By Alena Maschke, LONG BEACH BUSINESS JOURNAL
January 14, 2019
The destructive and deadly wildfires of 2018 have placed California utilities under special scrutiny as power companies PG&E and Southern California Edison are questioned about their preparedness for the increasingly intense fires and the potential role their infrastructure may have played in igniting them.
“I think there’s no question, whether it’s wildfires or hurricanes or other natural disasters, that utilities – particularly those on the coasts – have to prove a readiness to deal with emergencies,” Consumer Watchdog President Jamie Court said. The potential liability of power companies for the costly damage of wildfires has put their current business model into question, he explained.
“These companies used to be and should be safe investments,” the consumer advocate pointed out. “I think the shareholder-investor model for utilities is really in question.” Instead, Court said he’s expecting more of a push towards locally owned utilities. “The municipal utilities seem to be doing a much better job at preparing and being ready,” he asserted.
Barry Moline, executive director of the California Municipal Utilities Association, said all players in the industry have been compelled to review their practices in light of the lives and homes claimed by the 2019 wildfires. “Electric utilities are looking at every element of their systems,” Moline said. “While everyone probably thinks they’re doing a good job, it’s good to undergo a complete and thorough review again.”
Both Court and Moline are expecting the intensifying risk posed by wildfires to boost existing efforts to transition to more renewable energy sources. “The big issue that utilities will have to deal with is how to adapt regionally to the renewable revolution, whether to embrace it or fight it,” Court said. “In California, they’ve embraced it.”
Looking at municipal utilities, Moline is expecting to see more investment in solar power storage. “If we’re ever going to use renewable energy in a more efficient, around-the-clock way, we have to store the energy,” Moline explained. “You can’t use solar at night, but with batteries or with storage, you can.”
Investments into more reliable and sustainable infrastructure are likely going to cause rate increases for consumers, Moline said – especially as buildings and devices become more efficient, and consumers reduce their consumption out of environmental and financial concerns. “The cost of that infrastructure is going up, but we’re not seeing the growth that would normally pay for that infrastructure redevelopment,” he pointed out. “Energy efficiency continues to grow. We’re just doing better as a society at reducing our consumption.”
On a local level, public utilities are also expected to upgrade their infrastructure, including a project to replace old pipes and automate metering by Long Beach Water and pipeline replacements within the Long Beach Energy Resources’ system.
Director, Long Beach Energy Resources
Long Beach Energy Resources (LBER) outlook for 2019 for its Natural Gas Utility continues to be impacted by the volatile gas commodity prices recently observed at the Southern California Gas Company (SoCalGas) CityGate hub. In general, Western US hub prices in December 2018 were roughly $4/MMbtu more year over year or roughly double year over year. LBER is a wholesale customer of SoCalGas and the price it pays for natural gas delivered at the SoCal CityGate hub is passed directly along to its customers with no additional costs. Current constraints on the SoCalGas transmission lines which deliver gas into the City of Long Beach, coupled with significantly reduced storage withdrawals at the Aliso Canyon storage facility, pushed the SoCal CityGate hub gas prices to above $13.50/MMbtu in December 2018, more than double the $6.35/MMbtu price observed in December 2017. LBER anticipates prices to return to normal pricing in the early first quarter of 2019 and to remain flat for the remainder of 2019. LBER’s Gas Utility also has a number of pipeline replacement projects planned for 2019 to ensure the continued operational integrity and overall safety of its 1,900 miles of gas pipeline infrastructure. In 2018, LBER replaced approximately 10,000 feet of main pipeline (the pipeline that runs under streets) and replaced 24,000 feet of service pipeline (pipeline that connects from the main pipeline to the customer’s meter).
General Manager, Long Beach Water Department
For 2019, the Long Beach Water Department will continue to push that conservation is now a way of life in California. Long Beach residents and businesses have always been leaders in efficient water use in their daily lives. While in the past the focus has been on single family homes, the Water Department will be rolling out new programs to encourage those in multi-family homes to install water efficient appliances to expand upon our customers’ water conservation efforts. The Water Department will concentrate on investing in its 2,000+ miles of underground water and sewer pipelines as well as storage improvement and maximizing local water supplies. We enter 2019 with the Sierra snowpack at about 67% and the Upper Colorado River Basin at 90% of historical levels. This is critical as the storage level in Lake Mead from the Colorado River has been reduced to minimal levels recently. Good news is that the Metropolitan Water District’s usable storage is more than double what it was during the peak of the current drought period. Residents can rest assured that they will continue receiving safe, excellent tasting drinking water from Long Beach Water Department in 2019, as they have for over 100 years.