SACRAMENTO, Calif. — PG&E Corp. put a cost estimate of more than $25 billion Thursday on its effort to plant thousands of miles of power lines underground in an effort to tamp down wildfire risks.
Eight months after announcing the project as the Dixie Fire raged through Northern California, the utility's chief executive defended the expense as a "game-changing investment" that will make customers safer. The project will take years.
PG&E committed to the project last summer just days after it acknowledged to investigators that its equipment was the likely cause of the Dixie Fire, which began when a tree brushed against the utility's power lines in a remote area of Plumas County.
The Dixie Fire eventually blossomed into the second-largest wildfire in California history, burning 963,309 acres across multiple counties. More than 1,000 homes and other buildings were destroyed, and the fire devoured much of the tiny Plumas County community of Greenville.
Planting wires underground is one of the most expensive wildfire-risk strategies any utility can undertake — and it remains to be seen if the $25 billion estimate is high enough to cover the entire 10,000 miles that are to be placed underground in the areas deemed at most risk to wildfire across PG&E's territory.
The price tag is based on PG&E's belief that it can do the job for $2.5 million per mile. Yet PG&E plans to spend $3.75 million per mile this year, when it expects to complete 175 miles of work. And in a white paper published four years ago, PG&E said underground work costs $3 million per mile.
Nonetheless, Chief Executive Patti Poppe said she's confident that as the project ramps up, economies of scale and new technologies will bring costs into line. The utility expects to be planting 1,200 miles a year underground by 2026.
"We can dramatically reduce our costs every year," she said on a conference call with Wall Street investment analysts. "With scale, we can improve the unit costs."
While the expense of the project would be built into customer rates, Poppe said PG&E is embarking on cost-cutting efforts to keep customers' electricity bills down. "It's truly on us to make the business more efficient," she said.
The under-grounding project has been one of Poppe's signature programs since arriving at PG&E more than a year ago. She announced the project in Chico, not far from where the 2018 Camp Fire destroyed more than 13,000 homes and killed 85 people in the deadliest wildfire in state history.
In January, Cal Fire investigators confirmed that PG&E equipment caused the Dixie Fire.
Poppe acknowledged that the cost estimates for the underground project remain just that — estimates. Although the company has performed some preliminary work, it doesn't yet have contracts in place covering the full scope of the project.
"We have a lot more meat to put on the bones," she said. "We have to prove that out, we have to do it."
But she said the under-grounding effort is at the core of a series of initiatives that "give us a lot of confidence going forward in our ability to keep people safe."
The Dixie Fire was the latest in a series of mega-fires that has put PG&E under intense scrutiny from regulators and others. Prosecutors in five counties are investigating possible criminal charges, and the company has been subpoenaed by the U.S. attorney in Sacramento. As it is, PG&E is under indictment in connection with the fatal 2020 Zogg Fire in Shasta County and the massive 2019 Kincade Fire in Sonoma County.
