California Finalizes Climate Change Adaptation Measures for Utilities | Article

Images of the West Coast’s wildfires demonstrate some of the most dangerous threats of climate change. Thousands of homes have been destroyed, tens of thousands of people have been evacuated, and over 30 people have lost their lives. For states like California, conditions are only getting worse. Over the past several years, climate change has made its presence more forcibly known in California, and its impacts are being seen across the country. With their latest infrastructure decisions, policymakers and agencies within California are setting a national precedent on how to integrate climate change adaptation strategy into state-level decisions.

In 2018, the California Public Utilities Commission (CPUC) opened proceeding R.18-04-109 to assess how utilities should prepare for the increasingly serious climate change risks that threaten their services and infrastructure. Already, critical utility infrastructure and services are threatened by climate change impacts such as flooding from sea-level rise, reduced efficiency from heat waves, and damages from wildfires. If utilities incorporate climate change adaptation into their planning processes and operations, they can continue to provide reliable services and mitigate risks associated with climate change.

At the end of August, the Commission issued Decision 20-08-046, which specifically addresses electric and gas utilities and how they should incorporate climate change adaptation measures into their planning processes. The decision requires investor-owned utilities (IOUs) to prepare Utility Vulnerability Assessments every four years in line with their rate case cycles. These vulnerability assessments serve to guide long term investments and decision making and cover three time periods: the next 10-20 years, 20-30 years, and 30-50 years. Utilities must describe the risks to their assets, provide options for dealing with their vulnerabilities, and implement climate change teams across all their departments.

Through this forward-looking process, utilities can decide where and how to make their infrastructure and energy system more resilient. Utilities could move generation and transmission equipment to higher ground away from rising sea levels or design them so they continue to function even when submerged. Expanding battery storage and investing in microgrids and decentralized generation can provide backup power during power outages from severe storms. For California utilities, improved vegetation monitoring and control can help reduce the risk of future wildfires caused by electrical sparks from power lines. Through vulnerability assessments, utilities can identify where investments need to be made in their system and take appropriate action.

The CPUC’s decision also requires utilities to submit Community Engagement Plans which address how they will engage with Disadvantaged Vulnerable Communities (DVCs) during their vulnerability assessment development process. Communities defined as DVCs include the 25% highest scoring areas according to the California Communities Environmental Health Screening Tool (CalEnviroScreen), all tribal lands, areas with median household incomes below 60% of the state median, and areas that score in the highest 5% of Pollution Burden with CalEnviroScreen but don’t receive an overall score due to poor data.

The CPUC wants utilities to be mindful of how climate change and any adaptation decisions may impact communities already threatened by climate change, high energy burdens, and other threats. In their reports, utilities must discuss how they incorporated equity in their climate adaptation planning and conduct surveys that assess the effectiveness of their outreach efforts. As part of a continuing process, the results are filed to improve future research.

California has some of the most forward-looking climate policies in the nation because, in part, the state is already suffering some of the most severe impacts of climate change. Other states and their utilities could take similar anticipatory action before climate-related damages become overwhelming. Already, many utilities across the nation face recurring threats and disruptions to their electric system and services that are linked to climate change, and these impacts are becoming more frequent and more expensive.

For example, utilities and their infrastructure in states along the Gulf and Atlantic coasts are threatened by hurricane winds and flooding, both of which could be made worse by climate change. Utilities may face hundreds of millions of dollars in damages from flooded substations, downed power lines, and damaged transformers. A 2019 McKinsey report reviewed the financial records of ten utility companies in seven states with recurring hurricanes and flooding plus New Jersey. McKinsey estimated that the average utility incurred $1.4 billion in storm damages and lost revenues over 20 years. The same report expects additional years of major damages and predicts the costs of utilities to rise by 23 percent by 2050. The CPUC’s decision serves as a model for other utilities to similarly integrate climate change adaptation into their own core planning processes as they prepare for the future.

Mohit Chhabra, a scientist with the National Resource Defense Council (NRDC), commented on the CPUC decision in a recent article in which he argues that climate models will help power providers understand how climate change will impact their infrastructure, customers’ energy demand, and their renewable energy supply. Focusing on the significance of the CPUC decision, Chhabra states that if utilities invest and increase the resiliency of their energy system, they can “[minimize] the risk of climate damage, thereby reducing the costs for repairs and rebuilds that would be borne by Californians through their energy bills.” Other utilities across the country can also make resiliency investments to reduce future costs and increase productivity while simultaneously improving their bottom line and benefiting their customers. Chhabra believes utility planning led by climate models coupled with appropriate investments in energy efficiency and demand response will strengthen the CPUC’s decision.

California stands out as a leader for the rest of the country to follow. The CPUC writes in its Decision that “energy utilities need this guidance to plan to continue to fulfill their mission to provide safe, reliable, and affordable service in the future’s more difficult operating environment.” Policymakers and regulators across the country can learn from the CPUC and the responses from utilities as they consider how they should plan for climate change.

Author: Hamilton Steimer