Ignoring the risk that erratic environmental climates can pose for companies worldwide can have catastrophic consequences for supply chains and the communities they serve. Climate can disrupt production, affect the workforce, alter shipping routes and, in one of the most dramatic examples, literally turn off the lights.
The Pacific Gas and Electric Company (PG&E) is being held responsible for hundreds of fires in California, including several major fires that burned hundreds of thousands of acres and killed at least 22 people. The consequences of failing to meet the risk of forest fires with an adequate response has the utility filing for bankruptcy, considering blackouts during severe drought conditions and raising costs for consumers down the pipeline.
The company spent years trying to shore up its equipment in the face of a years-long drought, but a lack of resources, commitment and urgency led to a situation in which PG&E now faces “billions of [U.S.] dollars in legal claims, the specter of bankruptcy, a federal judge forcing his way into utility operations, the possibility state regulators will break it into pieces, and potential state criminal charges including homicide, due to its continued inability to stop the fires from starting.”
PG&E lags far behind other California utilities, such as Sempra Energy’s San Diego Gas & Electric and Edison International’s Southern California Edison unit, in its efforts to implement fire-prevention measures along thousands of miles of power lines. Whereas the other two utilities had installed weather stations, replaced old power lines and poles, and cut down trees that stood in the path of power lines, PG&E has reportedly said that its own improvements won’t be completed until 2022. Despite a multi-year campaign and expenditures in the hundreds of millions of U.S. dollars to trim and cut down trees and replace old lines, the utility was unable to prevent fire after fire.