Los Angeles Times - 31.10.2019

C4 THURSDAY, OCTOBER 31, 2019 LATIMES.COM/BUSINESS

Stocks on Wall Street
rose broadly Wednesday,
sending the Standard &
Poor’s 500 index to a new
record high for the second
time this week, as investors
welcomed the Federal Re-
serve’s decision to cut inter-
est rates again.
The nation’s central bank
also indicated that it won’t
lower rates further in the
coming months unless the
economic outlook worsens.
The Fed has been using its
power to cut short-term in-
terest rates in a bid to shore
up the economy amid the
costly effects of the U.S.-
China trade war.
Stocks wobbled shortly
after the Fed’s announce-
ment, which had been widely
anticipated by traders. The
market then rallied into the
close, led by gains in technol-
ogy and healthcare stocks.
Bond yields fell.
“The rate cut was ex-
pected, and also the market
had been expecting a change
in the language regarding
another rate cut this year,”

said Quincy Krosby, chief

market strategist at Pru-

dential Financial. “The Fed

just basically upped the bar

for another rate cut by sug-

gesting that the economy is

in a good place.”

The S&P 500 index rose

9.88 points, or 0.3%, to

3,046.77, beating the record

high it set Monday.

The Dow Jones industrial

average rose 115.27, or 0.4%, to

27,186.69. The Nasdaq com-

posite rose 27.12 points, or

0.3%, to 8,303.98.

The Russell 2000 index of

smaller-company stocks fell

4.23 points, or 0.3%, to

1,572.85.

In addition to the interest

rate news Wednesday, the

Commerce Department

said the U.S. economy

slowed to a modest growth

rate of 1.9% in the July-

through-September quar-

ter. That surpassed econo-

mists’ forecasts for even

weaker growth, however.

The report indicated that

consumer spending down-

shifted and businesses con-

tinued to trim their invest-

ments in response to uncer-

tainty caused by the trade

war and a weakening global

economy.

Technology and health-

care companies drove much

of the market’s broad gains

Wednesday. Microsoft rose

1.3%. Johnson & Johnson

climbed 2.9%.

Energy stocks took the

heaviest losses. Chevron slid

1.5%. Helmerich & Payne fell

4.3%. The sector dropped

2.1%, lowering its gains for

the year to just 1.1%. That’s

the smallest gain of all the

sectors in the S&P 500.

Several big banks helped

drag down financial sector

stocks as bond yields de-

clined. The yield on the 10-

year Treasury note dropped

to 1.77% from 1.83%.

The yield is a benchmark

for interest rates that banks

charge for mortgages and

other loans. JPMorgan

shares fell 0.6%. Bank of

America slid 1.4%.

Investors also continued

to focus on a steady flow of

corporate earnings.

Apple, Facebook and

Lyft climbed in after-hours

trading after reporting

quarterly results that beat

Wall Street’s forecasts. Twit-

ter slumped after the social

media company announced

it is banning political ads

from its service.

MARKET ROUNDUP

S&P 500 again climbs to new record

Index

Dow industrials

S&P 500

Nasdaq composite

S&P 400

Russell 2000

EuroStoxx 50

Nikkei(Japan)

Hang Seng(Hong Kong)

Close

Daily

change

Daily % YTD %

27,186.69 +115.27 +0.43 +16.54

3,046.77 +9.88 +0.33 +21.54

8,303.97 +27.12 +0.33 +25.15

1,969.94 -0.67 -0.03 +18.45

1,572.85 -4.22 -0.27 +16.63

3,289.17 +8.54 +0.26 +19.17

22,843.12 -131.01 -0.57 +14.13

26,667.71 -119.05 -0.44 +3.29

Major stock indexes

change change

Source: AP

associated press

massive methane leak at

Southern California Gas’ Al-

iso Canyon storage field in

2015 and ’16.

“Nothing’s perfect. There

is no perfectly safe way of de-

livering electricity or gas to

people’s homes,” Auffham-

mer said.

Asked about the electric

grid shutoffs, gas company

spokesman Chris Gilbride

said it’s increasingly clear

that the state needs “more

than an oversimplified, one-

size-fits-all approach to en-

ergy use in buildings that

balances our climate goals

with the diverse needs of

California’s 40 million resi-

dents.”

“This is not a debate

about which appliances

work best in a power outage

or natural gas versus elec-

tricity for that matter,”

Gilbride said in an email.

“This is about how best to

keep Californians safe and

provide every family and

business with the afford-

able, reliable and resilient

energy services they need.”

Electrification advo-

cates, though, see a looming

battle between natural gas

and electricity, with the

power shut-offs as a wild

card.

They say local govern-

ments and state policy-

makers must limit the effect

of the preemptive blackouts

and make sure California’s

climate programs aren’t de-

railed.

Perhaps the most obvi-

ous solution is helping

homes and businesses in-

stall backup power systems,

such as solar panels paired

with batteries. The state

ought to provide funding for

low-income households that

can’t afford to spend tens of

thousands of dollars on

those systems, Borenstein

said.

“We pay for a lot of infra-

structure through the state

budget,” he said. “We do lots

cars and trucks that run on
petroleum, and electric heat
pumps and cooktops in-
stead of traditional gas fur-
naces, water heaters and
stoves.
The natural gas industry
has warned that electrifying
buildings could be a big mis-
take, citing the Public Safety
Power Shutoffs, as the pre-
cautionary blackouts are
formally known.
Southern California Gas
Co. — which is engaged in a
sweeping campaign to pre-
serve the role of its pipelines
in powering society — told
the state’s Public Utilities
Commission in August that
communities affected by
preemptive blackouts “need
a hedge other than electric-
ity for obvious reasons: Elec-
tricity is the one energy sup-
ply that will be turned off.”
Those communities could
use gas-powered microgrids
to keep the lights on, the gas
company suggested.
Similarly, the advocacy
group Californians for Bal-
anced Energy Solutions —
which has received funding
and political support from
the gas company — tweeted
about PG&E’s first round of
preemptive blackouts this
month, writing that policy-
makers should be wary of
“putting all eggs in one ener-
gy source basket.”
“We must consider all en-
ergy methods to mitigate
drastic and widespread im-
pact,” the pro-gas group
wrote in another tweet the
next day.

No easy answers
Those types of warnings
could have “a serious poten-
tial negative consequence”
on efforts to slash planet-
warming carbon emissions,
said Severin Borenstein, a
UC Berkeley energy econo-
mist who serves on the
board of the California Inde-
pendent System Operator,
which oversees the power
grid.
“The best hope we have of
dramatic decarbonization is
through electricity,” Boren-
stein said. “And that is going
to be through an electrical
grid.”
For that reason, it’s im-
portant not to let reliability
concerns get in the way of
electrification, Borenstein,
Wara and some other energy
experts say.
They point out that many
gas appliances actually need
electricity to operate, as do
smart thermostats such as
Google’s Nest. Although gas
fireplaces and cooktops
work during an electricity
outage, gas furnaces gener-
ally don’t. Neither do tank-
less gas water heaters, un-
less they have battery
backup.
Electrification propo-
nents also say phasing gas
out of homes and businesses
will take decades. Public
Safety Power Shutoffs, on
the other hand, could be-
come less common within a
few years as electric utilities
harden their infrastructure,
even if the phenomenon
doesn’t go away entirely. Gas
pipelines have their own reli-
ability problems, said Maxi-
milian Auffhammer, an envi-
ronmental economist at UC
Berkeley. He cited the
PG&E pipeline explosion
that killed eight people in
San Bruno in 2010, and the

of low-income support pro-

grams through the state

budget.”

Looking to local

government

Government-run energy

providers known as commu-

nity choice aggregators, or

CCAs — which now serve

about one-quarter of Cali-

fornia residents — say they

could play a major role in

helping homes and busi-

nesses install rooftop solar

systems and batteries to

protect themselves against

blackouts.

CCAs don’t operate the

poles and wires at the heart

of the state’s wildfire crisis —

that’s still the job of investor-

owned utilities across most

of the state. But they are re-

sponsible for electricity

rates and customer incen-

tive programs, and many of

them have chosen to pri-

oritize local energy re-

sources. The CCA serving

Alameda County, East Bay

Community Energy, re-

cently signed a contract

with Sunrun to buy 500 kilo-

watts of “resource ade-

quacy” from rooftop solar

panels and batteries the San

Francisco company plans to

install at low-income single-

family and multifamily

homes.

Basically, the CCA will

pay Sunrun for the right to

draw power from the solar-

plus-storage systems. And

when PG&E’s electric grid

goes down during a preem-

ptive power shut-off or other

emergency, those low-in-

come homes will be able to

keep the lights on, East Bay

Chief Executive Nick Chaset

said.

East Bay is planning a

much larger purchase of

similar solar-plus-storage

resources. This time, the

CCA may tell potential ven-

dors to prioritize homes

most likely to have their

power shut off preemptively

by PG&E, or perhaps cus-

tomers who depend on med-

ical devices that run on elec-

tricity, Chaset said.

“So far, we have not seen

PG&E come out and do

this,” he said. “This is more

in the wheelhouse of a CCA.”

Some experts are think-

ing about ways to make

PG&E and other for-profit

utility companies more sup-

portive of customer-owned

power sources.

Take Lorenzo Kristov, an

energy consultant who

spent nearly two decades as

a top policy expert at the

California Independent Sys-

tem Operator.

Kristov has been working

with two clean energy advo-

cacy groups on a proposal to

convert PG&E to an “open

access distribution system

operator.”

It’s a fancy way of saying

that the beleaguered utility

— which filed for bankruptcy

protection this year in the

face of tens of billions of dol-

lars in potential wildfire lia-

bilities — would largely be-

come a poles-and-wires

company, more interested in

facilitating electricity trans-

actions than in selling

power.

In Kristov’s vision,

PG&E shareholders would

be rewarded when the utility

works with clean energy de-

velopers and local govern-

ments to promote “distrib-

uted energy resources” such

as rooftop solar panels, com-

munity microgrids and so-

lar-plus-storage systems at

hospitals and other crucial

facilities.

“Part of the answer to

this anxiety on power shut-

offs is, ‘How do we become

less dependent on the

grid?’ ” Kristov said. “Not,

‘How do we become less de-

pendent on electricity?’ ”

Utility customers who re-

duce their dependence on

the grid could avoid another

pitfall of electrification: elec-

tric rate increases as PG&E

and Edison spend billions of

dollars insulating wires,

trimming trees, building

weather stations and taking

other steps to limit wildfire

ignition risk.

Mike O’Boyle, director of

electricity policy for San

Francisco research firm En-

ergy Innovation, said electri-

fication is key to California’s

climate goals. But consum-

ers already pay more for

electricity than they do for

gas. A widening price gap

could “tip the scales” against

electrification, O’Boyle said.

“We need to have afford-

able, cheap, clean electric-

ity,” he said. “If we don’t have

that, it’s going to stand in the

way of progress.”

A grid in transition

Wildfires and blackouts

are far from the only chal-

lenges facing California as

the state works toward a

goal of 100% clean energy by

2045.

In the short term, energy

regulators are worried the

planned shutdown of three

Southern California gas-

fired power plants will

threaten reliability by mak-

ing the state too dependent

on solar and wind farms,

which generate electricity

only when the sun is shining

or the wind is blowing. In the

long run, there’s no good so-

lution yet for how to run a

grid dominated by solar and

wind power, particularly

during periods when the sun

and wind disappear for days

at a time.

Then there’s the Diablo

Canyon nuclear plant, which

can generate electricity

around the clock and is Cali-

fornia’s single largest source

of climate-friendly power.

State officials approved

an agreement between

PG&E and environmental

groups to replace the nucle-

ar plant’s output with a com-

bination of renewable ener-

gy and storage. But the de-

tails of that replacement

power are yet to be deter-

mined, and critics say natu-

ral gas use is likely to rise.

Consumers, meanwhile,

are increasingly being asked

to change the way they use

energy.

Electric utilities are im-

plementing time-varying

rates meant to encourage

people to use more energy in

the afternoon, when solar

power is plentiful, and less in

the evening.

Electric cars and home

batteries could help con-

sumers balance out their de-

mand — if they charge and

discharge strategically.

Some experts have also

called for larger “demand re-

sponse” programs in which

utilities pay customers to

cut back when extra power is

needed on the grid.

Transitioning to an emis-

sions-free power grid was ne-

ver going to be easy, said

Carl Zichella, director of

Western transmission for

the Natural Resources De-

fense Council, a nonprofit

environmental group. The

threat posed by fires to grid

reliability makes the work

even harder, he said, but not

impossible.

“This is something we

cannot shirk. We have to get

ahead of it,” Zichella said. “I

don’t see any diminishment

of the intensity or interest in

doing this.”

Outages may hurt clean-energy shift

THE PLANNEDshutdown of three Southland gas-fired power plants is another threat to reliable electricity.

Al SeibLos Angeles Times

[Outages,from C1]

Report, a transparency tool

that tracks political spend-

ing on the platform, custom-

ers have spent more than

$857 million on Facebook

ads about social issues, elec-

tions or politics in the United

States and Canada since

May 2018, representing

nearly 2% of the company’s

ad revenue in the region.

Zuckerberg reiterated

Wednesday that Facebook’s

policies on political advertis-

ing were not motivated by fi-

nancial incentives. He add-

ed that allowing political

candidates to buy ads re-

gardless of whether the ads

are truthful follows in the

spirit of Federal Communi-

cations Commission regula-

tions on political advertis-

ing.

In broad strokes, those

regulations require radio

and television stations li-

censed by the FCC — but not

online platforms such as

Facebook or Twitter — to

run advertisements directly

paid for by political candi-

dates regardless of their con-

tent.

The issue gained promi-

nence in September when

Twitter, along with Face-

book and Google, refused to

remove a misleading video

ad from Trump’s campaign

that targeted former Vice

President Joe Biden, a lead-

ing Democratic presidential

candidate.

In response, Democratic

Sen. Elizabeth Warren, an-

other presidential hopeful,

ran an ad on Facebook tak-

ing aim at Zuckerberg. The

ad falsely claimed that

Zuckerberg endorsed

Trump for reelection, ac-

knowledging the deliberate

falsehood as necessary to

make a point.

Critics have called on

Facebook to ban all political

ads. This includes CNN chief

Jeff Zucker, who recently

called the policy of allowing

lies ludicrous and advised

the social media giant to sit

out the 2020 election until it

could figure out something

better.

form of President Trump,

updated its policies in June

to say it would label — but

not remove — tweets from

government officials that

broke its bullying and har-

assment rules. Twitter’s rule

applies to what it calls veri-

fied leaders, representatives

and candidates with more

than 100,000 followers on the

platform, though it says

there are cases, such as “di-

rect threats of violence or

calls to commit violence

against an individual,” in

which it might take down an

official’s tweet.

Dorsey said Wednesday

that the language of the offi-

cial Twitter policy reflecting

the ban on political ads

would be made public by

Nov. 15 and would be en-

forced starting Nov. 22.

In an indirect response to

Zuckerberg, whose argu-

ments in favor of allowing

political advertising on

Facebook have emphasized

the importance of free

speech and expression in the

political discourse, Dorsey

ended his thread by saying:

“This isn’t about free expres-

sion. This is about paying for

reach. And paying to

increase the reach of politi-

cal speech has significant

ramifications that today’s

democratic infrastructure

may not be prepared

to handle. It’s worth step-

ping back in order to ad-

dress.”

The new policy is unlikely

to have much effect on Twit-

ter’s bottom line. The com-

pany said last week that po-

litical ads brought in less

than $3 million during the

2018 midterm election cycle,

an amount that represents

less than 0.2% of its 2018 U.S.

revenue.

On Facebook’s earnings

call Wednesday afternoon,

about an hour after Dorsey’s

announcement, Zuckerberg

said he expected ads from

politicians to constitute less

than 0.5% of Facebook’s rev-

enue next year. According to

the company’s Ad Library

Twitter to reject all

political advertising

[Twitter,from C1]