CNBC looked at hundreds of legal political contributions made by public utilities and their CEOs since 2016 and found millions of dollars in donations to candidates, parties and political action committees.

In one instance, NV Energy, the big Nevada utility and a subsidiary of Warren Buffett’s Berkshire Hathaway Energy, contributed over $63 million to defeat a ballot measure that would prevent the utility company from having a monopoly over the state.

The failed ballot measure would have added Nevada to a list of states that have deregulated their energy markets at least partially, allowing customers to choose their energy provider. Instead, residents must get their energy from the utility that serves the area where they reside.

The monopolistic nature of the industry dates back to the 19th century, when state governments decided to have only one set of poles and wires to deliver energy, according to Stanford’s Wara.

CNBC’s Brian Sullivan, left, interviews Michael Wara, the director of the Climate and Energy Policy Program at Stanford University and an expert in wildfire mitigation plans.

CNBC

The lack of competition, he said, has made utilities less nimble in responding to challenges and risks.

It also means that if customers such as Glogovac, whose childhood home in Paradise, California, went up in flames, are dissatisfied with their utility, they are left with no other options.

“We don’t have a choice. It’s PG&E or nothing here,” Glogovac said.

Lack of state oversight

Utility companies are regulated by state public utility commissions. These commissions are state regulatory bodies that enforce rules, oversee rates and make key energy decisions.

To understand how many utility-caused wildfires have occurred in the last 10 years, CNBC reached out to public utility commissions for relevant data in 10 states that wildfire trackers have identified as particularly prone to ignite — Arizona, California, Colorado, Hawaii, Montana, Nevada, New Mexico, Oregon, Utah and Washington.

CNBC requested information on the number of wildfires since 2013, the location of the fires, the total acreage affected, any deaths or injuries that occurred as a result, and the estimated cost of the damage.

Only one state of the 10 CNBC reviewed — California — publishes this wildfire data annually on a government-run website.

A PG&E utility worker locates a gas main line in the rubble of a home burned down by wildfire in Paradise, California, Nov. 13, 2018.

David Paul Morris/Bloomberg via Getty Images

Public utility commissions for Arizona, New Mexico and Washington told CNBC they do not track utility-caused wildfire data and recommended asking other state departments or the utility companies directly.

Other states, such as Nevada and Utah, have some of the requested data scattered in utility companies’ wildfire mitigation plans or incident reports, but do not track and publish the data in one compiled location that members of the public can easily access.

The Energy and Policy Institute’s Pomerantz said he finds the lack of oversight by public utility commissions to be troubling.

“These public utility commissions are really the first and only line of defense that we have to make sure that electric utilities are keeping us safe, that their infrastructure isn’t causing these terrible fires,” he said. “The fact that they’re not even keeping track of that problem in many cases — that should be really concerning and a sign that they have a long way to go.”

CNBC also reached out to state fire marshals, forestry departments and natural resources departments for wildfire incident data. Several of those agencies track statewide wildfire information, but most did not keep track of the names of utility companies associated with wildfire incidents.

Fires were indicated as “powerline-caused” or “equipment failures” but did not include more detail on whether the cause was a company’s faulty infrastructure or an external factor, such as a bird flying into a power line.

Paying out to victims

In instances where a utility company’s role in a wildfire is clear, or even suspected, publicly traded companies can find themselves the subject of complex litigation.

Hawaiian Electric, in addition to the lawsuit brought by Maui County for the August fires, faces a separate lawsuit, brought by investors, which claims the company made “misleading statements” about its wildfire prevention and safety protocols, calling them “inadequate.” As a result, the investors said they have “suffered significant losses and damages.”

Burned buildings and cars in Lahaina, Hawaii, seen Oct. 7, 2023, nearly two months after a wildfire swept through the historic town.

Mario Tama | Getty Images

After the 2021 Marshall Fire in Colorado, Xcel Energy faces a pending lawsuit alleging it “failed to take any measures to reduce the risk of a fire igniting from its equipment.” The fire destroyed more homes than any wildfire in Colorado state history, according to the National Oceanic and Atmospheric Administration, which provides data and information on climate science, adaptation and mitigation.

And following wildfires in Oregon in 2020, Pacificorp in December reached a $299 million settlement agreement with wildfire victims, on top of $87 million the company owed a separate group of property owners.

Among the largest settlements CNBC found: San Diego Gas and Electric paid out $2.4 billion to resolve allegations it caused a series of 2007 wildfires that killed 10 people and destroyed more than 1,500 homes.

Victims funds and settlement payouts, while a potential lifeline for those affected, can come with strings attached.

In November, Hawaii Gov. Josh Green announced a $150 million recovery fund for victims who lost family members or were injured in the Lahaina wildfire. Those affected can receive money as soon as this year, but to receive the money, victims must waive their right to sue the parties paying into the fund for wrongful death or severe personal injury.

That includes the state of Hawaii, Maui County and Hawaiian Electric, which has vowed to contribute $75 million toward the fund.

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BYD is offering free car insurance on select EVs in new end-of-year sales promo

Published

2 hours ago

December 26, 2024

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BYD is offering free car insurance on select EVs in new end-of-year sales promo

China’s EV leader wants to close the year strong with a new sales promotion. BYD is now offering free car insurance on certain EVs ahead of the upcoming Chinese New Year. Will it be enough to take the global EV sales crown in 2024?

BYD offers free insurance on some EVs to boost sales

With a record 506,804 NEVs (EV and PHEV models) sold in November, BYD has now had two straight months with over 500,000 in vehicle sales.

The EV giant has no plans to slow down. On Thursday, BYD announced its latest “New Year GO New Car” sales promotion on its Weibo page.

From today, December 26, 2024, through January 26, 2025, BYD is offering free car insurance on select PHEVs and EVs in its Ocean and Dynasy lineups. The promo includes several top-selling EVs, including the Dolphin, Seal, and Sea Lion 07.

Through the first 11 months of 2024, BYD sold nearly 3.76 million NEVs, including 1.56 million all-electric models. The promo comes as BYD is in a tight race with Tesla for the global EV sales crown for 2024.

Through September, Tesla delivered 1.3 million EVs compared to BYD’s 1.17 million. Since Tesla doesn’t report monthly sales numbers, we will have to wait until the end-of-year numbers come out to determine who will take the EV sales crown in 2024.

BYD-Seagull-cheapest-EV — BYD Seagull (Source: BYD)

The Seagull EV, BYD’s cheapest electric car starting under $10,000, was once again China’s best-selling vehicle last month after topping the Tesla Model Y. BYD sold 56,156 Seagull EVs last month alone in China.

Although the global EV sales race between BYD and Tesla is heating up into the end of the year, the Chinese EV leader is quickly outselling some of the largest global automakers.

BYD sold more vehicles globally than Nissan and Honda in the third quarter, and it is now closing in on Ford.

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The rate at which China has rebuilt its car industry is truly staggering

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2 hours ago

December 26, 2024

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The rate at which China has rebuilt its car industry is truly staggering

ZEEKR 001 FR Launch — ZEEKR-001 FR assembly line; via Geely.

After starting off slow, China’s EV industry has reorganized itself in record time, going from a global laggard to a global leader in about 5 years – showing other countries how it ought to be done.

In 2020, China was still early in its EV transition, lagging behind many other countries and regions. With EVs only consisting of 5.4% of the country’s car market, it lagged behind California and almost all of Europe – even the slower-adopting countries, like Romania. It was only barely ahead of the 4.6% global average that year.

It set a relatively unambitious goal of 50% EV sales by 2035 – and those 50% didn’t even need to be gasoline-free, they could be hybrids or plug-in hybrids which still have a gas engine inside (what China classifies as “New Energy Vehicles” or NEVs). Around that time, both California and Europe were thinking about banning gas car sales by 2035 – and each of those targets probably could have been earlier, too.

Now, with 2025 coming in just a week, China is likely to hit that 2035 target ten years early – closer to the year that it set the target than the year that the target was set for. It even moved its target forward to 45% NEVs by 2027 this January… and exceeded that target within less than a year.

It’s an indication of how much China is able to do when they put their minds to it – and how other countries have completely failed to keep up due to bickering and resistance from companies or governments being hostile to better technology.

The rapid rise in Chinese EVs

2020 was a turning point for the Chinese EV industry. China responded strongly to the start of the COVID-19 pandemic (and as a result, had a lower death rate than almost any country, despite life within China being relatively normal after initial lockdowns), which meant a large drop in vehicle sales in the country (much like the rest of the world).

But when sales recovered, China’s eyes had turned inwards. Not only had domestic EV makers started to ramp up production rates and quality (after a decade of smart industrial policy focusing on mineral supply and encouraging domestic manufacturers), but the rest of the world had spent years blaming China for all sorts of ills (like carbon emissions, which China was criticized for not doing enough about, and now is criticized for doing too much). Technology blockades and discussions about tariffs led to consumer nationalism, with Chinese consumers expressing interest in domestic goods more than they had before.

This, coupled with new emissions rules that the rest of the world’s automakers hadn’t prepared properly for (despite having 7 years notice) led to a glut in gas car supply – mostly from foreign brands – which we called the “canary in the coal mine” for where the global ICE car market was going.

Chinese auto dealers could have responded to this by asking the government to reverse the rules, but instead they asked for (and were granted) a six month amnesty in order to clear unsold cars off of their lots, and otherwise demanded that auto manufacturers shape up and build EVs faster.

As a result of this mentality, China became the top global exporter of automobiles this year – a title that Japan had for decades.

Meanwhile, the West drags its feet

It’s a stark difference to how automakers and governments usually behave in the West (and in Japan), working to slow down transitions and add protectionist measures instead of gearing up for an inevitable change in the industry that already started.

And the regressive portions of Western governments are all too happy to oblige, with for example the US republicans promising to hold the US auto industry back even further, ensuring it isn’t ready for the present, and their far-right ilk in European governments arguing for similar measures.

President Biden’s administration did do its part to try to turn US industrial policy around to be ready for EVs with the excellent Inflation Reduction Act, which brought hundreds of billions in investment and hundreds of thousands of EV jobs to the US. Biden’s EPA and DOT also improved several emissions rules (despite softening them somewhat after industry pressure) to move the industry forward. But it also implemented large tariffs, which could help to breed complacency.

But unfortunately for America, the next occupant of the White House is convicted felon Donald Trump, who finally received more votes than his opponent on his third attempt (despite committing treason in 2021, for which there is a clear legal remedy), with less than half of the country voting to ensure that US manufacturing fall further behind.

In his last stint squatting in the White House, the EPA knowingly worked against clean air and instead of preparing the US to lead the EV transition, it focused on petty losing squabbles with states that are actually trying to move the US forward. We could have had smarter industrial policy, like China, but instead government worked to shatter the regulatory certainty that President Obama had helped to lay out.

Luckily, most Western auto manufacturers may have learned their lessons, and this time they’re finally asking government not to blow up emissions rules. They recently donated money to the famous narcissist, presumably hoping to get in his ear – we’ll have to wait and see whether what they say is actually geared towards the future (and whether the ignoramus they’re saying it to is even able to comprehend it). Though that could all be for naught, because one of Mr. Trump’s closest allies is Elon Musk, CEO of the largest EV maker in the US, who has confusingly focused his advocacy on harming EVs.

Change is coming faster than you think

China’s rapid rise in EV sales, meeting targets well ahead of schedule, may seem anomalous at first blush. It’s not often that a target gets met in one third of the time allotted for it, especially when you’re dealing with a country of 1.5 billion people. That’s a lot of inertia to turn around.

But there are other examples of targets getting met and exceeded early, and companies and governments need to be aware of these and maintain flexibility instead of fighting in the face of positive change.

Norway is one example, where the country was already far ahead of the international community, and set a target to end gas car sales by 2025. While there are still a trickle of non-EVs sold in the country, Norway’s market was already over 90% electrified in 2021.

This is not uncommon with technology adoption curves, as once a technology reaches a critical mass, most consumers consider it the default and will switch to it without much issue. That critical mass has already been met in most Northern European countries and in China, but other places could get there fast.

Once they do, who do you think will come out for the better – the countries and companies whose manufacturing base is ready to supply products that fuel that change, or the ones that have spent decades bickering and trying to slow it down so they can continue spewing poison in all of our lungs?

And as I’ve ended several articles in recent years: we should have been doing more earlier, but as the famous (possibly Chinese) proverb says, “the best time to plant a tree is 20 years ago, the second best time is today.”

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Kia’s new Syros SUV is going electric as a low-cost Hyundai Inster EV twin

Published

4 hours ago

December 26, 2024

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Kia's new Syros SUV is going electric as a low-cost Hyundai Inster EV twin

Kia introduced its new Syros SUV last week. Although it was launched with a gas-powered engine, Kia plans to launch the all-electric version soon. The new Kia Syros EV will share underpinnings with the Hyundai Inster EV as its latest low-cost electric model.

What we know about the upcoming Kia Syros EV

India’s EV market is expected to surge over the next few years. In 2024, the India EV market is projected to be valued at around $24 billion. That number is expected to reach nearly $118 billion by 2032.

Kia is looking to take advantage of the transition. After launching its first vehicle (Seltos) in India in 2019, Kia is already one of the top 10 auto manufacturers in the region.

The Korean auto giant has added several models to its lineup, including the Sonet, Carnival, Caren, and electric EV6 and EV9 SUVs.

Just last week, the Kia Syros made its global debut. Kia calls the compact SUV “revolutionary,” but there’s one problem: it only has two gas-powered engine options. That will soon change. According to Autocar India, Kia will launch the Syros EV in India in early 2025.

Although no other details were confirmed, the Kia Syros EV will share its K1 platform with the Hyundai Inster EV. Hyundai’s compact electric crossover has two battery options, 42 kWh and 49 kWh, good for 300 km (186 mi) to 355 km (220 mi) range on the WLTP cycle.

In Europe, the Inster EV starts at around $30,000. In Korea, the electric crossover is known as the Casper Electric, and prices, including incentives, start around $20,000.

Hyundai-Casper-EV-Cross — Hyundai Casper Electric (Inster EV) models (Source: Hyundai)

Kia’s new electric SUV is expected to start in the price range of Rs 15 lakh-20 lakh (ex-showroom), or around $17,500 to $23,500.

Despite the difference in powertrain, the electric version is expected to have the same styling and features as the gas-powered models. Kia expects between 50,000 and 60,000 in sales between the upcoming electric Carens and Syros EV models by 2026.

The company is launching a series of more affordable, mass-market EVs globally, including the EV3, EV4, and EV5, to secure its spot in the industry as it shifts to electric vehicles.

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