Remember this phrase – Condition-Based Maintenance.  CBM.   Crash and Burn Maintenance.  CBM.  

The San Bruno explosion should be a wake up call.  As the inevitable regulatory reviews, recriminations and revisions of history play out in the wake of San Bruno, it is important to keep CBM in mind because it is one of the most nefarious and dangerous lingering effects of the deregulation mania that swept over California and the nation in the last 15 years.  It must be eliminated from utility practice.  Let me explain.

Utility systems provide essential services whose loss even for a moment can be devastating in a very short time. – in the  case of manufacturing processes a matter of milliseconds.  For this reason operation and maintenance of these systems should be rigorously scrutinized and high standards enforced.  This is especially true of gas pipeline systems, because the substance they carry, methane gas under relatively high pressures, can be highly explosive and dangerous.

For decades standard practice in the utility industry was to perform Preventive Maintenance (PM) at relatively short intervals, with regular inspections between preventive maintenance applications.  This provided a high degree of assurance that equipment or material failures would not occur.

Deregulation placed a premium on cost cutting, job cutting and corner cutting, in the name of maximizing profits.  Preventive maintenance was one of the casualties.  It was replaced by CBM, Condition-Based Maintenance.   CBM is a concept that substitutes inspection intervals for maintenance intervals, with actual maintenance occurring only as needed based on the observed condition of the equipment or system.  If system or equipment is close to failure, maintenance or replacement is supposed to be performed “just in time.”  However, as San Bruno demonstrated, the inspections can miss something and place our communities literally at risk of blowing up.  There is no place for CBM in the utility infrastructure for delivering essential services and explosive substances.

The risk of catastrophe is enhanced in California because even though improved inspections can identify potentially hazardous conditions that warrant repair or replacement, the actual maintenance and capital spending by the utilities is set at a level that deliberately cuts safety margins to the edge of failure.  For example, gas utilities in California are currently operating pipes and equipment far beyond their designed life, with schedules for replacement as much as seven years into the future.

The PG&E San Bruno explosion has sparked a renewed sense of urgency in addressing infrastructure safety issues.  There are federal initiatives to improve pipeline safety that pre-dated San Bruno; there are state and federal investigations and there is sure to be a flurry of legislative proposals in the wake of the disaster that focus on improved inspections.  But until the philosophy of utility deregulation and the practice of CBM – push equipment and systems to the brink of failure in the name of cost-cutting – are eliminated, we have to ask: Whose neighborhood will blow up next?  Spin the chamber and pull the trigger.

Carl Wood is the Democratic candidate for the 65th State Assembly district (Riverside and San Bernardino Counties). Wood is a member of the Utility Workers Union of America and former Public Utilities Commissioner.  He has worked as a power plant maintenance electrician.

The “infamous case” cited by Robert Cruickshank is actually much worse than reported in Thursday’s Chronicle.  Under Pete Wilson’s PUC, PG&E under-spent (pocketed) multimillion dollar maintenance allowances included in rates, including its tree-trimming budget, not once but in three successive triennial rate case cycles.  The unspent ratepayer funds went right to the corporation’s bottom line.

When I was appointed to the PUC by Governor Gray Davis in 1999, the commission was about to vote on a new PG&E rate case.  The administrative law judge who heard the case, disgusted by the company’s performance, drafted a decision reducing the rate request by hundreds of millions of dollars.  The expectation of workers at the utility was that PG&E would respond with hundreds of layoffs rather than accept a reduction in profits.  

I offered an alternate decision that required the company to actually spend the money on tree-trimming (necessary to minimize service interruptions during storms and prevent wildfires), or return it to ratepayers.  My proposal passed 3-2, and over the next 3 years PG&E finally dealt with a decade’s accumulation of untrimmed trees.

The implementation of other reforms included in that decision, such as requiring the utility to track the condition of its electrical distribution system, meet its service appointment deadlines or pay penalties directly to the affected customers, and inspect homes for carbon monoxide was derailed by PG&E’s self-serving bankruptcy filing at the height of the 2000-2001 Energy Crisis.  After Gov. Davis caved in to corporate pressure and appointed anti-consumer commissioners (such as Susan Kennedy, currently Gov. Schwarzenegger’s Chief of Staff), any chance of serious regulatory oversight by the PUC disappeared.

This is another example of what is at stake in this year’s elections.  The new governor will be able immediately to appoint a majority to the PUC.  Whether this powerful commission will answer to consumers or to the industry it is supposed to regulate will turn on the outcome of the vote on November 2.

Utility Workers Union leader Carl Wood is the Democratic candidate in the 65th Assembly District (Riverside and San Bernardino Counties).

As a former California Public Utilities Commissioner (1999-2004), I would like to offer a few thoughts about smart meters.

“Smart” meters are devices that can remotely report electricity and gas usage readings as often as hourly to utilities without the need for human meter readers.  The justifications offered by proponents are twofold.  First, it is claimed that utilities can control electricity usage by sharply raising rates during hours of high system demand, thus discouraging consumption and reducing the need for additional generation capacity.  Second, customers can supposedly benefit by moving their usage to hours when demand and prices are low.

While most residential customers are skeptical, this analysis has tremendous appeal to energy producers and market-oriented economists and regulators, the same folks who brought us the electrical deregulation catastrophe in 2000-2001.  What is almost never part of the public discussion is the real motivation of smart meter proponents.

Utilities make their money in two ways: they are reimbursed through rates for their reasonably-incurred costs of providing service, such as paying their workers; and they are fully repaid plus  a “reasonable” rate of return for long-term capital investments in their systems (“rate base”).  Only the second adds to corporate profit, the bottom line.  Replacing functioning existing meters, which have already been partially or fully amortized and have a low rate base, with expensive new ones provides a guaranteed stream of profits for decades to come.  

For example, Southern California Gas Company’s new meters, recently approved by the PUC, add over $1 billion to rate base and will bring the shareholders hundreds of millions of dollars in profits over the next 26 years, even if they don’t work as advertised or become technologically obsolete during that time.  As 1000 union jobs are eliminated in Southern California, customers will lose the safety-related services provided by human meter readers, even though there is no net cost savings from the new technology.

Most residential and small business consumers cannot afford the expensive systems that would enable them to automatically control their consumption in response to hourly price changes.  The winners here will be large industrial and commercial consumers and perhaps some very wealthy homeowners.  Even if non-time-of-use rates are maintained as an option for small consumers, they will go up as large consumers escape regulation that apportions utility system costs among classes of consumers.  In fact, this outcome has always been a central goal of deregulation.

Despite opposition from consumer advocates, Schwarzenegger’s PUC has enthusiastically rubber-stamped every smart meter project that has come before it.  Whoever is elected Governor in November will be able immediately to appoint a majority of this powerful commission.  Progressives need to make sure that the issue becomes part of the election debate.

[Full disclosure: I represent Utility Workers Union of America, Local 132 in its opposition to smart gas meters at the PUC; and I am President of the Board of The Utility Reform Network (TURN), which is leading the campaign to disclose the failings of PG&E’s smart meters.  I am also the Democratic candidate in the 65th Assembly District.]

It’s a happy day in Spain today.  Sure, the whole World Cup was kind of a big deal.  But there’s something else:  Spain has now leapfrogged the United States as the biggest producer of solar power.

Spain has opened the world’s largest solar power station, meaning that it overtakes the US as the biggest solar generator in the world. The nation’s total solar power production is now equivalent to the output of a nuclear power station.

Spain is a world leader in renewable energies and has long been a producer of hydro-electricity (only China and the US have built more dams). It also has a highly developed wind power sector which, like solar power, has received generous government subsidies. (GuardianUK)

I’ll save you all the technical details that got me (as a huge nerd) interested in the story, but instead look at the economic and societal impacts.  In the end, rankings really don’t have much of a real meaning. I guess that it’s good for the Spanish national psyche, which after the 20% unemployment and the “socialist” government’s ill-advised austerity program could use a boost.  But, the greater issue is what is Spain doing better than us.  And here in California, we should be kicking Spain’s butt all on our own.

After all, we have all the inherent advantages (and many more) that Spain has.  The California economy is bigger than that of Spain.  The Spanish economy is roughly 1.46 trillion, ours is roughly 1.85 trillion. Spain has plenty of sun, we have plenty of sun.  Spain has a population that is concerned with the environment, as does California. (Though we’ll get some hard numbers with the Prop 23 question of AB32 repeal.)

So why is Spain now producing a nuclear power station’s worth while we’re still diterhing around the margins?  Well, there’s the obvious issue of our grid.  The upgrading of the grid was supposed to be one of the big projects emerging from the Recovery Act, and that’s happening as we speak. BUt, unfortunately, that’s still going to take a while.  The funding was cut down from the original bill, and we will still need plenty of time to really be able to manage the grid as well as we hope to in the future.  

We’ll also need to think about combining energy storage capacity with the new green energy.  You can start with flywheels and that sort of thing, but the big hope on that front is a grid that can tap into a whole network of batteries parked in the garage of every house. Like…say a fleet of electric cars that can be charged and discharged in times of high or low loads.

But the biggest failure on our part is that we just haven’t aimed high enough. We’ve been content to play around the edges, and our power companies haven’t vigorously pursued green power.  This is one of the reasons that the defeat of Prop 16 was so critical. Had PG&E won that measure, they would have been able to shut down competition and controlled all of the purchasing of power.  Instead, we can work through our elected representatives to bring more green power.

In the end, you don’t get to be the world’s leader by spouting platitudes. It’s nice to hear the Governor talk about green power, and for Meg Whitman to tut-tut the concept. But California needs a leader that will affirmatively drag our economy into the new green economy.  Years ago, they used to call Jerry Brown Governor Moonbeam.

Well, today, we need Governor Sun Ray or Wind Gust.  How’s about it Jerry?

If ever any corporation earned regulatory legislation, PG&E did so when they spent nearly $50 million of ratepayer funds to try to pass a constitutional amendment to guarantee the monopoly.  And Mark Leno is making it happen.

Senator Mark Leno today announced legislation that would prevent Pacific Gas & Electric Company (PG&E) from using ratepayer funds to finance future political campaigns. The bill allows the corporation to continue participating in political campaigns, but stipulates that money derived from ratepayers cannot be used for political or public affairs expenditures.

Senator Leno’s bill requires PG&E to report its annual political and public affairs spending to the California Public Utilities Commission. The PUC will ensure that all political and public affairs spending identified in this report did not derive from ratepayer funds.

This is already the rule for municipal utitilies.  And, frankly, if PG&E wants to guarantee its monopoly so much, they should be totally fine with competing on a level playing field.

What do you think the odds of that are?

I’ve been a political campaign junkie for years.  And the frustrating part about this job is that after going to Election Night parties, I have to go home and write about it for readers to view the next morning.  So if a particular race takes the whole night to resolve, I could be up very late.  But I had no problem sticking around the “No on 16” campaign party last night until 1:00 a.m. – monitoring the results with Supervisor Ross Mirkarimi, State Senator Mark Leno and our good friends at TURN.  Because last night’s defeat of Prop 16 was one of the most historic victories in California history.  Outspent over 1,000-to-one by a monster utility company, consumer advocates defeated by a 52-47 margin an odious measure that would have cemented PG&E’s monopoly. To call this a David & Goliath victory does not give it justice.  As my friend Robert Cruickshank wrote at Calitics, it’s like “an ant taking down an elephant.”  Oh, and Prop 17 failed too.

PG&E is desperate to stop community choice aggregation – where local governments can purchase energy to offer their constituents a “public option” to the company’s monopoly.  Proposition 16 would have required a two-thirds vote of the electorate before cities can do community choice aggregation, and cynically dubbed it the Taxpayer’s Right to Vote.

Never mind that taxpayers already have the right to vote out their elected officials – if they don’t support community choice aggregation.  Never mind that ratepayers were not given the chance on voting for PG&E as their energy provider.  Public power is not even one of my top “issues,” but I was outraged that PG&E would try something like Prop 16.

PG&E shattered campaign spending records with $46 million to pass Prop 16 – ratepayer money that we give them every month when we pay our energy bills.  The only organized opposition was TURN (the Utility Reform Network), who only raised $90,000.  Bloggers got creative by making “No on 16” videos, and a hilarious Twitter feed.  But the campaign often seemed like a rag-tag army tilting at the windmills.

When I arrived at the “No on 16” party at Otis Lounge around 9:30 p.m., the results were looking bad.  We were down by about three points, but the night was still young.  Having watched statewide campaigns for years, I knew it would ultimately come down to Los Angeles County – so I quickly went online to check how we were doing down there.

Not good.  The early absentees had Prop 16 winning L.A. County by 13 points, far worse than where we were statewide.  If this kept on during the night, it was going to be painful.  The public power entity in Los Angeles had just raised rates, and folks at the party said it may be why Prop 16 was doing so well.  Small comfort for the largest county in the state.

Mark Toney of TURN was saying we should be proud that we held PG&E to such a close margin, after having been outspent nearly 1,000-to-one – but I cringed when I heard that.  We were losing.  Sure, we were doing pretty well in Northern California – where people know and hate PG&E, but we were getting creamed down south.  Where the votes are.

But as the night wore on, some folks pointed out how well we were doing in counties like Fresno, Madera, and Mariposa.  These are conservative places in the Central Valley, but PG&E had alienated these customers with “smart meters.”  I checked how we were doing in San Benito County – which political junkies often say is the bellwether of California state politics.  We were slightly ahead in San Benito County, but only by about 50 votes.

And the L.A. County numbers were trickling in – slowly, but surely.  We were still losing there, but the margin was noticeably trending in our favor.  By now, everyone at the party was huddled around a small number of laptops – while I double-checked the Secretary of State’s website with what individual counties were saying.  Places like San Diego and Orange County were coming in where we were behind, but we were not losing ground.

Pretty soon, our three-point loss became a one-point lead – and there was a palpable sense in the air that we could win it.  I wasn’t convinced yet – scouring the L.A. County numbers to see if this positive trend in our favor was not going to start reversing itself.

When 58% of L.A. County had been counted, we were ahead there.  I got up, and boldly shouted that we had won.  It reminded me of the scene in Milk, when Jim Rivaldo tells Harvey Milk not to worry about the Briggs Initiative.  L.A. County had just come in, and we were going to win.  By now, I was sure that we had slain the Prop 16 dragon.

During that whole time, Proposition 17 – Mercury Insurance’s scam to rip off consumers – had been ahead by a wider margin than Prop 16.  As we were all fixated on the Prop 16 results, it became apparent that Prop 17 results were following similar trends.  By the end of the evening, Prop 17 had likewise had the same fate – it also lost by about five points.

As of 4:00 this morning, Prop 16 is losing 47-53 – with 91.6% of all precincts reporting.  Not only is this a stunning rebuke of PG&E, but it is a strong mandate for public power.  Californians want a choice in the energy marketplace, and are ready for a “public option” that provides them with competitive rates and renewable energy sources.

And PG&E will deserve every share of anger, rebuke and humiliation coming at it.

Paul Hogarth is the Managing Editor of Beyond Chron, San Francisco’s Alternative Online Daily, where this piece was first published.