Indirectly with PSPS: Wildfire Resilient Electric Grid Cost-Benefit Decision-Making

The Cost Tradeoff Decisionfor a Wildfire-Resilient Grid Utilities face a tough tradeoff when it comes tomanaging wildfire risk: continue absorbing the highcosts of Public Safety Power Shutoffs (PSPS), orinvest in long-term solutions like undergrounding high- A single one-hour summer-afternoon outage costsan average large commercial or industrial customerapproximately $82,000 and an average small ormedium commercial customer approximately $1,200,according to Lawrence Berkeley National Laboratory’s Once prohibitively expensive, distributionundergrounding is increasingly benefiting fromindustrialized delivery models, with standardizeddesigns and strategic sourcing helping drive down Set against event-driven losses, the ratepayer cost ofundergrounding the highest wildfire-risk distributioncircuits is finite, recoverable over time, and comes In its 2023 General Rate Case decision for PG&E,the California Public Utilities Commission (CPUC)authorized undergrounding 1,230 miles of distributionlines in the highest fire-risk areas — an action thatincreased the typical residential customer’s combinedmonthly electric and natural gas bill by approximately With undergrounding now central to building gridresilience, the next general rate case cycle willdetermine whether utilities can justify large-scaledeployment through circuit-level economics that weigh The Cost of GoingDark — and the That cost asymmetry — open-ended, recurringPSPS exposure on one side and a finite, recoverableinvestment on the other — is the central argument ofthis paper. Distribution undergrounding converts an For utilities, regulators and ratepayers, the debateis no longer whether undergrounding is justified inthe highest-risk corridors, but how quickly capitalprograms can scale to deliver it, and how clearly that PSPS are the industry’s most visible near-termtool for preventing utility-ignited wildfires, but theireconomic toll on ratepayers and regional economiesis substantial. The Stanford Woods Institute for This shift is being supported by a rare convergenceof regulatory and federal policy. The CPUC and theFederal Energy Regulatory Commission (FERC)have tightened cost-discipline requirements whileproviding clear pathways for undergrounding projects The ResilienceTipping Point: Undergrounding has shifted from a discretionaryaesthetic enhancement to a foundational pillar ofgrid resilience. Federal frameworks and utility capital The case for undergrounding is not limited to wildfirerisk mitigation, it can be aesthetic and environmentalas well. In the U.K., for instance, the Visual Impact While approximately 20% of the U.S. electricdistribution system is now underground, transmissionundergrounding remains a specialized application.Only a tiny fraction of transmission lines at or above Climate Change,Droughts, and the For utility leaders, the pilot phase is over. It is nowa period of high-conviction, data-driven execution,where underground assets must demonstrably The urgency of grid hardening is amplified by thesevere drought gripping the U.S. West. The winter of2025–2026 produced the worst snowpack deficits indecades, with snow water equivalent levels reachingrecord lows in multiple states. In March 2026, theNational Integrated Drought Information System Drivers of Change:Wildfire Risk Across the U.S. West, wildfire risk is the primarycatalyst for undergrounding capital allocation. Becauseundergrounding eliminates ignition risk along treatedsegments, it has become a cornerstone of long-term Conditions deteriorated sharply in March after anunprecedented early-season heat wave shatteredtemperature records across the Southwest.Temperatures exceeded historical averages by 52°F to63°F across parts of California, Nevada and Arizona, with some locations recording their highest Marchreadings in over a century.13A rapid analysis by the In Colorado’s Front Range, these conditions havealready produced operational consequences: XcelEnergy executed multiple shutoffs between December2025 and March 2026, cutting power during extreme For utilities and regulators, these conditions reinforcethe need for permanent risk reduction. While PSPSevents remain a critical near-term tool, they imposesignificant burden on customers, local economies,and grid reliability. Even mature programs treatthem as a last resort: PG&E’s PSPS protocols, filedannually with the CPUC, document layered decision The compounding effects of snow drought, recordheat, and desiccated vegetation are creatingconditions for a potentially severe wildfire season.The National Interagency Fire Center has identifiedelevated wildfire potential across parts of the Westthrough the summer.15The absence of persistent Wildfire risk has become apersistent, accelerating liabilitythat demands capital investment Each shutoff underscores the long-term value ofundergrounding, which eliminates the ignition riskthat drives PSPS dependency in the first place. Asclimate change creates extreme weath