Californians were forced to contend with rolling blackouts throughout the week after a catastrophic heatwave wreaked havoc on the state's power supply. A combination of poor planning and poor execution by state agencies and power companies are to blame for the two days of rolling blackouts throughout the state.
Rolling blackouts were instituted over as a result of immense stress on California's electrical grid, coming as a consequence of an intense heatwave that ravaged the state throughout the weekend. The California Independent System Operator, the institution that manages most of California's electrical grid, declared a stage 3 emergency and issued a "flex alert" asking residents to conserve electricity where possible, as well as ordering power companies Pacific Gas & Electric (NYSE: PCG) and Southern California Edison (Parent company Edison International) (NYSE: EIX) rolling blackouts to ease the strain on California's electrical grid.
Governor Gavin Newsom ordered an investigation into the source of the blackouts, which was determined outside the official inquiry to be a combination of technical strain and a lack of resources. Despite the energy sector in California being increasingly embattled, mainly due to the intense scrutiny focused on PG&E due to its role in a string of wildfires due to poor practices, it appeared that the majority of the fault with the rolling blackouts lay with regulators, and not power companies.
The primary catalyst was a significant shortfall in available power, caused by 15% of California's electrical grid being inoperable, and some plants performing below average. Regulators had been attempting to rely on power plants that were no longer in operation and had apparently not adjusted their contingency plans to account for this.
Other issues included miscommunication, with regulators being misinformed of the operational status of some power plants. The Inland Empire Energy Center, a natural gas power plant, was listed as being operational despite the plant being decommissioned early and being partially demolished. A geothermal power plant was listed as operating below capacity, despite Calpine Energy, the plant's operator, reporting that the plant was, in fact, running at full capacity.
Power regulators informed Governor Newsom that they were looking into why the state was so ill-prepared. However, this did little to assuage the Governor, who lambasted regulators for the shortfall.
"Grid operators were caught flat footed, unable to avert disruptive blackouts and to adequately warn the public," Governor Newsom said.
As of Thursday, the threat of rolling blackouts seems to be dissipating. Flex alerts had not been issued, with the California ISO reporting that it did not expect any significant disruptions. The end of disruptions is primarily due to power conservation measures.
PG&E has been on a downward trend over the last week, likely due to the lack of confidence in the utility operator amid another round of issues with California's electrical grid. PG&E stock is down 2.6% since Monday, though at the time of writing, it appeared that PG&E stock was showing some recovery in after-hours trading.
Edison International, the parent company of Southern California Edison, has also trended down this week, ending trading on Thursday 2.6% down since Monday.