You Can Lead Californians to Wastewater, But You Can't Make Them Drink

(Image from San Diego Pollution Trackers)

Headline: California poised to allow ‘toilet to tap’ projects, in landmark water rule [bold added]

California water regulators are poised to approve long-awaited rules that will allow local water agencies to convert sewage — such as what drains from toilets and showers — directly into drinking water.

In what is probably an understatement

Acceptance among ordinary people who would drink the water remains a concern; [Kirsten] Struve estimates that one-third of the public is not keen on the concept. However, water experts believe that Californians are increasingly open to the concept — in part due to water scarcity struggles statewide.

Your humble blogger thinks that water "experts" are too optimistic that the public will drink treated wastewater. Many Californians don't even drink tap water now. According to a UC-Berkeley paper

The majority of Californians have access to safe surface water. Yet, 70% of Californians drink bottled water at least monthly (Lucas 2003). Over 35% of the bottled water sold in the U.S. is consumed in California and one third of Californians use such water as a primary source of drinking water (Allen 1994).

If this were a plot by the bottled water companies to increase their sales, it's genius.

When You Want Everything, You End Up with Nothing

(Images of class action lawsuits against HE)

After its 2019 bankruptcy resulting from wildfire liabilities, PG&E enacted procedures to cut off electricity preemptively when fire danger is high.

Now similar class-action lawsuits have been filed against Hawaiian Electric for not shutting down Maui's power lines.

Utilities may not be as legally responsible in Hawaii as they are in California. [bold added]

The company noted that there is no precedent in Hawaii, as there is in California, for property owners to receive compensation for damages caused by a private party such as an investor-owned utility, or from a government entity.

Hawaiian Electric also cited the dangers of shutting down electricity in the midst of a fire:

“Preemptive, short-notice power shut-offs have to be coordinated with first responders, and in Lahaina, electricity powers some of the pumps that provide the water needed for firefighting,” the company wrote. “A power shut-off can jeopardize the health and safety of the elderly, the disabled and those most in need.”

Hawaiian Electric management no doubt bears some responsibility, but IMHO government is at least equally culpable. Government regulates utilities because utility monopolies are free to set prices without being restrained by competition. The WSJ says that Hawaiian Electric and PG&E are simply following their State governments' orders:

If Hawaiian Electric’s lines did ignite the fires, it would echo the problems of PG&E, the California utility that filed for Chapter 11 bankruptcy in 2019 after getting sued for tens of billions of dollars for damages from fires caused by its equipment. The 2018 Camp Fire killed 84 people and razed the town of Paradise.

What both utilities have in common is that they prioritized growing renewable power to meet government mandates over hardening their systems and reducing fire risk. In 2015 Hawaii lawmakers required that 100% of the state’s electricity come from renewable sources by 2045. California and some other states followed with similar mandates.

Hawaii and California share another characteristic: the Democratic Party has held all state-wide offices and controlled the state legislature for over a decade. This means that the priorities of regulated businesses are the priorities of the Party: eliminating fossil fuels, promoting DEI (diversification, equity, and inclusion) and corporate ESG (environment, social, and governance) all supersede such mundane activities as hardening infrastructure and operating profitably.

The voters of Hawaii and California are getting what they wanted, and the victims of Paradise, CA, and Lahaina, HI paid the tragic price.

Winning by Losing

After the acquisition fell apart in 2016, NEE and HE's stock prices diverged, even before the Lahaina fires.

(This post is related to yesterday's about the collapse of Hawaiian Electric Industries' stock price.)

Seven years ago Florida-based NextEra Energy (NEE) failed in its attempted acquisition of Hawaiian Electric for $2.63 billion. The deal was rejected by Hawaiian regulators.

The ostensible reason was that NextEra did not provide enough details about whether its green-energy plans were sufficiently compliant with Hawaii's own goals. In truth there was a local element that would have resisted any takeover of HE, a Hawaiian institution that was more than 120 years old.

NEE, with a current market cap of about $137 billion, must be thanking its lucky stars that the deal fell apart. With a wealthy Mainland parent company who would be convenient to blame, the Maui victims and lawyers would try to extract $billions in damages from HE's parent.

In NextEra's case the failure to make a deal was the best deal.

Chased Away

At 10 a.m. yesterday the water pressure in the house dropped to zero. I looked out the window. A couple of utility trucks were in the street.

Presumably the interruption was going to be brief, else the workers would have knocked on the affected homes' doors and informed everyone. One could also infer from the absence of signs that the shut-off was unplanned.

After an hour with no water I walked across the street. The homeowner explained that his plumber had damaged the line to the neighborhood, and the City had to close the valve while contractors fixed the leak. Maybe another hour, he said.

Not wishing to wait around, especially if nature called, we left an hour early for the appointment at the Apple Store to fix an Apple Watch.

Any irritation I felt evaporated. I felt sorry for our neighbor, who may be on the hook for the street repair costs, not to mention a plumbing job gone wrong. I felt grateful to live in a City that could respond so quickly to a utilities emergency. And I appreciated living close to safe shopping malls, work-out clubs, and restaurants where we could pass the hours. When we got back in the afternoon the water was back on, and the men were still working in the street.

San Francisco is only 20 miles north, but it seems much farther away.

Evergreen Headline

"Water Rates are Going up Again."

With apologies to the U.S. Post Office, "Neither snow nor rain nor heat nor gloom of night stays these water rates from swiftly increasing on customers' bimonthly bills."

Nothing customers do will prevent the increases. When we let our lawns die due to the drought, the fixed sewer charges (imposed even if one doesn't use any water) rose to $100 per month. Now that water is plentiful from the winter rains, the rates are still going up.

The reason is "due to projected increases in the San Francisco Public Utilities Commission (SFPUC) wholesale water rates and to provide necessary revenue for the maintenance, operation, and capital costs associated with the water distribution enterprise over a five-year term."

Economics 101 teaches that public utilities are often monopolies, can impose whatever prices they want, and therefore need to be regulated. "Regulatory capture" commonly occurs, and the regulatory agency usually rubber-stamps price increases.

That's why our water rates always go up, no matter how much or how little rain we get.

Adding to the List of Worries: Brain-Eating Amoeba

The hot springs of Hot Ditch (Chron photo)

Another reason to limit your swimming to the ocean and chlorinated swimming pools:

Headline: This popular California hot spring reportedly still has brain-eating amoeba present in the water

Recent water testing of a popular California hot springs destination called Hot Ditch in Bishop (Inyo County) reportedly found that the same brain-eating amoeba that killed an 8-year-old boy in 2018 remained present in the water.

Dutch Benjamin Abbott and his parents visited Hot Ditch, a series of man-made water ponds in Bishop in October of 2018. Several days after they returned to Los Angeles, he experienced pain that he described feeling as if a “drill was going through” his head, according to the family’s lawyer, Scott Boyer.

He died a few days later.

Health officials confirmed he was infected with Naegleria fowleri , an amoeba that primarily enters through the nose and spurs an infection that’s fatal is 97% of cases, according to the CDC.

It's tragic enough that a boy died in 2018, but it's worse that nothing has been done by the Los Angeles Dept. of Water and Power in the intervening four years, according to a lawsuit:

The lawsuit claims DWP has failed to properly monitor, regular and chlorinate the water, warn visitors to the danger, and utilize a filtration system capable of protecting them...The lawsuit alleges that Keough’s Hot Springs’ practice of dumping their waste water into what’s called a diversion, which then mixes with the natural water, has created a breeding ground for the amoeba.

No one will be fired, and any damages will be covered by the ratepayers. It's good to work in the public sector.

The Fire Next Time

California is inching its way toward a program for mitigating future damages by utility-caused wildfires. [bold added]

Paradise, 2018 (Chron photo)

[Gov. Gavin] Newsom has proposed extending a Department of Water Resources charge that was originally imposed because of the energy crisis in the early 2000s. The charge could be extended for more than a decade, netting as much as $10.5 billion.

Under the first financing option, known as a “liquidity fund,” the state would be able to provide a line of credit for utilities to pay wildfire claims. But the utilities would have to reimburse the fund.

The second option would work more like insurance, paying out claims directly. If all three utilities [Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric] participated, they would match the $10.5 billion charge by providing $7.5 billion up front and annual payments of $300 million to finance the rest, all with investor — as opposed to ratepayer — money. The insurance fund, which would be managed by the state, could take other steps — including buying reinsurance — to bring its total capacity up to about $40 billion, according to the governor’s office.

Ratepayers, taxpayers, existing bondholders, and stockholders will all have to contribute to the fund. In the 1980's PG&E stock was one of our first investments, using Peter Lynch's investment principles. We got out 15 years ago when the energy industry began to change, and it didn't look like PG&E had a handle on what was happening.

By the way, in the stampede toward solar energy the fire danger may be increasing due to higher geographic dispersion and more exposure to the atmosphere than a traditional power plant. Articles:

Fire Concerns with Roof-Mounted Solar Panels

(Photo from blfirerisk)

One of the many dangers to solar panels is how the panel and its mounting system impact the combustibility of the overall roof system. Some solar panels, for example, include a backing of highly combustible plastic.

In laboratory-based fire tests of roof assemblies, the maximum allowable fire spread is between approximately 20 and 40 ft2 (1.9 and 3.7 m2), depending on whether an A, B or C rating is desired. In actual roof fires with roof-mounted solar panels, fire damage has involved areas of between 1,000 and 183,000 ft2 (93 and 17,000 m2). In the most extreme case the fire spread to the inside and destroyed the entire building.

‘Avian Incident’ Knocks Out 84% of Massive California Solar Farm

An “avian incident” sparked a fire at one of California’s biggest solar farms, affecting 1,200 acres and knocking out 84% of the California Valley Solar Ranch’s [250 megawatt] generating capacity.

A Huge Solar Plant Caught on Fire, and That's the Least of its Problems

On Wednesday, May 25, [2016] Ivanpah's operator, NRG energy, confirmed the fire was indeed caused by mirrors that did not track the sun properly, which focused sunlight onto the wrong part of the tower [in San Bernardino County].

Steep Price for Corporate Virtue

Virtue Signaling by individuals is questionable, but it only affects the person doing it. When a business virtue-signals, it can divert management's attention from key missions like serving customers and earning a profit for shareholders. Such is the case with Pacific, Gas, and Electric, now bankrupt, which curried favor with the green crowd. [bold added]

(Chronicle photo)

The California utility’s moves over the past 10 years to rely more on renewable energy sources such as wind and solar resulted in high scores on environmental, social and governance [ESG] metrics, which are considered by many investors to be a positive factor in choosing a stock and used by others to manage risk...

Both firms evaluate companies on a broad range of issues. Under the heading of environmental, for example, MSCI and Sustainalytics assess corporations on issues such as carbon emissions, raw-material sourcing and climate-change vulnerability.

ESG is a poor predictor of financial success:

2015 VW share price after cheating 

as of November 2018, Sustainalytics rated PG&E in the top 10% of its peers in the environmental category, and the firm had singled the California utility out in 2017 as one of 10 companies world-wide best positioned to take advantage of emerging ESG trends...

PG&E isn’t the only high-rated company that has faced an ESG-related selloff in the past year. Facebook shares have fallen more than 20% since its peak over the summer, a decline that many analysts attribute to its handling of a data-privacy controversy...

Similarly, Volkswagen was historically viewed as a strong ESG company before the 2015 disclosure that the German auto maker systematically cheated on emissions tests. In that case, MSCI raised governance concerns about the firm ahead of the scandal and later attributed “Dieselgate” to Volkswagen’s mismanagement....An investor who bought Volkswagen shares in April 2015 would show a loss of more than 35% on the investment.

With its very existence at stake, PG&E seeks to shed itself of long-term renewable energy contracts that gave it a high ESG rating.

PG&E has agreements to purchase power from about 350 energy suppliers representing $42 billion, according to Bankruptcy Court papers. The company says it entered into most of the agreements to satisfy California’s renewable energy requirements, and the contracts typically last for 15 to 20 years or more.

Renewable energy prices have fallen significantly since the contracts were put in place, creating an opportunity for PG&E.

When a company touts all the great things it's doing for the environment and "social justice", take a second look. If it's more than PR, do your portfolio a favor and walk away.

Disappointing the Plaintiffs

Deep-pocketed PG&E has responded to a blizzard of lawsuits over last month's fires by stating [bold added]

last month’s Wine Country wildfires may have been started by electrical equipment not owned or installed by Pacific Gas and Electric Co., the utility said in a legal filing Thursday.

A filing Thursday from PG&E states that while fire investigators are still trying to determine what caused the Tubbs Fire, “preliminary investigations suggest that this fire might have been caused by electrical equipment that was owned, installed and maintained by a third party.” [snip]

October’s wildfires, which included blazes in the Sierra foothills and Orange County, caused more than $3.3 billion in damage, according to an estimate from the state’s insurance commissioner. California utilities can be held liable for economic damages from wildfires caused by their equipment, even if they followed all applicable safety regulations.

Marginally relevant: the aging telephone pole
outside my parents' home has more cables and
transformers every time I visit Honolulu.

Even if PG&E equipment did not initiate the fire, downed power lines likely contributed to its spread. The utility will have to cough up something, though that amount will disappoint the plaintiffs.

Plus ça change

Honolulu: as power needs grow, the tangles get worse.

Telephone poles and overhead power lines have been a ubiquitous part of the Honolulu landscape ever since I can remember. They're still in every neighborhood a half-century later despite the danger and poor esthetics. The cost of burying infrastructure (electricity, trains) is enormously expensive, so little has been done.

In Napa and Sonoma counties Pacific Gas and Electric faces similar costs to Hawaiian Electric and did not bury most of its power lines.  PG&E is being blamed for starting or at least exacerbating the fires that have raged for over two weeks. The property damage--estimated so far at well under $5 billion--is much less than putting power lines throughout Northern California:

A new underground distribution line across most of PG&E’s territory costs about $1.16 million per mile, according to data filed with state regulators during the utility’s most recent general rate case. That’s more than twice the price of a new overhead line, which costs about $448,800 per mile. Most of the difference comes from the expense of digging a trench for the cable.

Prices rise within cities, where the work is more complex. A 2015 San Francisco report found that recent costs for moving power lines underground in Oakland had averaged $2.8 million per mile, while similar work in San Jose had cost $4.6 million per mile.

And burying high-voltage transmission lines — the kind usually strung from immense steel towers across long distances — can cost as much as $5 million per mile, according to PG&E.

Overhead lines are also easier and cheaper to fix:

Repair crews have no trouble spotting a knocked-over power pole or downed line. But when an underground line fails, operators first have to figure out where the problem occurred, without being able to see it — though sensors attached to the power lines can help narrow things down. Then they have to dig.

After the fires are out, expect to see the usual kabuki: personal stories of loss, public chastisement of PG&E, damage assessments, lawsuits, and settlements paid years from now. By then the new overhead power lines should be up and running.

Rail Power

For years we've been pestered by door-to-door salespeople who are trying to push solar panels. Though we've given a couple of them extended hearings (some of the products are financially complex--certainly worthy of a separate post), we have declined for two principal reasons:

1) the technology is improving rapidly, and we would hate to have buyer's remorse in a few years;

2) storage (i.e., battery) solutions haven't gotten to the point where we could be completely off the grid; one of our goals is to be independent of PG&E.

Energy storage is a problem faced by alternative energy systems. The wind doesn't always blow, the sun doesn't always shine, and both wind and solar

require extra, large-scale infrastructure to store the energy so that it is available on demand and not just when it’s windy or sunny.

Ingenious energy storage solutions often involve gravity: water is pumped uphill using solar energy during the day, for example, then rotates turbines as it runs downhill during the night. But water is not always available or suitable.

ARES: don't call it Sisyphus

Advanced Rail Energy Storage (ARES) has designed an ingenious energy-transfer system involving railcars that are carrying rocks:

The rocks stand in for the water in a pumped-storage system. They are carried up- and downhill by a train that is thus the equivalent of the turbines.....The hill ARES has chosen has a gradient of about 8%. The track itself is just under 9km (about 5½ miles) long. The company estimates that its proposed system will be able to store 12.5 MWh of energy, and deliver it back to the grid at a rate of up to 50MW.

Storage technology will undoubtedly improve, but probably not to the point where weights could be deposited on my roof during the day, then lowered during the evening. Besides, the neighbors will complain.

Under Pressure

The master control valve was rusty but
gave way to determination + a pipe wrench

Displaying more than my usual initiative, I wielded the pickax on Friday afternoon to prepare the flower bed for spring planting. After fifteen minutes of chopping, the pickax struck something hard. Water began welling from beneath the surface. Oh #@!!% (look elsewhere, dear reader, for a blog on disciplined Lenten purification).

I turned off the valve to the house, but the water continued to flow. A fairly desperate call (it was Friday, remember) at 4:35 to the city water department, now closed, referred me to the Foster City Fire Department. And so it was that a fire truck with five firefighters pulled up, surely an inefficient use of public resources but I certainly wasn't complaining.

After 15 minutes of fiddling with various valves and connections, the firefighters unlocked the master control valve near the curb and shut off the water to the property. Apparently the developer in his haste had run a water line directly to the sprinklers without going through the house system.

On a serious note, the problem of undocumented underground utility lines is a nationwide problem:

Failure to locate underground utilities before you dig can result in disruption of services to individual homes or entire neighborhoods. Even worse, cutting into some buried cables or pipes can result in injury or death. But, underground pipes and cables can be hard to find. In some instances, they have been recorded on GIS [geographic information system] mapping. In many cases, however, there is no record of where this underground infrastructure has been buried.

Glue gets it done

Who knows what other surprises lurk beneath the surface? In these drought-ridden times perhaps it's finally time to pull out all the flora--without digging too deeply, of course--and put in a rock garden.

[Update - 3/1/15: fortunately the leak was from a PVC pipe and I was able to replace the section myself on Sunday morning.

(BTW, I found that so-called "glue-free" lockable couplings weren't leak-free under continuous water pressure)]

Something Important That's Done Well

It’s much easier to criticize than to create, especially when the topic is government. With government-provided services we can’t buy an alternative (police, firefighting) or can only obtain a substitute expensively (private education). If we’re unhappy about the state of affairs, we have to wait years to express our displeasure at the ballot box. People of all political persuasions know the feeling of being stuck and frustrated. That’s why it’s important to recognize government agencies when they do perform well, if only not to sour us on the whole enterprise.

Thanks to the visionary engineers of the 20th century and the ongoing management of the San Francisco Public Utilities Commission, many Bay Area residents are blessed with some of the best drinking water in the nation. From the 2008 report on water quality:

The sources of drinking water (both tap water and bottled water) include rivers, lakes, streams, ponds, reservoirs, springs, and wells. For the SFPUC systems, the major water source originates from spring snowmelt flowing down the Tuolumne River to the Hetch Hetchy Reservoir, where it is stored. This pristine water source is located in the well-protected Sierra region and meets all federal and state criteria for watershed protection. Based on the SFPUC’s disinfection treatment practice, extensive bacteriological-quality monitoring, and high operational standards, the State has granted the Hetch Hetchy water source a filtration exemption. In other words, the source is so clean and protected that the SFPUC is not required to filter water from the Hetch Hetchy Reservoir.

84% of the tap water for our town of Foster City comes from the Hetch Hetchy. Clean running water adds immeasurably to the quality of our lives, yet it's easy to take for granted. Here’s one taxpayer who doesn’t. Salud!