California power outage strains economy of the region

The San Francisco Bay Area experienced a widespread power outage last week when Pacific Gas and Electric (PG&E), the main power supplier for the region, intentionally shut off power in anticipation of extreme winds and dry weather. This intentional shutdown comes as a precaution to prevent wildfires sparked by electrical equipment and power lines. After two phases of the shutdown, it is estimated that 2.5 million people were without electricity in the Bay Area. PG&E reported that once the wind dies down, restoring power could take up to five days, as all lines must be inspected and cleared. The shutdown has tested the resilience of the Bay Area, as communities have been forced to cope with little information surrounding the shortage, and have adjusted to a lack of internet and cellular service. The impact of the outage will stretch beyond human conditions however, as it will strain the economy of the region and display the interconnectedness of different industries that rely on access to electricity. 

Many residents of the Bay Area claim PG&E did not provide adequate information throughout the shutdown. The company’s website crashed while customers were hoping to find information about the dates of the outage and how long it would last. The resilience of residents has been tested as they have been left without hot water, internet connection, or cellular service, making it even more challenging to gather information and respond effectively. Dead traffic lights have caused backups and multiple crashes, injuring five people in Santa Rosa, CA. Long fuel lines have also made it challenging to get gas for generators, in addition to the currently high cost of $4 per gallon. The resilience implications of the outage are felt beyond daily life, however. The economic impact of the shutdown may be extremely significant for residents and small commercial and industrial businesses. 

Using the “Interruption Cost Estimate Calculator” created by the Lawrence Berkeley National Laboratory and Nexant, Michael Wara, Director of the energy and climate program at Stanford Woods Institute has estimated the cost to residential customers could reach a total of $65 million, while the cost to small commercial and industrial customers could get as high as $2.5 billion. Other researchers say that many costs are incalculable, as the costs are spread out through the economy, from workers who are unable to get paid to small businesses without generators who are forced to close. These costs develop further throughout the economy and disrupt supply chains. The outage has also disproportionately affected smaller rural towns, where residents incomes are much less than those in the Bay Area. Many people here are unable to afford a generator or the expensive gas required to run it, forcing them to cope with increased losses. In coming years, the risk of wildfires is only expected to increase. Dryer conditions and changes in the climate will make damage to power lines more likely. Greater preparedness efforts will be needed to enable communities to better adapt to these changes, and minimize the negative impacts of similar outages.

Sources and Further Reading

Californians Confront a Blackout Induced to Prevent Blazes – New York Times

500,000 in California Are Without Electricity in Planned Shutdown – New York Times

The Haves and Have-Nots of (Electrical) Power in California – New York Times

‘A cool billion’: Economists estimate PG&E outages could have big impact – San Francisco Chronicle

PG&E power outage could cost the California economy more than $2 billion – CNBC