California Wildfires: Feeling the Heat

• Tara Kaushik, Partner, Holland & Knight, LLP • Joy Mastache, Senior Attorney, Sacramento Municipal Utilities District • Justin Wynne, Partner, Braun Blaising Smith Wynne, P.C. • Laura Manz, Director, Navigant Consulting, Inc. • Anne Selting, Analytical Manager & Head of North American P3 and Project Ratings, S&P Global Infrastructure Ratings

publicpower.org/academy Wildfires and the Effect of Climate Change

Tara Kaushik Holland & Knight California Wildfires: Feeling the Heat A Utility Perspective

Joy Mastache, Senior Attorney

APPA Legal & Regulatory Conference October 21, 2019 4:00 p.m.

Powering forward. Together. Wildfire Ignition

Only 1 in 10 wildfires are related to utility infrastructure • Objects contacting lines – Vegetation – Animals – Foreign materials (mylar balloons etc.) • Power lines slapping together • Equipment failure

– Poles and attachments SMUD’s 2018 Outage Report – Connections • Downed power lines

5 Key Risk Drivers and Impacts

Drivers and impacts are indicators that a risk event could occur, not a reflection of actual or threatened conditions. 6 The Wildfire Mitigation Plan (WMP)

Elements of Wildfire Plan Overview of SMUD’s WMP & SMUD’s Low Public Wildfire Risk Profile Outreach

i Qualified Enterprise Risk Independent Approach Evaluator’s Report

Board WMP Presentation Requirements and CWSAB  Review

September 11, 2019 7 Board Policy Committee Meeting and Special SMUD Board of Directors Meeting Wildfire Prevention Programs

Vegetation Design Inspection Recloser & Situational Education & Management & & De- Awareness Outage & Fuels Construction Maintenance Energization Comm. Reduction • Pole and wire • Non- • Aerial and • Transmission • Weather • Critical event clearing expulsion ground and stations messaging equipment patrols distribution • Right of way protocols • Camera pilot maintenance • System • LiDAR and upgrades infrared technologies

September 11, 2019 8 Board Policy Committee Meeting and Special SMUD Board of Directors Meeting Plan Effectiveness

Le a d Performance Program Monitoring Executive Me tric s Targets

• Completion of • Operations vegetation level • Chief Grid • Wire down clearing for • Compliance Strategy and events lines and rights and quality Operations • Ignition events of way assurance Officer • Miles of line • Internal and/or inspected external audit

September 11, 2019 9 Board Policy Committee Meeting and Special SMUD Board of Directors Meeting Costs

• Wildfire planning and prevention programs • Liability – Strict liability • Utility is liable if electric facilities a substantial cause of the fire • Inverse condemnation theory based on Constitution’s “takings” clause – Negligence • Prudent utility operator in circumstances • Compliance with regulations and industry standards • Insurance – Utilities paying up to 100% of liability coverage – Property owners unable to obtain coverage

10 Thank you.

11 A Changing Landscape: New Wildfire Regulations and Oversight for California’s Publicly-Owned Utilities

Justin Wynne Braun Blaising Smith Wynne, P.C. 915 L Street, Suite 1480 Sacramento, CA, 95184 13 Background General Order 95 vs. NESC

14 California never adopted and does NOT use National Electrical Safety Code

1915: R.R. Commission authorized to modify overhead electrical line construction requirements 1922: R.R. Commission adopts General Order (GO) 64 1941: GO 95 replaces GO 64 1997: GO 165 Adopted CPUC Jurisdiction

 CPUC has no authority over Publicly Owned Utilities (POUs) unless expressly granted by the Legislature. (Inyo v. Pub. Utilities Com., 26 Cal. 3d 154, 166 (1980))

 Minimum overhead construction requirements set in statute. (Cal. Pub. Util. Code (PUC) §§ 8001-8038)

 Applies to all “persons” (PUC § 8002)

 CPUC authorized to inspect, make changes, and enforce statutory requirements. (PUC § 8037) CPUC Jurisdiction

 1922 to 1998, CPUC never asserted jurisdiction over POUs.

 In 1998, CPUC asserted authority under §§ 8001-8038 extends to POUs. (D.98-03-036)

 Justified based on Polk v. City of Los Angeles, 26 Cal. 2d 519, 541 (1945)

 CPUC refuses to expressly assert penalty authority, but has never issued a fine against a POU.

 California POUs universally follow relevant GOs (95, 128, 165, 174) as primary industry standards. 17 Evolution of Wildfire Regulations 18 Response to 2007/2008 Fires

 2008: CPUC initiates Rulemaking  2009: CPUC Adopts  Interim maps designating high fire threat zones  Time-of-trim guidelines  Increased vegetation clearances in high fire threat zones  Minimum repair timelines for safety hazards  Increased frequency of inspections in high fire threat zones  Notification requirement when hazard discovered Response to 2007/2008 Fires

 2012: CPUC Adopts  Increased requirements for Communications Companies  Increased frequency of performing pole loading calculations  Requirements to help identify equipment owners on joint use poles  2012: CPUC approves SDG&E De-energization program  2012: CPUC initiates process to develop statewide wildfire threat map 21 Response to 2015 Fires

 Butte Fire ignited outside of high fire threat area  Statewide mapping process starts over  Extensive map development and review process  Each POU serves as a lead, drawing the map boundaries for its territory  Reviewed by industry review team  Reviewed by CALFIRE and team of Experts Legislature Loses Patience

 Senate Bill 1028 (2015)

 Requires IOUs to develop Wildfire Mitigation Plans

 Requires POUs to assess wildfire risk

 If significant risk found, POU must identify “wildfire mitigation measures” to reduce the risk of a catastrophic wildfire (PUC § 8387(c). 24 Response to 2017 Fires

 CPUC Adopts  Statewide High Fire Threat Map  Tier 3 (extreme)  Tier 2 (elevated)  Tier 1 (normal) CPUC Response to 2017 Fires

 CPUC Adopts  Reduced hazard correction timelines based on Fire Threat Tier  Massive increase in time-of-trim guidelines in the HFTD  Increase in minimum clearance requirements in Nor. Cal. HFTD  Increased wire to wire clearance requirements  CPUC directs PG&E and SCE to Implement de-energization programs similar to SDG&E Legislative Response to 2017 Fires

 SB 901 (2018)  All POUs (regardless of size and risk) must adopt Wildfire Mitigation Plans  Present to governing board by Jan. 1, 2020  Include minimum elements  Identify mitigation measures  Metrics for measuring plan performance  Consider de-energization and recloser protocols  Requirement for audit performed by qualified independent evaluator 28 Response to 2018 Fires

 CPUC Focuses on IOU WMPs  Key issue is Metrics  AB 1054, AB 111 (2019)  Wildfire Safety Division  In CPUC for 2 Years, then moves to Resources Agency  Has primary oversight for IOU WMPs  Wildfire Safety Advisory Board  7 Members (at least 3 with experience in electric infrastructure)  Makes recommendation to Wildfire Safety Division on metrics  POUs submit WMPs to Board each year.  Board provides POUs with “comments and advisory opinions” on content and sufficiency of WMPs. Response to 2018 Fires

 2019: CPUC Adopts De-energization Guidelines  IOU retains ultimate discretion  Special notification requirements for public safety partners, critical facilities, and “access and functional needs populations.”  Timing requirements for notifications  Requirement to develop interim transmission-level de-energization protocols (consider impacts to POUs) 800000 750000 700000 Public Safety Power Shutoff Events

600000 Customer Accounts Taken Offline

500000

400000

300000

200000

100000 60000 49264 20837 22000 13000 3 3 93 14000 650 5800 379 19 41 34 0 31 9/21/17 10/20/17 10/23/17 12/6/17 12/14/17 1/27/18 10/15/18 10/19/18 10/14/18 11/11/18 11/8/18 12/29/18 6/8/19 9/23/19 10/9/19 10/10/19 SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E PG&E SDG&E SCE SCE PG&E PG&E PG&E SCE Thank you!

Justin Wynne Braun Blaising Smith Wynne, P.C. 915 L Street, Suite 1480 Sacramento, CA 95814 [email protected] WILDFIRE MITIGATION PLAN STRATEGIES AND STANDARDS

OCTOBER 21, 2019

I. Overview I. Objectives of the Plan

II. Objectives of the WMP II. Description of Risk-Minimizing Strategies III. Roles & Responsibilities III. Risk Analysis & Risk Drivers IV. Wildfire Risks & Drivers

V. Wildfire Prevention Strategies IV. Wildfire Prevention Strategies

VI. Community Outreach / Public Awareness V. Emergency Preparedness & Response VII. Restoration of Service VI. Performance Metrics & Monitoring VIII. Evaluating the Plan CPUC Template WMP CMUA WMP Template WMP CMUA IX. Independent Auditor / Evaluator VII. Cost Estimates for Proposed Strategies

Source: CMUA POU WMP Template (2018)_ / CPUC R. 18-10-007 ALJ Ruling (2019)

Metrics for Plan Effectiveness • First round of metrics are activity-based targets – such as number of trees trimmed or miles of power lines hardened • Next round of metrics intend to gauge the of effectiveness of wildfire mitigation effectiveness risk reduction – E.g., Number of ignition events during high threat periods Continuous Improvement • Ten year gap after regulatory guidance for SDG&E during the wake of the 2007 fires • The last five years include several of the most catastrophic wildfires in the state’s history • Utility personnel training for integration of wildfire mitigation strategies within standard operating practices

Source: https://www.cpuc.ca.gov/firethreatmaps/

Evolving Practices Current Challenges

• Covered conductors within the HFTD • Lack of availably-trained personnel or contractors • Disabling reclosers during high fire risk periods to meet field work demand • Substation hardening • Training for personnel and inter-department • Enhanced vegetation management program coordination • Enhanced inspection practices with aerial support • Need for qualified arborists and fuels management • Pole-top cameras and weather stations crew • Infrared imaging • Procurement constraints for system hardening • Pole inspection and remediation resources • Community outreach and educational awareness • Access to remote areas for inspection and campaigns restoration efforts • Customer notification and communication • PSPS protocols need further development for protocols during and post high risk events coordination with public safety partners

Applications of Fault-Detection Technology • Utilities will investigate using Distribution Fault Anticipation devices that can provide deeper awareness to distribution fault/trip events based upon real-time monitoring and incident reporting – Research opportunity: Investigate similar application for transmission-level fault detections Rethink Solutions for Critical Facilities and Communities • Proactive de-energization aims to protect customers and communities from wildfire ignition potential • To help meet the state’s clean energy goals, innovative renewable solutions as an alternative to traditional diesel back up generation will need to be further researched – Navigant Research has investigated solutions utilizing islanding renewable microgrid designs to maintain business continuity during pre-emptive de-energization events • Line sectionalizing to segment out impacted circuits, better addressing areas of higher risk factor during PSPS conditions Situational• iRestore vendor Awareness • Securely connected applications capturing live incidents through public safety partnerships – iRestore App

Notice Regarding Presentation This presentation was prepared by Navigant Consulting, Inc. (Navigant) for informational purposes only. Navigant makes no claim to any government data and other data obtained from public sources found in this publication (whether or not the owners of such data are noted in this publication).

Navigant does not make any express or implied warranty or representation concerning the information contained in this presentation, or as to merchantability or fitness for a particular purpose or function. This presentation is incomplete without reference to, and should be viewed in conjunction with the oral briefing provided by Navigant. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from Navigant.

LAURA MANZ Director 858-354-8333 [email protected]

Anne Selting S&P Global Infrastructure Ratings

NCSHA Annual Conference & Tradeshow - October 14-16th, 2018 41

California Utility Ratings:

Notch Change Entity Rating / Outlook Framework Since Q2 2017

Enterprise Risk = ---- Pacific Gas & Electric Rating: D / --- -12 Co. Financial Risk = ---- D

Enterprise Risk = Strong Southern California Rating: BBB / Stable -1 Edison Co. Financial Risk = Significant BBB

Enterprise Risk = Strong San Diego Gas & Rating: BBB+ / Stable -2 Electric Co. Financial Risk = Significant BBB+

Enterprise Risk = Very Strong Sacramento Municipal Rating: AA / Negative +1 Utility District Financial Risk = Very Strong AA

Business Risk = Strong Glendale Water & Rating: AA- / Negative 0 Power Financial Risk = Strong AA-

Fire Season Timeline & Rating Impact

Detwiler Fire: July 2017 Mendocino Complex: July 2018 PG&E Files for Credit Profile as of Tubbs Fire: October 2017 Woolsey Fire: November 2018 Bankruptcy Projection: October 15th, 2019 Thomas Fire: December 2017 Camp Fire: November 2018 January 29, 2019

July 12th, 2019: Governor Newsom signs bill for $21 billion wildfire fund.

Summer 2017 Fall 2017 Fall 2018 January 2019 Fall 2019

Ratings: Ratings: Ratings: A- BBB D PG&E PG&E PG&E Stable Negative N/A Southern Cal BBB+ Southern Cal BBB+ Southern Cal BBB Edison Stable Edison Negative / CW Neg Edison Stable San Diego A San Diego A- San Diego BBB+ G&E Stable G&E Negative G&E Stable AA- AA AA SMUD SMUD SMUD Stable Stable Negative AA- AA- Glendale AA- Glendale W&P Glendale W&P Stable Stable W&P Negative

California Wildfire Legislation: Credit Neutral for Public Power Utilities

Features of Legislation: – Wildfire Recovery Fund: Investor-Owned Electric Utilities must select one of two forms of state managed funds for recovering some or all wildfire liability.

– Comparable Operation Clause: Recovery hinges on the IOUs ability to demonstrate that it operated and maintained assets that triggered the fire in a manner consistent with those of a reasonable utility under similar circumstances.

– Safety Advisory Review: requirement that public power utilities file their plans with the state's California Wildfire Safety Advisory Board for review and comment.

Takeaways: Credit Positive: more frequent safety reviews will codify fire hardening & mitigation. Credit Neutral: public power utilities’ autonomous ratemaking authority helps shield them from potentially protracted and unpredictable proceedings. Credit Negative: does not change exposure to wildfire liability.

NCSHA Annual Conference & Tradeshow - October 14-16th, 2018 44

THANK YOU! Tara Kaushik Partner, Holland & Knight, LLP

Joy Mastache Senior Attorney, Sacramento Municipal Utilities District

Justin Wynne Partner, Braun Blaising Smith Wynne, P.C.

Laura Manz Director, Navigant Consulting, Inc.

Anne Selting Analytical Manager & Head of North American P3 and Project Ratings S&P Global Infrastructure Ratings