Will Portland verdict impact Sisters' electricity?

In what could be the first verdict for private plaintiffs against a utility over a wildfire, a jury in Portland found PacifiCorp negligible for a series of wildfires in 2020 and awarded more than $72 million for property damage to 17 plaintiffs.

The verdict, rendered June 12, included about $67.5 million in noneconomic damages against PacifiCorp, which operates Pacific Power and is part of deep-pocketed Berkshire Hathaway Energy. PacifiCorp said it would appeal.

The verdict found PacifiCorp's actions willful, reckless, and grossly negligent. The trial moved to a second phase in which plaintiffs' lawyers are seeking punitive damages for the plaintiffs. Jurors also found liability to a class of thousands of property owners, who would be part of the second phase that could result in $15 billion in damages against PacifiCorp.

Other utilities have paid hundreds of millions of dollars, in some cases billions, to settle lawsuits over wildfires in California. In 2021, Southern California Edison and its parent company, Edison International, paid $4.6 billion to resolve litigation involving blazes and mudslides in the Los Angeles area in 2017 and 2018.

The Portland trial ensued from four wildfires in September 2020, where many evacuees sought refuge in Sisters. The lawsuit was filed by named plaintiffs seeking damages on behalf of a class of property owners.

The 12-person jury found PacifiCorp negligent on all major counts, including gross negligence, for causing the Santiam, Echo Mountain, 242, and South Obenchain fires. The fire in the McKenzie River Valley, dubbed the Holiday Fire as it ignited on Labor Day, disrupted traffic to and from Sisters for weeks.

In asking if the large award and potentially a $15 billion further verdict will have an impact on rates or operations in Sisters Country, CEC (Central Electric Cooperative) told The Nugget: "While we can't speak to the specifics of the class action lawsuit brought against PacifiCorp, the 2020 Labor Day wildfires were a tragic and sobering event and serve as a reminder for CEC to remain vigilant in taking every precaution possible to reduce the risk of our infrastructure contributing to the cause of a fire.

"We continue to implement our Wildfire Mitigation Plan, which includes preparing for a Public Safety Public Shutdown (PSPS) should extreme weather events and related criteria require executing one," Brent ten Pas, spokesman for CEC, said. "Simultaneously, efforts continue to inform and educate our members and the communities we serve on what they can expect from CEC and what they can do should a PSPS occur."

Rate impact

Sisters has among the lowest electric rates, at an average of 11 cents/kwh, lower than Bend's and Redmond's by a penny and lower than Oregon's 14.7 cents and the national average of 17 cents/kwh. Will that remain as more and more utilities cough up multi-billion dollar settlements?

Not surprisingly, last week PacifiCorp filed with the Oregon Public Utility Commission for a rate increase of $90 million, which, if approved, essentially covers the jury verdict. CEC is not an investor-owned utility but basically is owned by its customers.

Spokesman ten Pas is not saying that rates won't increase as utilities' cost of wildfire mitigation continues to rise. Nor is he saying they will.

"Central Electric Cooperative, as a not-for-profit, is a BPA (Bonneville Power Administration) preference customer, and the co-op gets nearly 100 percent of its power from BPA purchased through PNGC, a G&T cooperative, of which CEC is a member. PNGC also makes market purchases to supplement our power supply as needed," he explained.

Transformer shortage worsens

Meanwhile, the cost of transformers has doubled or tripled since 2020, and the lead time between order and delivery has grown from three months to a year plus. The average U.S. transformer is 30 to 40 years old - far beyond the intended lifespan of 25 years.

The transformer manufacturing industry was crushed by offshoring. The remaining eight U.S.-based companies that produce transformers satisfy only about 20 percent of the market, leaving America's 3,000 domestic electric utilities vulnerable to supply chain disruptions such as were widespread during Covid.

Sisters is experiencing unabated growth of both residential and commercial properties. As is all of Central Oregon, pushing up transformer demand. In the event of a disaster such as the Holiday Fire, the ability of CEC to replace lost transformers would be severely tested.

"As for the national transformer shortage, delays continue. Residential transformers take about a year, while commercial three-phase transformers face delays for up to two years," ten Pas said.

He added: "To help ease the immediate demand, CEC has partnered with a vendor to refurbish old transformers, returning them to us in like-new condition within weeks, and has also taken steps to secure production slots with vendors to help shorten the delivery timeline for new transformers."