California Businesses Confront an Uncertain Future as PG&E Says Power Outages Aren't Going Away

Even after the electric power returned to her family-owned shop in Kensington, Calif., Mairie Raxakoul was still feeling the impact on the business.

With high winds in the forecast, PG&E had warned it would shut down power lines to prevent the risk of wildfire. She kept the doors of Raxakoul Coffee open as PG&E delayed, then delayed again, its planned outage. Meanwhile, the neighbors who normally patronize her shop were more interested buying batteries and flashlights in the hardware store across the street than the coffee, cheeses, and ice cream in her refrigerated cases.

The lights finally went dark around 11 p.m. Wednesday, and stayed out for most of the next day. Raxakoul moved what perishables she could to another family store in nearby Berkeley, while scrambling to find a power generator. That proved prohibitively expensive: Surge pricing lifted the cost of the only local generator she could find to $5,300, a small fortune for a small business, while generators sold online might not arrive for days. In the end, Raxakoul bought $400 worth of dry ice, but even with that purchase the store threw out any food she thought had a chance of spoiling.

The aggregate cost of the outage on northern California businesses has yet to be tallied. An early estimate by Michael Wara, head of the climate and energy policy program at Stanford University’s Woods Institute, put the costs of interrupted business of a 48-hour outage near $2.5 billion. But the final tally could be far different: many populated areas were in the dark for less than half that time; and that figure does not include costs of, for example, spoiled foods at restaurants and grocery stores.

“When the lights came back on, I decided to stay open, but no one came. It was like a ghost town around here,” Raxakoul says. “The way this whole thing was handled, we couldn’t plan as well as we wanted to. As a small business, that really hurt us.”

Order restored…for now

The power outages that afflicted much of Northern California are largely over. Hundreds of thousands of affected PG&E customers can keep their phones recharged and pack away their camping lanterns. Restaurants aren’t rushing to relocate perishable food, and stores don’t have to pay employee wages while keeping doors shut until the power comes back on.

Order is restored—at least for now. But for some business owners—particularly mom and pop establishments that were been caught off guard—last week’s outages left a gnawing uncertainty about when and how often it could happen in the future, and how they can best prepare themselves.

If anything, the outage served as a kind of dress rehearsal for an event that could grow more frequent in coming years, disrupting businesses with lost revenue or increased preparation costs each time a utility shuts off power to ward off the threat of damage from high winds and low humidity. PG&E has warned that these outages could become the “new normal.” And if that’s the case, normal could mean more trouble for businesses ahead.

“We are in the business of giving power, not taking it away,” PG&E CEO Bill Johnson said in a press conference after nearly 2 million residents lost power. “This is not the future we want to live in.” But it may be the future that many businesses may be stuck with for some time, especially smaller businesses. Big tech companies in the Bay Area, in comparison, rely on higher grade power infrastructure than what many residential areas depend on.

Learning to Prepare

In areas like the line of shops in Kensington, the outage affected residents and business alike, mostly according to how well they were able to prepare. Kensington ACE Hardware did a brisk business Monday and Tuesday as forward-thinking neighbors stocked up on batteries, lanterns and other supplies.

Procrastinators who waited too late found empty shelves there. And, if they needed gasoline for their cars, they had to wait in long lines at the Chevron nearby. Tempers grew thin. Some shopkeepers said that when a PG&E worker showed up to do some maintenance, he caught an earful from frustrated residents passing by.

Brian Odell, who owns the town’s hardware store, has learned from a rash of power outages the area suffered many years before. He says the outage wasn’t a big deal for his store, which had a generator on hand. For the most part, the staff used flashlights to find items and write down their price.

It wasn’t all old school, though. A Square credit-card reader with a wireless connection helped the hardware store process digital payments. “It was a life saver,” Odell says. “I had to walk outside to get a decent cell signal sometimes, but that was something that we didn’t have during outages 10 years ago.”

Hardware stores like Odell’s are positioned to benefit from higher demand as people prepare for an event like a planned power outage. Shares of Home Depot and Lowe’s are up 3.3% and 3.9%, respectively, in the past week.

“Tuesday was our biggest day of sales ever,” Odell says. “It was a little chaotic.” But the rush was nothing like another wildfire-related event a year ago, when smoke from the Camp wildfire enshroude d the Bay Area for days, leading to a run on respirator masks. “We would come in in the morning and there would be a line going through the parking lot,” he says.

Whether it be wildfires in California, flooding in the midwest, or hurricanes on the Atlantic Coast, businesses are learning they need to prepare in advance for extreme climate events they might not have encountered before. In California, that might mean a detailed plan for outages, including having a generator on hand if needed, a way to handle sales in the dark, and a security system that could last during a days-long outage.

And PG&E, which knows as well as any company the potential costs a wildfire can inflict on a business, can help smaller businesses by offering better advance preparation in the future. That could help smooth things for entrepreneurs like Raxakoul.

“Every month, PG&E gets income from everyone around here,” she says. “I hope in the future they give us what we need to be able to maintain our sanity and just go on about our business.”