On this episode of Free Range, Mike Livermore interviews Katherine Blunt, a journalist at the Wall Street Journal and the recent author of California Burning: The Fall of Pacific Gas and Electric and What it Means for America’s Power Grid.

The conversation begins with the book’s narrative of criminal charges, with Blunt briefly describing the cast of characters and situations in the book that led to prosecutions for a violation of the Federal Pipeline Safety Act and 84 counts of involuntary manslaughter. The latter was one of the first situations in history in which a company was charged with homicide. (0:32-7:06)

Even with these successful criminal prosecutions, many were left with a sense of dissatisfaction. (7:07-10:30) Livermore and Blunt discuss some of the moral complexities of collective criminal liability. (10:31 - 17:45) Blunt highlights the fact that the victims compensation fund is tied to the future stock price of the company; different types of penalties have the potential to weigh on the company’s share price. The two also discuss the difficulty of recruiting new talent to work at a corporation when criminal liability may be at stake. (17:46 - 28:49)

The two move to discuss broader policy issues, including how regulated utilities receive returns on capital but not operating and maintenance (O&M) expenses. Blunt believes that the company had significantly underspent on O&M with serious negative consequences. (28:50 - 33:59)

Blunt discusses possibility that the charge given to PG&E — delivering safe, reliable, affordable, and clean energy — might be an impossible task. (34:00 - 41:21) The two shift to the topic of renewable energy. Blunt describes California’s ambitious targets for carbon reduction. California’s early investments in wind and solar helped create the economies of scale which made these forms of energy are affordable, but California’s ratepayers paid billions of dollars for this power. (41:22 - 45:25)

Livermore asks how people in California should feel about how this has all played out. Blunt responds that California’s contribution to reducing carbon emissions is rightfully a point of pride. But as a leader in climate change efforts, California has incurred a real cost. (45:26- 49:29)

Blunt then discusses the broader implications of the PG&E story. Utilities everywhere are going to have to confront new risks as a result of climate change. PG&E’s story demonstrates that if any company has a narrative of mismanaging risk, it’s going to be very challenging to get ahead of things. The consequences of the failure of the electric system are becoming greater, in both an acute and a broader sense. There are lessons here for every region of the country. (49:30 - 52:10)

A question that comes out of the book is how bad PG&E’s risk management practices were compared to other utilities in California. Blunt highlights the inherent tension between private interests and public good, which is present in every utility company. PG&E is hardly the only utility to mismanage that. Historically, PG&E’s mismanagement has been more acute than others and the consequences have been much greater. (52:11 - 55:55)

Blunt then turns to bigger picture questions of centralized versus distributed energy. In her view, distributed technology will play a role in how we generate and consume power and it has the potential to reduce the amount of large centralized infrastructure in the future. But, it is hard for her to foresee a future without a need for centralized generation and transmission carried over large distances. The model has a lot of challenges which are becoming more acute, but there is no great solution for a substantially different model. The only solution is to work within the parameters of what we have and make it better. (55:56 - 1:01:00)