PG&E Failed California. Here’s How the State Could Turn Things Around.

By Nathanael Johnson, senior writer at Grist and author of two books,Unseen City and All Natural. Follow him on Twitter @SavorTooth. Originally published at Grist

For the last 150 years, Pacific Gas & Electric has been playing political hardball to maintain its monopoly over California’s electricity.

PG&E, now infamous for its connection to wildfires and power outages, started life in 1852, when three brothers — the Scots-Irish Donohues — began laying gas pipe through the muddy streets of Gold Rush-era San Francisco. Over the following decades, the company swallowed rivals, growing into an investor-owned giant with a monopoly on the power and gas lines to the cities of Northern California. PG&E’s growth mirrored that of California’s in the early decades of the 20th century, as the former colonial outpost once pillaged for treasure morphed into a self-sustaining powerhouse. It was the era of massive public projects — the Golden Gate Bridge, the Hetch-Hetchy Dam in Yosemite — bound together with a web of rails and blacktop to form the foundation of what would become the fifth-largest economy in the world.

To power this growth, the state needed electrons in a hurry, a task delegated to PG&E. California allowed the utility to have a monopoly on electricity sales to most of the state until the 1930s, when the federal, state, and local governments laid out a plan for massive hydroelectric dams. The company fought back, protesting that public power was “socialistic and un-American,” according to the historian Norris Hundley Jr.’s book, The Great Thirst. PG&E proposed a compromise: Go ahead and build the dams, but give us exclusive rights to move and sell this hydroelectricity. The state went for it.

The only hole in PG&Es dominance of California’s electricity market came from Sacramento’s vote in 1924 to create a municipal power company. Other cities failed in such efforts, including San Francisco, where city officials tried several times to break free and start a city-owned utility. Each time PG&E fought back and won.

This continued all the way up to the present. In 2008, PG&E defeated a push by locals for San Francisco to study whether public power would work. During that campaign, the utility had an ally in Mayor Gavin Newsom — now California’s governor — who has received hundreds of thousands of dollars in campaign donations over the years from PG&E. Last year, PG&E spent more money lobbying in California than any other organization — business, union, nonprofit, you name it. For most of PG&E’s history, it was hard to imagine that California would ever consider breaking up with its largest power provider.

A series of catastrophes changed that. In 1997, a jury court ruled that the utility was responsible for burning down part of the Northern California town of Rough and Ready three years before. Prosecutors presented evidence that the company had diverted millions from tree pruning, which might have prevented the fire, into profits every year. Last year, a PG&E power line ignited the Camp Fire, which killed 85 people, making it the deadliest wildfire in the state’s history.

“PG&E has been implicated in close to 100 deaths,” said Mindy Spatt, communications director for the nonprofit The Utility Reform Network. “They have been found criminally negligent again and again.”

A back fire set by fire fighters burns a hillside behind Pacific Gas and Electric power lines during firefighting operations to battle the Kincade Fire in Healdsburg, California on October 26, 2019. – Photo by PHILIP PACHECO / AFP via Getty Images

In January, PG&E filed for bankruptcy after it became clear the company couldn’t afford to pay the billions it would likely owe to the victims of wildfires. And it’s recently drawn widespread ire for shutting off power to more than 2 million Californians. Several times this fall, residents of dozens of cities had to switch on flashlights and generators when PG&E cut the electricity to prevent fires. Food spoiled in fridges, and tempers flared. Though that might have avoided some blazes, PG&E told regulators that one of its transmission towers had broken near the ignition point of the Kincade Fire in Sonoma County, which forced nearly 200,000 people out of their homes last month.

PG&E is now in such a mess that many see it as an opening to rebuild it into something better. Newsom said last month that he wants to overhaul PG&E so that it’s “a completely different entity when they get out of bankruptcy.” Mayors from 22 cities representing 5 million Californians signed an open letter to Newsom and state regulators proposing that PG&E become a cooperative, owned by its customers. A state senator is introducing a bill to turn it into a state-run utility.

With climate change likely to stoke more wildfires, customers are clamoring for a more functional utility to adapt to a hotter, drier California. The goal is to build a power provider that doesn’t burn down its customer’s houses or leave them in the dark (at least, not so often). And seemingly every special interest out there — big business, anti-nuclear activists, solar industry groups, environmental advocates — also sees a restructuring as an opportunity to help their cause.

It can be hard to take the long view while people are losing power and homes are burning, said V. John White, head of the nonprofit Center for Energy Efficiency and Renewable Technologies, or CEERT. But focus on the latest bad news and you miss the larger forces at work, the root causes of the current mess. “We’re in some rough water right now,” White said. “But this is the time when we need that 10,000-foot view.”

The utility that eventually emerges from bankruptcy will be a different beast. It could be broken up, sold to the highest bidder (Newsom wants Warren Buffett to buy it), taken over by the state, or morph into something else. Here are a few scenarios for what could lie ahead for PG&E.

Break the Monopoly Grip

In April, California Public Utilities Commission asked Scott Hempling, a Maryland attorney who specializes in utility regulation, to suggest a fix. Hempling told the commission that part of PG&E’s problem was the direct conflict between public safety and profit. “A dollar cut from safety is a dollar added to profit,” he told the commission.

The larger problem, Hempling said, was the lack of competition from other utilities. PG&E still has a monopoly over most of California, an area stretching from the Oregon border to Bakersfield, north of Los Angeles (other utilities serve Southern California).

In the early 20th century, the state granted certain utilities the right to become monopolies “for reasons no one remembers,” Hempling explained. “The natural result? A culture of entitlement — the utility’s entitlement to remain the monopoly franchise, indefinitely, no matter how many rules it breaks, no matter how much anticompetitive conduct it carries out, no matter how many felonies it commits.”

Protesters hold signs as they march to the Pacific Gas and Electric headquarters on December 11, 2018 in San Francisco, California. Photo by Justin Sullivan / Getty Images

Hempling’s solution: Lay out clear plans for liquidating and replacing utilities like PG&E if they break the rules. California could then auction off the job to the highest bidder, hand the work over to a nonprofit utility, or do the job itself.

Change Owners

Keith Taylor, who researches rural economies at the University of California, Davis, said one often-overlooked option comes with plenty of benefits: a cooperative, like The Associated Press or the food company Land O’Lakes Inc., owned by their members. Unlike investor-owned utilities, which have a fiduciary duty to maximize profits, a cooperative can return money left over to the customers who own it. When customers own cooperatives, there’s often more trust and transparency, Taylor said.

A good example exists within California: the Plumas-Sierra Rural Electric Cooperative, which serves about 8,000 people in a heavily forested, fire-prone part of the state north of Lake Tahoe. “They have been pretty aggressive about tree trimming and wildfire mitigation,” Taylor said. While PG&E was saying it just couldn’t find enough workers to pare branches back from power lines, tiny Plumas-Sierra managed it with a much smaller profit margin, albeit over a much smaller area.

In fact, rural electric co-ops serve people all around the country, in both blue states and red, accounting for 12 percent of the country’s electricity business. “There’s this massive electric co-op system with $42 billion in revenue, and they are totally left out of the policy discussions,” Taylor said. Publicly owned systems, like the one formed when the state of Nebraska took over its investor-owned utilities in 1970, are responsible for another 15 percent of the market.

But turning into a cooperative or a state-run utility isn’t a sure-fire remedy. Los Angeles gets its water and electricity from a public utility which has been plagued by corruption scandals and implicated in the ignition of wildfires.

Plan Ahead

The idea that you could put PG&E on the right path by taking it away from investors strikes some as simplistic. There are plenty of for-profit utilities out there that don’t have PG&E’s problems, they say. Maybe the company just needs better management.

Take San Diego Gas & Electric. As PG&E implodes, people have pointed to the San Diego utility as an example of how to get it right. After windblown sparks from its electrical lines started a devastating fire in 2007, SDG&E started spending hundreds of millions of dollars every year on a flurry of measures to prevent future blazes. It buried some power lines underground, replaced wooden poles with steel ones, aggressively cut back trees, beefed up its maintenance regime, hired meteorologists, built weather stations, and started shutting off the electricity when it became dangerously windy. In other words, the San Diego utility took on all the work PG&E is just starting.

“Everyone’s favorite utility right now is SDG&E,” said James Bushnell, an economist at the University of California, Davis.

San Diego Gas and Electric, like PG&E, is owned by investors, and it’s also overseen by the same regulators, the California Public Utilities Commission. There are some key ways in which the two utilities differ that might explain the disparate results. Northern California is full of trees, while San Diego is mostly covered in bushes that barely reach the ankles of electrical towers, so the odds of fires sparked by power lines are much higher. And PG&E delivers energy to a region 17 times larger than the San Diego utility’s service area.

There’s no doubt that PG&E has a more difficult job. Still, with enough time, PG&E could follow the example of SDG&E.

Improved Oversight

What wouldn’t require a major overhaul of one of the country’s biggest, messiest utilities? Getting regulators to do a better job. After all, the California Public Utilities Commission, a panel of five commissioners in San Francisco responsible for watching over all privately owned public utilities in the state, could have forced PG&E to complete safety measures to stymie fires. “The idea that the Public Utilities Commission is shocked and surprised is bullshit,” said White from CEERT. “The oversight of PG&E has simply not been what it needs to be.”

The commission twice allowed PG&E to collect $5 million dollars from customers to fix gas pipes around San Francisco. In 2007, the pipeline had sprung a leak, revealing cracks in the welding. That meant other sections of pipeline likely had the problem. The utility collected the money, but held off on the work. In 2010, one of those gas lines blew up, killing eight people and destroying a city block in San Bruno, south of San Francisco.

Spratt from TURN thinks the utility would improve if regulators just grew spines. For instance, the commission could demand that PG&E release more data on how it spends money. That would help prevent the utility from collecting money for public safety and then giving it to shareholders. “First and foremost it’s a regulatory failure,” Spratt said. “The public utilities commission is charged with looking over PG&E and making sure customers won’t be ripped off or killed.”

Some energy experts think regulators could do a better job if they had more staff. The five appointed commissioners are supposed to understand everything they regulate, a grab bag of business which includes buses, railroads, water systems, and ride-sharing companies like Uber and Lyft. At the very least, the regulators could stop accepting gifts from PG&E. Executives from PG&E have plied the commissioners with $200 bottles of whiskey, fancy dinners complete with mysterious guests referred to as “Charlie’s Angels,”and a lot of wine.

Mark Ferron, a former member of the California Public Utilities Commission, told the Wall Street Journal that PG&E routinely played a “cat and mouse game” with regulators. The problem is that the commission “is not a particularly adroit cat.”

Others say that regulators make an easy target. The commission has become the place for politicians to hand off tough decisions guaranteed to piss someone off, wrote Joe Mathews, a longtime California political journalist: “The PUC is full of technically proficient people, from engineers to scientists to judges, who are accustomed to getting blamed when they can’t resolve the impossible problems we send their way.”

A Greener Grid

In 2013, Vox’s David Roberts, then a Grist staffer, wrote about the threat utilities saw from “distributed renewable energy,” — in other words, a solar panel on every roof. Distributed generation, he said, “could lay waste to U.S. power utilities and burn the utility business model, which has remained virtually unchanged for a century, to the ground.”

Roberts was pointing out that electrical utilities would stop making money if enough people started generating their own electricity. The framing suggests utilities are the natural enemies of renewable energy. But Roberts wasn’t really saying that solar panels should kill utilities. After all, somebody is going to have to build a bigger grid and maintain power lines if the country is going to connect the windy Rockies and the sunny South with the electricity-hungry cities in the East.

While some investor-owned utilities, like Xcel in Colorado, are turning a tidy profit by building renewable energy plants, others are shifting from selling electricity to selling the transportation of electricity through their power lines. That’s the vision that White has for PG&E: “They become a poles-and-wires company, paid for their ability to enable a free flow of clean resources across the system.”

It’s not a solution that would insure the utility burns down fewer of its customer’s houses, it’s taking aim at bigger game: The transformational change needed to stop filling the atmosphere with greenhouse gases.

A utility prepared for a hotter climate should be able to nimbly shut off small parts of the grid at a time, rather than leaving whole swathes of the state in the dark, said Walter McGuire, who ran the state’s energy conservation campaign for 15 years before he retired. It should build even smaller sections, microgrids, where solar power and batteries can keep refrigerators and ventilators running even within a blackout.

To do that, it could follow the lead of Advanced Microgrid Systems, a company which has built a network of buildings and batteries in Irvine, California, that allows businesses to draw electricity from batteries rather than from the grid at peak hours when costs are high — while also providing backup power for outages. McGuire thinks these kinds of innovations will radically change what we need from electrical grids.

“As we move forward, we need to make sure we don’t just rebuild the old grid of the 1930s,” he said. “Storage, distributed renewables, demand response: We ought to consider these things, I don’t know that we are.”

Pacific Gas and Electric workers install conduit in trenches for underground electric lines in Paradise, California. Photo by ROBYN BECK / AFP via Getty Images

No matter what Northern California chooses for it’s electrical system, it will come with tradeoffs.

Back in January, a judge raked PG&E over the coals for failing to turn off the electricity before the Camp Fire started. But when it switched the power off for large swaths of the state in October, people noted a lack of wind in their immediate vicinity and speculated that the company did it purely out of stupidity and spite. And Governor Newsom was for the power shut offs until they proved to be unpopular. In short, PG&E is damned if it does, damned if it doesn’t.

Some experts maintain that shutting off the power was the lesser of two evils. In Southern California, where power stayed on during the same stretch of dangerous conditions, electricity might have started a fire that killed two people and forced 100,000 to evacuate.

There’s plenty of blame to go around. Even if PG&E were perfect, California would still be in deep shit, because a quarter of its people live in the forests. No utility reform will fix the pattern where coastal cities thwart homebuilding, and push sprawl into hazardous fire areas where small governments with little oversight are only too happy to bend the rules for developers.

Northern California needs a solvent utility, not just to keep the lights on but also to achieve the state’s climate goals. Solar and wind companies are depending on PG&E to make good on the higher-than-market rates it promised to pay them for $30 billion in renewable energy contracts, White said.

There’s no doubt that PG&E has had more than its share of scandals. But California has to go beyond assigning blame and come up with a better option. There’s a lot riding on that, even though non-partisan experts seem unsure exactly what the solution should be.

California has been one of the great laboratories for crafting new policies. Its experiments with auto emissions rules, property tax increase limits, and energy efficiency standards, have become national norms. Now, with the fate of a bankrupt utility giant on the line, it looks like the state is about to embark on a grand experiment once again.

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29 comments

    1. Cat Burglar

      Co-op or Public Utility District utility ownership does not have a direct incentive for growth. It is true that they have often responded to political pressure to expand generation and transmission from local powers, and they do have to plan to accommodate growing demand — but they do not have to do that by selling more power, as an investor-owned utility has an incentive to do.

      Reply
  1. Olga

    A timely addition
    https://www.power-grid.com/2019/11/19/pge-boss-says-utility-wasnt-ready-for-california-outages/?utm_medium=email&utm_campaign=powergrid_weekly_newsletter&utm_source=enl&utm_content=2019-11-21

    “Lawmakers wanted answers from Bill Johnson and executives from the state’s other two investor-owned utilities about the shutoffs last month that caused life-saving medication to spoil, businesses to lose money and communications networks to go dark.
    PG&E CEO Bill Johnson blamed his company’s poor response to the blackouts affecting millions of people partly on a sense of complacency after a much smaller outage went well earlier this year.
    “We weren’t as well prepared as we thought, and we needed to give a little more attention — a lot more attention — to impacts after we shut the power off,” Johnson said. “I do think as things went on, we got better at each one of these.”
    If all else fails, blame problems on your incompetence…

    Reply
  2. Nigel j Watson

    Imagine, all these words to simply describe a totally different reality, namely:
    Rothschild power companies; directed-energy weapons; Wildlands Project.

    Suggest the writer dig much deeper. He might begin with Jamie Lee and Deborah Tavares.
    If I didn’t know better, I might think this piece was penned by a C.O. ;)
    NjW

    Reply
  3. The Rev Kev

    No point in changing owners as that would just mean another team of MBAs coming in to loot the place. A co-op of some sort may be the way to go as annual meetings could be used to keep their leadership in line though you might have to bring in compulsory, secret balloting by a paper vote to avoid the leadership capture that you see in large unions. Not having to pay out shareholders and massive executive bonuses would mean that all that money could be put to use in upgrading infrastructure and maintenance.
    Any plan to re-capitalize PG&E by having the public pay all their debts and vitally needed work would mean that California would be right back where it started but with Californians lumbered with hiked electricity bills for this bail out. We know this as that is exactly what happened with PG&E went into bankruptcy the last time which was not that long ago. Why do something that you know will not work?

    Reply
    1. Another Scott

      I prefer true municipal ownership compared the co-op structure, where many member-owners see themselves as customers, and managers little oversight.

      This article in The Nation provides some insight into the benefits, problems, and potential for co-op utilities.

      https://www.thenation.com/article/economic-democracy-and-the-billion-dollar-co-op/

      “The conditions of managerial capture are not quite so arbitrary. The best and worst co-op managers alike carry on their books and in their habits the weight of decades-long contracts, of old loan conditions, of billion-dollar coal plants. There have been astonishing cases of self-dealing by boards and staff. But co-ops can still serve as vehicles of participatory economics on a vast scale, just as when farmers suspicious of banks and abandoned by capitalists built utilities for themselves—so well that Washington saw fit to give them bank-rate loans. It was a rare bit of development policy designed to actually empower the people it was supposed to help.”

      While the co-op structure would eliminate the profit motives and shareholder demands, I suspect that a co-op PG&E would still have the problems with self-dealing boards and staff.

      Reply
    2. heresy101

      PG&E must Die! Last year it spent $8.9M buying politicians and refuses to pay wildfire victims this year. It has made a $11B deal with insurance companies (and Wall Street parasites that hold claims) to pay them first IN CASH, while the increased amount $8.5B to be paid to wild fire victims would be IN STOCK.

      The lawyers have turned off the electricity not for safety, but to avoid potential future fire claims. Meanwhile, small businesses are losing 10’s of thousands, people with electrical medical needs are left to fend for themselves, schools are closed, etc etc. PG&E says that we are going to have to live with this for 10 more years before they get their act together (ie raise rates high enough).
      PG&E is asking for a 22% rate increase for 2022: https://calmatters.org/economy/2019/08/pges-rate-increases-what-you-need-to-know/

      This article is lame and doesn’t really address what needs to be done; it is like Newsom and his waffling. The State needs to form a new utility that uses eminent domain to buy out PG&E – about $48B for depreciated assets, trucks, property, etc. This money would be mandated to be loaned by CalPERS at 6% for 30 years. CalPERS would have about 15% of it’s funds with a guaranteed return that will keep it solvent and the cost of the loan would be a little more than PG&E profit but would be fixed at about $0.044/kWh for 30 years.

      The State utility would be divided into about 20 local Municipal Utility Districts like SMUD. There are eleven CCAs that buy energy for their areas (https://cal-cca.org/) that would be responsible for the distribution system and the costs of it’s purchase. Two of them (Valley Clean Energy and Sonoma are actively looking at taking over PG&E). The new MUDs could be structured as SMUD or they could be co-ops based on what people would support. The advantage of many smaller entities is that they would have local people running them who would be looking out for their families and friends; not profit.

      PG&E’s transmission assets would be put in a new transmission agency to rebuild the ancient broken lines. Maybe the Transmission Agency of Northern California (TANC http://www.tanc.us/) could be enticed to help them. SMUD could be enlisted to do scheduling and the California Independent System Operator (CAISO) could be disbanded due to their mechanisms that Wall Street uses to speculate. The new transmission agency would be tasked with undersea cables for the about 15,000 GWs of offshore wind that is coming in the next 10 years.

      Die! PG&E Die!

      Reply
      1. Tyronius

        This sounds like you’ve given the problems a lot of thought and have provided an outline of the players and potential fixes.

        My comment is something more fundamental; killing corporate entities must include making sure stockholders and bond holders take a substantial share of the losses, because otherwise it’s just another round of privatised gains and socialised losses. Aside from moral hazard issues, this aligns the desires of said stakeholders with the correct behavior on the part of the new company.

        And while we’re holding people accountable, let’s be sure and do the same for the executive team that presided over this catastrophe, rather than footing the bill for the usual golden parachutes.

        Reply
      2. Grumpy Engineer

        15,000 GW of offshore wind that is coming in the next 10 years“?

        It’ll never happen. Recent offshore wind projects have clocked in around $3000 per kW of nameplate capacity, which means that 15000 GW would cost $45 trillion.

        Reply
  4. Bill

    This is a one-sided hit piece designed to support a political takeover of utilities. If Politicians are so smart why not have politicians run everything? Regardless, it omits certain important facts. Probably the most important is that there will be and are monopolies wherever electricity is delivered. No one argues for competition with multiple wires being strung by competing electrical companies all over the place. Thus it will be a monopoly (as it is in Sacramento) whether run by politicians or not. Being a monopoly, the utility must be restrained from setting its own monopolistic prices, and, in California, all utilities, water, transportation, electrical and so on are limited by the California Public Utility Commission CPUC, which sets the prices the companies may charge, it also establishes what they can spend the money they collect from consumers on. In effect the politicians already run PG&E. The CPUC has limited the amount of money the electrical utility companies and pay for trimming etc. (just as the State itself has not been proactive in preventing fires) in order to save the consumer money. There is a trail of budgets being submitted to the politicians’ agent, CPUC, for decades asking for approval to spend rate-payers money on trimming etc. and the budgetary requests being denied. This is a failure of politicians. They rolled the dice, and the public lost. Lay the blame where it belongs.

    Reply
    1. JBird4049

      he CPUC has limited the amount of money the electrical utility companies and pay for trimming etc.

      Oh what utter bullpucky.

      PG&E has routinely taken money specifically given to it for maintenance towards profits and lied about it for decades. The company asks for the money, it is given it, and then it is sent elsewhere. It has been very profitable for longer than we have been alive.

      As a life long Californian, I welcome such hit pieces. As one who sat in the dark, without a working phone, I rejoice in such talk. Both it and California’s CPUC including the ancestral and associated agencies have been mutually corrupt for over a hundred years. The corruption has now spread again to the state government after a relatively competent, uncorrupt state government for about thirty or forty years. Now the whole thing is the misbegotten Hellchilde of Tammy Hall.

      Reply
  5. Brooklin Bridge

    Under the heading, A Greener Grid:

    In 2013, Vox’s David Roberts, then a Grist staffer [link not repeated], wrote about the threat utilities saw from “distributed renewable energy,” — in other words, a solar panel on every roof. Distributed generation, he said, “could lay waste to U.S. power utilities and burn the utility business model, which has remained virtually unchanged for a century, to the ground.”

    So then what? The author drops the subject like a hot potato when rooftop solar should be fully explored due to it’s huge advantage of reducing transmission volume. Perhaps the current business model of electric utilities SHOULD be burned to the ground (instead of the customers homes and lives) or at least radically changed to place environmental needs above profits and the same goes for other renewable local energy production types, such as small windmills, that take on significance in the aggregate). Profit profit everywhere and not a drop to quench fires, is not a good system.

    Reply
    1. steven

      PG&E’s business model seems to be something along the lines of

      take as much money from and put as little into a system built generations ago as you can.

      For other utilities it is

      put as much money into the grid as their state utility commission will allow (San Diego Gas and Electric?).

      One solar advocate here in Tucson told me “Utilities love solar as long as they own it. I believe they would much prefer buying ‘stranded assets’ like gas generators and even much more expensive nukes if they thought their utility commissions would allow them to get away with it. As Michael Hudson and the classical economists would say ‘It’s all about rent seeking’.

      Reply
    1. Cat Burglar

      You have to love the utility expert that suggests the state should move from a regulated monopoly to having a regulated oligopoly — then you would have two utilities with an incentive to burn down the state to improve their financial market performance! The expert suggests that competition would eliminate a culture of entitlement — so instead of feeling like they have a right to burn the state, they would know that they were wrong while they did it. How electricity price competition would be effective in preventing future disasters is not clear — but it is very clear what financial market price competition has meant: they can’t keep the lights on, and they can’t stop killing people.

      Reply
  6. Whoamolly

    Recall Newsom petition is circulating in my small Northern California town. I plan to sign.

    My dentist says his business can’t stand the lost revenue and extra costs from the blackouts.

    Reply
    1. Tyronius

      I don’t live in California but Newsom’s suggestion to sell PG&E to Warren Buffet is exactly the kind of thing that would have me volunteering to collect signatures for his recall.

      Reply
  7. Maurice

    “…a bill to turn (PG&E) into a state-run utility.”

    A publicly owned company gives its surplus to the government. So, no private investors to please here.
    And the government tries to keep the utility in line, fearing defeat at the next election.

    But, with time, this entity turns into a government of its own, uses the offical government as a simple salesman for exportation, and does not give a damn about customers’ priorities, as it is a non-elected body.

    That is what we experience here, at the north-east end of the continent. (The public company is called Quebec Hydro.)

    So the problem with a publicly owned company is to maintain control by the government AND the general public. Difficult as it may be, it is probably even worse with a privately owned company.

    Maybe California could give it a try, hoping that the power grid will get safer and get the job done without repeatedly burning the place.

    Reply
    1. Cat Burglar

      Such publicly owned utilities already exist in the US, as separate governmental entities, controlled by elected boards: rural electric cooperatives and public utility districts. The article mentions one in California, the Plumas-Sierra Rural Electric Cooperative. There is no need to reinvent the wheel here, we just have to put a new one on. My computer right now is powered by electricity from the Wasco Electric Cooperative.

      You are right about the hazard of making a utility a department of a national, state, or provincial government. The lack of direct political control by ratepayers leaves the bureaucratic entities open to capture by big interest without any way for them to be directly challenged — the Los Angeles Department of Water and Power is a great example. The nuclear industry’s capture of the Bonneville Power Administration during the 1970s is another example.

      Reply
      1. Maurice

        Thanks for this reminder that elected boards for public utilities can be effective to prevent oppressive new entities to be born under the pretext of managing a natural monopoly.

        We’ll keep that in mind when problems grow to the point that reverting to private investors becomes a possibility.

        Reply
  8. teacup

    Who would have ever thought a ‘natural monopoly’ would be better off not run by a private company… oh, but wait, that’s ‘socialistic and un-American’. Keeping overhead costs of public infrastructure down used to be the focus of political economy (economics today).

    Reply
  9. jo6pac

    Here is a well run company and was smart enough to turn off their nuke plant and promote green energy. There is a lot of churches in Sacto that installed solar that smud buys the power during the week when the church is seating empty.

    .https://www.smud.org/

    An old friend of mine did some contracting for pg&e and yes the company is filled mba types and no engineers.

    Reply
  10. Cat Burglar

    The article suggests greater funding for the California Public Utility Commission staff to improve the CPUC’s depth of knowledge on electricity regulation by giving them an internal and independent base of knowledge. It is a good suggestion, but some care will have to be taken in how it is done.

    My Dad was an Administrative Law Judge at the CPUC during the 70s and 80s. He found that the staff was an excellent source of information and relied on them. But there was also another staff, the staff assigned to each Commissioner — they were usually the source of policy intiatives sent down from from above. You could see that as a way for popular political influence to be exerted on the bureaucracy; it was certainly a route for power to make its way in. The deregulation of intrastate trucking in the 70s, under the initiative of the Brown administration, was formulated by the staffs of the Commissioners. Things may have changed since then, but it looks like it has gotten worse.

    Reply
  11. smoker

    California has been one of the great laboratories for crafting new policies

    It’s unsurpassed for crafting policies which have: created an absolutely evil California record of inequality and homelessness in the US; allowed Google, Facebook and Palantir to become Quasi Government Entities with enormous power to destroy lives; and allowing regulated entities to repeatedly break California’s own Laws.

    As to publically owned utilities, though that could be the ideal solution in a better world, the way California operates, ceding much power to Local Governments (which contain some of the most corrupted amoral politicians in a state loaded with corrupt politicians) I won’t be getting my hopes up that the populace still won’t get utterly screwed.

    Reply
    1. JBird4049

      So to not keep sitting in the dark we Californians have to defenestrate the senior management, regulators, and statewide politicos as well as nationalize PG&E? My, my an electrified Augean Stables.

      Reply
  12. clonalantibody

    Article gives short shrift to taking PG&E over by the state or the Federal Government. All told, not a great article. Does not address the many issues faced by utilities from climate change, which will cause the need for a huge amount of downside protection. Something much better accomplished by being owned by the government.

    It is a falsity to assume that there is no corruption in private corporations, and a lot of it in Government run organizations. This is what the author appears to have done.

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  13. Tim

    San Diego is America’s finest city for many reasons. One of them is the people that live here. They still retain some semblance of common sense, don’t accept getting pushed around by cronyism, and has a healthy appreciation for Governments valued role in our social society.

    Case in point, was kicking out the Chargers for the owner wanting residents to foo the bill for the new stadium (Denied on two separate occasions by ballot measure). Instead what happened is the land was donated to SDSU (on a competing ballot measure). It may not even be technically legal for the local ballot measure to give that particular land to the State University, but nobody in local power is stopping them, because they all know it’s the right thing to do.

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  14. Wukchumni

    according to the historian Norris Hundley Jr.’s book, The Great Thirst.

    An amazing work, just add water.

    It does double duty also, in that you can use it for a doorstop, all 800 pages of the quite varied and interesting history of water in the Golden State.

    Reply

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