The Texas Trader at War with His Electric Company over Power Poles

Dow Jones
Yesterday

AMARILLO, Texas-Salem Abraham made his fortune trading stocks and commodity futures from the high plains of the Texas Panhandle. The self-described data junkie now has a new obsession: the wooden poles that carry power lines.

Ever since an aging pole in high winds snapped about 60 miles from his ranch and sparked what ballooned into the biggest wildfire in Texas history, Abraham has been studying the metal tags nailed on poles that indicate when they were last inspected.

Over the past two years, he has driven hundreds of miles crisscrossing the region, through back alleys and along highways to tally the condition of poles. He also fought in court to get the inspection records for poles along more than 200,000 miles of electric distribution lines in eight states served by Minnesota-based utility Xcel Energy.

"I'm just trying to figure out a puzzle here," Abraham said. "And when there's data involved, I'm pretty good at figuring out the puzzle."

His hypothesis is simple: Abraham thinks the records will show Xcel was negligent in Texas and had fallen behind in inspecting its equipment ahead of a February 2024 disaster that killed two people and 15,000 head of cattle.

Xcel has said its equipment was likely involved in igniting the blaze, but the utility disputes that it was negligent in maintaining and operating its infrastructure.

Abraham has a personal connection to this fight. He lost an estimated 3 million to 4 million trees at his ranch near his hometown of Canadian, in what became known as the Smokehouse Creek Fire.

"I can't get my trees back," he said. "We've got a bigger problem, which is this is everywhere. The world needs to know this is dangerous, and it's going to get worse."

The skirmish in this remote corner of Texas is part of a bigger conflict confronting utilities and their customers across the country. America's electric grid is under mounting strain. Much of the infrastructure was built in the years after World War II and is ill-equipped to meet the soaring power demands of the AI era.

Extreme weather conditions are wrecking equipment and challenging reliability. Wildfires such as the one in Texas are becoming more common and are no longer restricted to the West Coast and Hawaii. Utilities, regulators and lawmakers are grappling with how much money to invest to prevent fires-and how to make restitution when their equipment sparks a blaze.

That debate is loudest in California where an attempt by Gov. Gavin Newsom to limit utility liability for wildfires failed to make it through the state's legislature. Shares of PG&E and Edison International, the parent company of Southern California Edison, are down about 20% since the bid failed.

Other states are also wrestling with how to manage wildfire risks.

Michigan regulators have told utilities to come up with plans for shutting off power in targeted areas when wildfire risks are high. Missouri is asking utilities for wildfire mitigation plans. A recent Kansas law would cap punitive wildfire damages against electric utilities at $5 million. Utah now allows utilities to establish wildfire funds to help manage liability risk and caps the value of some fire-related claims.

In Texas, Abraham's cause has won some support at the state capital in Austin.

Attorney General Ken Paxton sued Xcel in December arguing that inspections in the weeks before the fire showed some of the poles were deteriorating. In some cases, the poles had been in service since 1936. Abraham is a donor to Paxton, who is running for U.S. Senate.

As part of a temporary injunction, Xcel agreed to inspect 35,000 wooden poles a year in Texas and replace the most damaged poles as quickly as one day after inspection. The company has said it replaced thousands of poles in Texas and New Mexico in 2024 and is current with its replacement queue.

The utility estimated losses for the Texas fire of at least $460 million and has paid nearly $400 million in settlements through June. In Colorado, Xcel disputes its equipment was involved in the ignition of the deadly 2021 Marshall Fire in Boulder County but settled litigation for $640 million, without admitting fault.

In response to the growing wildfire threat, Xcel's recent actions include creating a 60-person mitigation team, deploying hundreds of weather stations and cameras, and undergrounding more power lines over the past two years.

"It's not a matter if we're behind," said Michael Lamb, Xcel's executive vice president and chief delivery officer. "It's a matter of learning from a rapidly evolving risk that is new to the world and to our industry."

Abraham wants to drive Xcel out of the region entirely. He would prefer to see a local rural electric co-op or a smaller publicly traded company in Amarillo take over the service and has organized a coalition of 10 towns to press for safety improvements.

Xcel said it is focused on delivering safe, reliable and affordable electric service and strengthening the system. "We have longstanding, positive working relationships with our communities," the company said.

Ousting a utility would be a rarity. Scott Hempling, an author of three books on utility regulation who teaches utility law at Georgetown University Law Center, said there's little precedent for communities to follow.

"I can't claim to be an expert on replacing utilities because nobody is-because it doesn't happen," he said, calling it a gap in regulation.

Mike Borger, the mayor of Pampa, Texas, one of the towns in Abraham's coalition, said he would like to see competition in the electric market, and that the coalition is producing results.

"Suddenly we're seeing poles being replaced in our area everywhere," Borger said. "I'm glad they're doing it, but that also says, 'Oh, wow. These guys are on to us. We better make a showing here.'"

Pole ownership isn't straightforward. While most wooden poles are owned by the utility, some belong to phone or cable companies.

On a recent afternoon, attorneys for Xcel and Abraham argued over pole inspection records in the Wheeler County Courthouse in the Panhandle. Xcel said it doesn't have a problem providing them but wants the records kept confidential.

A judge agreed with Xcel that the information will stay under a protective order, for now.

Abraham's attorneys received the files, but he wants to share the data with the Panhandle towns and "whoever wants to see it." He thinks people everywhere should start looking at their utility poles and pressing for replacement.

Lamb, the Xcel executive, says the conditions that can create large wildfires are worsening and moving east, and all utilities in North America should prepare.

"Get your house in order because it's coming to you soon," he said.

 

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