Substation Infrared Monitoring Systems
Switchgear • Substations • Oil and Gas • Mining

Profitability vs Public Good

It’s a long-held, yet antiquated, belief that benefiting the public good means sacrificing your profit. Yet, in 2019, businesses are adopting sustainable initiatives, promoting “go green” marketing, and making public displays of looking out for more than their bottom line.

However, some boardrooms and executives may still harbor some fear that their profitable future could be held back by too many philanthropic or public-minded programs and policies. 

Recent history tells a different story.

What We Can Learn From PG&E & The California Wildfires

Pacific Gas and Electric recently appointed a new Chief Executive and 10 new board members to help improve operational efficiency and safety standards following a multi-million-dollar liability cost from wildfires. 

The flames that tore through California in 2017 are being connected to faulty and degraded PG&E electrical equipment, including electric power and distribution lines, conductors and the failure of power poles. The company is also being investigated for liability concerning the 2018 wildfires – resulting in a total potential liability cost of $30 billion (not including potential punitive damages, fines and penalties or damages related to future claims). Their business practices have driven them into a bankruptcy reorganization. On top of these liabilities they will be unable to pay dividends to shareholders for the foreseeable future. This is a devastating blow to their brand in the eyes of investors and capital markets generally.

What happened here? Was PG&E simply lazy with their safety monitoring and equipment maintenance? Or, is the entire model of safety and maintenance when it comes to electrical equipment and substations just smoke and mirrors? 

According to California law, utility companies are liable for damages caused by their equipment even if they were meeting maintenance requirements/standards. 

Exposing Cracks in the System: How We Can Respond

One of the main goals for all businesses, regardless of industry, is to improve and protect their profitability. After all, today’s profits are what keep businesses alive for the future. Part of improving that profitability is ensuring that the systems in place for safety and maintenance are routinely inspected and improved.

With their pending bankruptcy and the industry’s shift toward green energy (DERs) in response to the threat presented by climate change, PG&E are making some improvements in how they can provide long-term electric system hardening, including:

  • Installing nearly 600 new high-definition cameras in high fire-threat areas, increasing coverage across these areas to more than 90 percent.
  • Conducting accelerated safety inspections of over 5,500 miles of transmission lines, including approximately 50,000 structures in high fire-threat areas, in addition to routine inspections and maintenance. 
  • Replacing equipment to further reduce risk to its system and tailoring upgrades based on terrain and weather conditions using more granular analysis of fire-prone regions.

These are all steps in the right direction. And, while increased inspections and the use of cameras in high-risk areas are positive changes, we are still witnessing a lack of continuous, 24/7 monitoring. Not only would this provide coverage around the clock, but it would also provide amazing data for predictive analysis to avoid disasters like this in the future.

What if, instead of being mutually exclusive, profitability and the public good are two branches of the same tree? 

In the wake of these devastating fires and the massive financial blow PG&E is weathering, it’s easy to see how keeping the public good and profitability intersect.

PG&E is not the only company holding costly liabilities, though for most companies the liabilities remain unexposed.  Consequently, the PG&E story is serving as a wake-up call to many other IOUs. It’s clear that practices in keeping with the status quo will lead to an increased level of scrutiny and liability moving forward, with outcomes that could be both costly and dangerous.

The issue here isn’t one of negligence, it’s one of ignorance. With PG&E providing a crystalline example of how this system of maintenance is outdated, it’s time we look to sustainable solutions for the future. Our profit and the public we serve depends on it.