Employees at least get paid, knowledge workers sign over their intellectual property in exchange for a salary. There is no concept of data ownership, but there could be something similar. Imagine companies having to license your data and pay you a stipend or the like.
I used to coned (nyc + west Chester) and they have a robust “you messed up and we are taking over plan”. How do they not the same? They used to dangle that over our heads anytime anything happened (our fault or not)
It's kind of nice to sue PG&E for fires. If bought out, we'd only be suing ourselves, and then tax payers would be the ones on the hook for bailing out all the homeowners who wanted nice cabins in the woods.
Do you want a cabin in the woods, or a house? I think most people think very little amenities when thinking of a cabin in the woods, but maybe I am biased.
"About 48 percent of the population inside micropolitan statistical areas lived in incorporated places, while about 52 percent lived in unincorporated areas"
anecdotally the pursuit of not being around "public services" is a large part of the motivation. Personally as I'm leaving my 20s far behind I realize all the neon and jazz of the city did nothing but pacify a deeper realization that a more clear seeming experience of mind was on hold or somehow diluted...convenience can be very distracting.
... hopefully this makes some kind of sense. different kinds of folks/values. a lot of my peers live right in the city, which makes sense. convenience of stores / hospitals etc for raising a family. for me alone give me 50 acres and a 2 bdrm ranch home. and an invisible driveway
:)
right, and someone is still providing services to those its just higher up the chain right? there arent that many people living with water, roads right? they just arent organized at a town level
That's an unincorporated area, populated by an affluent community, with all the services you'd expect.
I think the answer is actually in the negative becuase the common amenities include pretty basic services like roads, police protection, or grid power. As far as I'm aware that level of disconnect is very rare.
I live in an unincorporated city of 14k and it's just plain ole suburbs. 1.5 miles to one mini-mall and 3 miles to another. We're also about a 15 minute drive from a huge mall, best buy, a fry's electronics, etc.
What do we have to lose? Other than more lives than PG&E has already taken from us... given that PG&E has caused fires many times so far it seems worthwhile to attempt more direct methods of fixing this.
If the regulators taking over somehow makes it worse, we can always privatize it again. There are other private power companies in the state that will remain private.
Right, but you're automatically assuming it will be worse. We have many examples of well-operated state-owned power companies. It's an obvious thing to try since it's already worked elsewhere. Other incentive methods have not forced PG&E to fix their behavior.
I don't think OnlineGladiator is assuming it will be worse. You asked, "what do we have to lose?", and they're answering the question by pointing out that we still have a lot to lose.
There are 365 days in a typical year. That's the theoretical limit for how many days Californians can go without power. That should give you an idea how much you have to lose from a power availability aspect. On top of that, there are millions upon millions of acres of unburnt land in California. A even more mismanaged PG&E could result in many more fires than we've seen thus far.
Considering even places like Syria and Venezuela have power most of the time, I think the idea that a state-owned power company would be unable to provide electricity for even one second of the year is an unrealistic consideration.
I agree there is a lot to lose. But I think you're being a little aggressive with your negativity.
If we're talking national or state-level regulatory agencies, there's a public review and commentary process where the public (usually affected companies and interested advocacy agencies, since relatively few individuals bother to notice) submit comments on proposed regulations. The agencies are required to acknowledge these comments, but this can sometimes be as little as "Comment noted, we've decided otherwise."
California's stringent green energy initiatives and regulations have cut into the budget allocated for updating transmission lines. The same people that pass those laws, also pass laws limiting the maximum profit of a utility to 10% and then lambast them for being greedy and not updating their lines. Yet if you look at the balance sheets of PG&E there isn't much net profit.
PG&E could easily fix the lines and pass the price onto the consumers. If anything, if their profits are limited to 10%, you'd think there would exist a perverse cost+ incentive on PG&E's part.
They paid dividends fairly regularly from 2011 to 2017.[1] They couldn't have used that money for updates and maintenance? You can't really claim to be profitable if you're deferring necessary maintenance expenses. Isn't that defrauding shareholders, in a way?
> They couldn't have used that money for updates and maintenance?
My understanding is that they could not, yes, because state regulators exercise line-by-line control over PG&E's budgets, including how much money will be distributed as dividends and how much money will be spent on maintenance.
Wouldn't investing revenues into infrastructure be a way to lower profit on their balance sheet? It seems like the profit cap would be an incentive to reinvest.
Any rate hike has to go through CPUC. Whether or not they would fight it depends upon the reasonableness of the request. There are other organizations that would likely fight it though.
Well, their net profit would be higher if they hadn't spent over $25m in executive compensation in 2019. That's a healthy amount of money for some electrical line maintenance, even if it wouldn't cover the cost of all of it. With how poorly the company is being run right now you can't really argue that compensation is buying The Best Executive Leadership...
Keep in mind that even if PG&E is doing their best to keep costs low, the cost of wildfires is being passed on to the consumer anyway (in some cases the cost is being passed on as dead humans instead of higher electrical costs). Is it better for PG&E to be able to have a profit margin of 25%, or for their lines to not cause wildfires? What about a low profit margin stops them from maintaining lines?
If the state and/or counties are operating the electrical company, profit need no longer be an issue. If they aren't making enough money to cover maintenance cost, that can come out of tax dollars or state-issued bonds just like road maintenance does. It's not as if electrical infrastructure isn't important. Taxpayers may not like higher taxes, but they also don't like having their power cut off or their houses destroyed.
For 2013-2017, PG&E had a total net income of $6.1 billion, or about $1.2 billion a year from an average revenue of $16.9 billion [1]. Only in 2018 did they incur a loss of $6.8 billion, mainly because of the $11.5 billion in charges for their role in starting wildfires.
The CPUC is directly responsible for the safety standards that PG&E has to meet.
"The CPUC meets publicly[15] to carry out the business of the agency, which may include the adoption of utility rate changes, rules on safety and service standards, implementation of conservation programs, investigation into unlawful or anticompetitive practices by regulated utilities and intervention into federal proceedings which affect California ratepayers."[0]
It is also their mission to assure access to reliable utility services.
"The CPUC regulates services and utilities, protects consumers, safeguards the environment, and assures Californians’ access to safe and reliable utility infrastructure and services."[1]
However, the CPUC does not regulate governmental utilities.
"The CPUC does not regulate the rates of utilities and common carriers operated by government agencies."[0]
I would prefer that my county was responsible for utilities as they are much more responsive to local demands and its much easier for me to justify rate increases for safety improvements.
The CPUC basically already has unlimited power over PG&E.
"The Constitution of California declares that the Public Utilities Code is the highest law in the state, that the legislature has unlimited authority to regulate public utilities under the Public Utilities Code, and that its provisions override any conflicting provision of the State Constitution which deals with the subject of regulation of public utilities."
It’s remarkably convenient for every politician in California that we’re all having this conversation about how bad PG&E is, while completely ignoring how California’s absolutely terrible forestry management is what’s actually been driving the risks up.
A drought combined with decades of highly aggressive fire suppression has sent the number of dead trees in CA forests skyrocketing. PG&E is an absolutely perfect scapegoat for CA politicians, but what would we say if one of our bosses told us to completely disregard mitigating impact, and instead focus all our attention on reducing the likelihood of failure to 0?
Where do you think PG&E's money to pay for legal judgements currently comes from?
Tax/rate payers are paying in either scenario. Private ownership just means shareholders manage to siphon off some of the money in dividends before the lawsuits.
The forest fires (of this magnitude) are also a relatively new development, and they're partially due to poor line maintenance. The poor line maintenance is the real direct cause of the outages, not lawsuits - if the lines were well maintained they would not be causing fires and no shutoffs would be necessary. We don't see line shutoffs like this all over the country right now.
I keep seeing this said, that the fires were caused due to poor line maintenance. Are the fires caused by lines failing or is the maintenence that they are failing on just clearing brush from around the lines?
The definition of negligence is difficult in these cases. I would agree with an argument that some court cases overreach, but we have clear cases where bad line hardware directly caused fires (PG&E has even admitted such).
I'm not personally a fan of suing them because it comes out of customers' pockets and not executive compensation or dividends, but we need to do something. I'm happy to see state ownership considered as an alternative to the lawsuits.
The definition of negligence doesn't matter. Even if they are proven to not be negligent and they did all the preventative maintenance, they are still liable. Under this scenario, it doesn't matter if they do preventative maintenance or not since they are on the hook either way. The only way to avoid being on the hook is to shut off power since that is the only way to reliably prevent even the best maintained equipment from causing a fire.
If they did everything they needed to, how are they negligent? I don't understand. The negligence so far has specifically been because poor maintenance triggered fires.
The power shut-offs are in response to the past fires, which were caused by poorly maintained lines.
> Even if they are proven to not be negligent and they did all the preventative maintenance, they are still liable. Under this scenario, it doesn't matter if they do preventative maintenance or not since they are on the hook either way.
Yes, there is a strict liability regime. Yes, this makes the definition of negligence irrelevant. No, this doesn't make preventive maintenance irrelevant: strict liability only applies to fires caused by their equipment, and preventive maintenance obviously effects that (that's what it is preventive of.)
But, in any case, if there weren't at least negligence involved, the behavior contributing to the fires would probably not have been found to be a violation of their criminal probation on top of any civil liability for damage caused by the fire.
Actually suing PG&E is not so nice. Costs just get shifted to recipients of PG&E's service. We need to charge the PG&E executives with criminal negligence and recover capital distributions that occurred while PG&E was neglecting its infrastructure.
The California Public Utilities Commission(CPUC) controls how much PG&E spends on infrastructure and dividends. PG&E requested to spend more on infrastructure improvements but the CPUC decided to keep rates lower, pay out dividends, and spend money subsidizing alternative power instead.
AFAIK PG&E works on "guaranteed profit" model, i.e. they can raise prices if current prices do not cover for expenses plus predetermined profit margin. So suing it, unless it's currently hugely profitable way beyond the margin (which AFAIK it is not) would only end up in "suing ourselves" anyway.
Yeah, to have a real impact on the flow of money we'd probably need to penalize executives somehow to change behavior... and they'd just bail on the company or deflect blame somehow, like we saw in that VW emissions scandal.
On the bright side the lawsuits have impacted PG&E's stock prices which does make it easier to take the company over, but the loss of power + increase of prices is not an ideal outcome.
This isn't completely correct - despite the "guaranteed profit" model, PG&E always needs approval to increase rates. Whether or not CPUC would fight those rate hikes is another question. There are some organizations that probably would though.
The technical term in the literature would be wildland-urban interface [1], and Santa Rosa should be pretty easy to find on this 2010 map of the WUI [2] when you zoom in on the Bay Area .
This is also exactly why natural monopolies like utilities should not be publicly-traded companies, in my opinion.
When fires happen in California, short-sighted shareholders from all over the place short sell their stock, sue them and waste money on legal expenses, and otherwise deprive them of funds they need to fix problems.
Imagine if every highway in the Bay Area were a publicly-traded company. Accident happens on I-280 due to a pothole. Shareholders panic and short sell I-280 stock. Accident never gets cleaned up. Pothole never gets fixed. Because they don't have funding to fix it.
When there are problems in infrastructure, like fires, we should be pouring money into fixing and upgrading infrastructure immediately so it doesn't happen again, not taking funding away.
> Imagine if every highway in the Bay Area were a publicly-traded company. Accident happens on I-280 due to a pothole. Shareholders panic and short sell I-280 stock. Accident never gets cleaned up. Pothole never gets fixed. Because they don't have funding to fix it.
I occasionally hear this argument about "the roads" mentioned, but I'm genuinely curious if there are notable real life examples of this scenario.
This is a great opportunity to expose folks to different types of ownership structures for corporations - something that I think gets missed by most folks outside of (decent) MBA programs.
As one anecdote/example: a close friend of mine is an actuary for a mutual insurance company, which is an ownership structure for an insurance firm such that the corporation is exclusively "owned" by the contract / policy holders. I remember having a fun debate over beers on why more companies / startups couldn't operate in that manner.
> I remember having a fun debate over beers on why more companies / startups couldn't operate in that manner.
Because it would complicate having multi-billion dollar exits. The VC's don't care about creating sustainable businesses that create value for their users. They care about creating runaway hits that they can make billions of dollars on when they IPO.
Because access to capital matters. If you are a non-VC funded business, you need to generate a profit. How do you compete when a VC-funded business comes in and starts selling a competing product at a loss?
That is in theory where the government steps in. It’s exactly why standard oil was broken up. Selling at a loss to try to create a monopoly completely breaks capitalism.
I invite the folks downvoting to explain how capitalism works with a market monopoly. Since pointing out government exists to prevent just such a situation is apparently an unpopular opinion.
In theory the company selling at a loss goes bankrupt and the people lending them money to burn lose all their money.
However post-2008 world is one where (1) the government will probably step in and rescue the people who were lending the money and (2) there are lunatic low-interest policies that encourage lending to anyone with a pulse over all forms of sane weighing up of risk.
So why not fund businesses that burn money? The problem in the story isn't antitrust, it is low interest rate policies that excessively favour borrow-and-spend tactics.
Not sure why you're getting downvoted. I guess a lot of HN voters are against the idea of regulation that would prevent a lot of startups from gaining traction ("why can't I sell my stuff at a loss to get new customers?"). In reality, regulation extending anti-dumping laws to startup-type products/services is a possible solution to this issue, it's just one that would be difficult to implement and enforce. Ex. where do you draw the line on dumping vs. acceptable marketing and how do you calculate it for something like SaaS that usually has really high margins?
This only applies if it’s anti-competitive, meaning if the intent is to undercut and harm a competing business. Funded startups routinely operate at losses, the point is that for many business models it isn’t possible to operate profitably from the start-making alternative ownership structures challenging.
Exactly. In the context of the original post I was responding to talking about Mutual companies, founders and VCs aiming for 100x exits by shafting customers and employees and society - is "toxic"...
> The owners of most startups want roughly the same thing the VCs want.
I am not so sure. The VC's want you to either have a billion dollar exit, or fail quickly. Most owners would be pretty happy with a multi-million dollar a year sustainable business.
Where "lifestyle business" is pretty much VC industry pejorative/derogatory jargon for "long term economically sustainable and ethical company" - as though any of that is a bad thing.
> Because it would complicate having multi-billion dollar exits
This is a flippant response to a deep question.
Mutuals work well for utilities because they're not required to invest for the long term, require public support and largely operate on existing physical capital. External capital is, to date, the best system for sponsoring disruptors and for building out new capital.
Just as private ownership isn't the solution for everything, it isn't anathema for everything. Presuming so is falling for the same mental shortcuts that produced PG&E.
> ...uhm, shouldn't utilities be required to invest for the long-term?
The different between should and did are incentives. Utilities have no incentive to invest. (They do have an incentive to spend, which if enabled by politicians, generally yields pricey, useless contracts for cronies.)
A good case study is in wireless providers in the U.S. and EU. American providers are private; European ones are more utilities. The utilities are cheaper; their CAPEX (and executive compensation) is lower. American cities thus end up with--on average--faster, more-expensive service than European cities. There isn't a better solution, just different ones for different goals.
> A good case study is in wireless providers in the U.S. and EU. American providers are private; European ones are more utilities.
European wireless internet providers are not private? That's news to me, can you give me some examples? I don't think that would even be permitted under EU competition law, which forces member states to create markets in those areas.
> External capital is, to date, the best system for sponsoring disruptors and for building out new capital.
Actually AT&T, before being broken up, ran under a regime that required it to invest and gave us a lot of foundational tech and basic science that still serves us today. Though the stock and bonds were traded on the public market they were so tightly regulated they were more like an of-balance-sheet entity like Fannie Mae.
Of course under such a regime they also found various loopholes and such that held us back in other ways. But since the breakup, infrastructure investment has plunged.
In the net I'm not sure if it was good or bad. Just pointing out your assertion is not absolute.
Bell Labs. I didn't realize this until looking it up but apparently Bell Labs is owned by Nokia today.
However I couldn't find a source on the quote about them being required to invest in R&D. It looks like Bell Labs was founded in the 20s, well before any significant corporate regulation took place, and prior to it's founding in 1925, Western Electric and AT&T had been operating their own separate yet active research departments.
well, to be fair the premise that public ownership is somehow going to fix this turkey is a bit flippant in and of itself. required reading: Washington Public Power Supply System (WPPSS) scandal during 70s-80s for both pros and cons of non-private utility ownership
Related question; under what circumstances does it make sense to ignore NPV when calculating value.
Net Present Value generally recommends against what most people would call good stewardship of a finite resource. It seems likely that the mental model behind NPV doesn't work out over long timeframes.
> which model is the best for stewardship of a resource?
What do "stewardship" and "resource" mean? Who agree on one of those definitions? Who form a natural conflicts with them?
Considering stewardship of natural ecosystems. Does that mean holding it in stasis? Keeping out human effects? How do you know if a snail went extinct because of natural or human factors? Which model influences that decision?
The chief advantage--and defining feature--of economic ownership models is they convert almost every question into currency. That seems base at first. But it enables competing sets of goals to be discussed within a common language.
If we won't assign natural resources a dollar value, and a set of owners incentivized to defending that value, or protect them absolutely under the law, those resources will be lost. (If there is a silver lining to California's NIMBYs, it is this. That energy results from an ownership system and defense mechanism. Tweak the variables and that energy could fight for our wetlands.)
I am a big fan of markets and economic incentives, but they're pretty limited tools for a lot of important things. For example, if you apply them to voting or having children, you get results that are obviously absurd. Not everything should be commoditized.
VC is not the only way of funding your company though. If your goal is to produce a long term viable business that genuinely creates value, VC is probably not the way to go.
I think you have part of that backwards. I agree VCs don't care about creating sustainable businesses as long as they get fat exits. But I think the reason we don't have more non-VC startups is that VCs are willing to spend a lot of money to create monopoly or oligopoly players. E.g., Super Pumped makes it clear that Uber was very active in trying to strangle all competition in the cradle.
>I remember having a fun debate over beers on why more companies / startups couldn't operate in that manner.
Typically cooperative ownership structures have trouble making big changes all at once — pivoting. When power is distributed hierarchically, it’s easier for a new idea to flow from bottom to top, top to everywhere. The tradeoff is that hierarchies can only do this if most people are mostly honest, while democratic structures do a better job of smoothing out competing incentives.
(I learned this, originally, from a contrast between Lenin’s NEP syndicalism and Stalin’s command economy. Centralization in the latter permitted big movements towards education and energy generation.)
I do sometimes wonder if these complicated financial instruments have abstracted important aspects of corporate ownership to the point where its just abuse of the system. If an individual can't use those same financial instruments, why should a corporation be allowed to use them?
I have a mutual whole life policy myself and it is amazing how my interests as a policy holder and my interests as an investor in the company are aligned so well. There really isn't any conflict of interest that I can think of and it's a great win/win structure.
That being said, having lived in countries with state run utility companies I don't trust the government to provide the best customer experience to put it mildly.
"Touchstone Energy Cooperatives represents a nationwide alliance of member-owned electric co-ops, including yours. Collectively, it delivers power and energy solutions to more than 750 unified local electric cooperatives across 46 states, forming the largest electric utility in the country."
The current regulations aren't working, in part because PG&E is a private company that is free to prioritize profit and dividends over line maintenance. It seems like they've been doing that.
Maybe this is my uninformed opinion but I think the state should own the poles at least. Pole real estate is a natural monopoly that we subsidize anyway and it empowers existing entities to stifle new competition. It also makes sense to me that such a thing should be tied to city planning.
In a perfect world power consumers and producers can just buy and sell into the marketplace as provided through the public lines. That's a long ways off because the grid just isn't that smart but maybe one day we'll get there.
The reason the state doesn't own the poles is that by allowing a private company to own them, the state doesn't have to finance their construction up-front.
The downside is that the taxpayers are now forever on the hook of paying shareholder dividends for electricity.
The best outcome in this whole situation is that PG&E is sued into bankruptcy and nationalized, leaving the shareholders with nothing. Owning a government-protected monopoly-utility that is bad at its job should not be a license to print money, regardless whether or not you ponied up some cash up front. Sometimes, you make bad investments.
Nearly all of the situations we've found ourselves in, be it power, internet, water, etc. are because we allow companies to have local monopolies over distribution systems, because we don't want to pay for the infrastructure up front, or take loans out as a towns.
It's a lot easier as a politician to say that someone else will pay for something than to say that we as a municipality are going to issue 10 year bonds or something so that we can fund an infrastructure project. We then freak out 10 years down the line when we realize we're stuck with a bad system because we sold ourselves out.
I mean, you're probably right that having California "nationalize" (State-ilize?) their power company is the answer to this, but being as the political system is what created this problem, I'm not exactly convinced its going to solve it any better this time.
In California we don't let the political equivalents of script kiddies run our water system because it turns out water is super important in semi-arid climates. Too many stakeholders care too much about it. That causes its own problems, but at least we're not letting complete novices decide engineering problems.
One, that's exceptional, so it's a bad way to make policy. It's like saying, "Because Theranos, we should end capitalism." Two, Flint's water system ran fine until it was removed from local control and given to ideological white Republicans to run. Since this discussion is about shifting to local control from a state-scale entity, Flint may work better as an example for the change.
But it doesn’t! Our water systems are in shambles, with a trillion dollars in backlogged investments according to the ASCE. The problem is the same as PG&E. Political boards control water and electric rates, and they’re incentivized your set rates low at the cost of money for maintenance and upgrades.
The argument was that state owned could end up being the same as state regulated. The government are people too, they might also have made mistakes that caused catastrophic bushfires - instead of greedy and incompetent it would be lazy and incompetent. The dry bush is a significant part of the equation.
Just looking over the Wikipedia page [0] it appears PG&E has a guaranteed rate of profit and monopoly status over certain aspects of the infrastructure. The problem with governments owning businesses is that they don't respond to market signals in the form of profits. Under this regulation, PG&E is also buffered from needing to respond to market signals in the form of profits.
The intellectual justification for privatising anything is to expose it to the need to fight to make profits which then enforces a sort of discipline on resource use. Regulation that privatises a company then shields it from the need to try hard to succeed is pretty much strictly worse than nationalising.
That is a likely perspective from the sort of person who believes that the political system is bad.
Ok so I’ve lived in these states my whole life and I love geography and know a little bit about this, apologize while I geek out a bit. (I’m also more interested in geography than meteorology per-se, so I’m only 90% confident all of this is right)
Oregon, Washington, and BC have bad fires too (not as bad, but bad nonetheless), but the rainy season comes much earlier. Here on the west coast you can set your watch to when the rainy season starts. Washington it starts within a couple weeks of early October, Oregon late October (I grew up there and never remember a dry Halloween, but it was also one of the first rains in months). California is so big it varies, but weatherman down here in the bay is saying mid-November at the earliest.
Low population in the forested areas is a factor, but less so. We just have fewer fires and they’re easier to fight.
There is also the type of trees, California is full of eucalyptus (arguably an invasive special from Australia) that constantly dumps debris in the form of oil rich bark and leaves and no natural insects are around to break it down.
Oregon and Washington don’t have that problem.
Arizona and Nevada have nothing to burn. The Nevada border is almost entirely huge mountains. It seems odd that 2 straight lines meeting at Lake Tahoe would be such a dramatic change from wet to dry, but it is. Arizona doesn’t look any different from south-East California, but that’s also probably the only part of California not affected by fires.
The Diablo/Santa Ana winds are also a big factor especially in Southern California. Those are ironically caused by the rainstorms in Oregon and Washington. The winds come in, full up the massive Great Basin of Nevada and Utah and eventually spill out over the mountains in California causing super, super dry and hot winds that can be the level of hurricanes. It’s this time of year when Oregon and Washington are getting rain and California is not that is especially precarious.
I’ve lived in both the Bay and LA for years now and I’ve actually never been awake for them. They only last a few hours and it seems only at night. I’ve seen the aftermath though, tons and tons of tree debris everywhere. In LA the palm trees even fall over and it looks like a war zone the next day.
The CPUC (state regulators) already stipulate literally how much money PG&E is allowed to make, i.e. target profit margin. PG&E isn't state-owned but is largely not allowed to make its own decisions.
Especially since the CPUC is not widely understood, this structure allows elected officials to present themselves as not being responsible for the tradeoffs PG&E has to make, even as the CPUC actually makes those decisions for them.
Maybe the state could provide and control brush-clearing services that do what PG&E was supposed to be doing, and mandate their purchase. If some convicts can do fire-fighting, they could do this as well. Just spitballing here.
What a cop out! "Every situation is different". Yet in every situation, money is the lubricant needed to make changes and meet those fire protection needs.
An interesting related problem is that even if you set up your own solar or wind power on your property, PG&E charges fees and higher rates when connecting to the grid. Supposedly this is to fund important programs for low-income users or something, but you'd think you would save money by contributing to the grid.
If local municipalities or the state own the poles, you can have a better incentive system where homeowners hooking up well-maintained solar/wind to the grid helps keep the grid humming and lowers costs for everyone.
> but you'd think you would save money by contributing to the grid.
You actually don't.
When you are generating most of your own power during renewable generation peaks, and drawing power from the grid, during renewable lulls/peak usage, you are in fact using the grid as a giant, personal battery. (One that would run you in the order of ~$50,000, if you were to build one out for yourself.)
Electricity is relatively cheap, especially during peak renewable generation times. Maintaining the grid is what's expensive.
I don't understand where you get your $50,000 figure from. You can get 8 Powerwalls for that price for a total of 108kWh of energy storage. I don't know what Americans are doing all day to consume 4500kWh per capita (residential energy usage) but even with such a high rate of energy consumption that setup has enough storage to keep running for days during a grid outage. I live alone and consume less than that so this system could keep the lights on for slightly more than 2 weeks. Buffering solar power with such a setup feels like a joke.
"The worst form of capitalism is one which bestows all of the benefit to the private sector while forcing all of the risk on the public sector." -- Adam Smith.
Over the past 50 years PG&E has made a game out of mis-managing the transmission infrastructure, selling it to the state, then buying it back at a discount.
California needs to own the entire utility and not just keep giving it un-warranted subsidies and gifts.
All PG&E executives should be imprisoned for the hundreds of people they have murdered in the past decade between their fires and the San Bruno explosion.
It is never in the best interest of the people to give critical public infrastructure to rent seeking flam-flam artists.
To my knowledge, in France, the national road systems are private (but weren't always) and charge massive tolls, but maintenance is paid for by contracts from the government. So all of the private owners of the roads also run sister companies that do maintenance. The government pays exorbitant prices to the companies to do maintenance for the roads that they then also make large amounts of toll from.
I'm not saying I fully support private roads or public roads, but the worst combination is a little bit of both...
Maybe. But private companies own the poles and transmission grids in many countries. You don’t see these problems in the U.K., Spain, etc. (Or for that matter in Maryland, New York, or Illinois.)
People calling for nationalization are focusing on the wrong thing. For the reasons you mention, utilities need regulation. Both government ownership and rate regulated private monopolies are a model that works routinely around the world. The ownership structure therefore can’t be the reason for PG&E’s problems. The problem instead seems to be California. PG&E was heavily regulated by the CPUC the whole time. What was CPUC doing wrong that the regulators in Germany, Spain, not to mention other US states are doing right? Bigger picture, why is it California that seems to suffer from all of these problems? Among the worst schools in the country. Housing prices out of control. Massive failed investments in public infrastructure? Cities running out of water?
> You don’t see these problems in the U.K., Spain, etc. (Or for that matter in Maryland, New York, or Illinois.)
Because they don't have a PG&E in those places. Maybe the problem is with the culture at PG&E and not with the regulators? I can't figure out if your argument is that there wasn't enough regulation in California or there was too much of it.
That’s how it works in NL; the power grid is owned by a separate entity (I think a consortium, not sure whether regional or national.) The cable and fiber networks are also separate and - lo! Behold! - the water management company board is even an elected body!
And NL is the least “socialist” place I’ve even known
The Dutch electric grid is mostly privatize, both retail and energy production. A publicly owned company manages the high voltage production lines. (But publicly owned companies in Europe often behave very much like privately owned ones. For example, TenneT, the Dutch high voltage grid operator, has a subsidiary that manages part of the grid in Germany. It issues annual statements reporting profits: https://annualreport.tennet.eu/2018/annualreport/userfiles/p.... It just so happens that the Dutch government owns all the shares.)
An association of municipalities that invested like a pension fund would be a very interesting vehicle. They could buy infrastructure, but their mandate would be for productive assets.
Public energy utilities in Canada just got loaded with off balance sheet debt and used as a general revenue slush fund for “infrastructure,” and built by unions on double time and a half, but it would be harder to get away with that today. A municipal wealth fund like a sovereign wealth fund would be worth exploring.
Who says they'd have to? If you shift ownership to counties or cities serviced by PG&E, San Diego wouldn't have to pay taxes. Think more deeply about solutions to the problem.
I live in California bud, I know how the municipalities operate here (very poorly). I'm thinking much more deeply than you are. If I own the only powerlines in town, one of the rare true monopolies in America that will keep my family rich for generations, I'm not trading that for a one-time payoff.
IIRC SDG&E said that they'd want to sell their grid if PG&E and SCE were sold to the state. They may just decide this is a good time to sell out and transfer the risks to the public.
The transmission line monopoly is such a cash cow that really doesn't make a lot of sense. For the life of me I can't figure out why utility poles don't have wireless communication such that when one node loses power, the previous one kills power to the downed line (which in theory should happen faster than it takes for the line to fall to the ground and start a fire). Once those lines are modernized, the potential for profit is enormous. It doesn't make any financial sense to give up such a rare monopoly.
I can't help thinking - what makes one suppose that California politicians would do a better job managing PG&E than whoever is doing it now who has been working under the aegis and in the full cooperation with the same California politicians as a monopoly sanctioned by those same politicians?
We have some successful non-private power companies in the state, so another power company modeled on them at least has the possibility of working out. The private approach has not worked for PG&E so far, we need to attempt fixes. If you have better ideas for how to fix PG&E you should contact your representatives or perhaps start a ballot initiative.
Politician's fallacy: "we have to do something, this is something, so we have to do this".
I don't see any argument so far why nationalizing PG&E is going to improve anything. It's already heavily regulated. Same bad decisions PG&E management took would be taken by State PG&E management for the same reasons.
> If you have better ideas for how to fix PG&E you should contact your representatives or perhaps start a ballot initiative.
This is another fallacy, for which I don't have a name. It goes like this: I assume my solution fixes the problem. In order to be allowed to poke holes in my solution, you must present another solution that you can prove fixes the problem, or your criticism is invalid.
Oh yeah this should solve all our problems. Once this happens they should hire the repair team that maintains the bart to work on our power lines. That team is the elite of the elite.
BART is chronically underfunded and a chunk of its money is spent on expansions instead of maintenance and/or salaries for staff. Low pay for staff naturally leads to low-quality work and low payroll budget leads to lower headcounts (and higher workloads for individual staff).
Really, BART has a lot in common with how PG&E executives are running things. The solution is to give it enough funding and ensure the money goes to the right place. We can't do that right now with a private power company and they aren't sending the money to the right place, but if set up correctly a regulator CAN do that. Whether they will is another question, but it probably won't be worse.
Nobody is proposing handing PG&E over to BART. In the first place, with how much of BART's funding comes from customers it wouldn't be that different were it privatized.
You’re not wrong. I would think, based off of my observations of bart, that handing pg and e to the government can only at best create an entity similar to bart. Since you say it’s already similar, there’s really no point.
People should call this what it is, a bailout of PG&E. The only people who lose in this situation are the people of California.
Granted, this is better than continuing to beat the dead horse that is PG&E for money. However, if this plan isn't accompanied by legitimate forest management and plans for controlled burns this would be like bailing out student loans without adjusting how the government guarantees student loans...
The necessary behavioral changes are not trivial to execute without a state/county takeover given that PG&E has still been prioritizing executive compensation, dividends, and profit.
We need to at least start with measures to address that, even if we also need to do other things. Are you arguing that we ONLY need to do those other things, or just that we're doomed?
What makes sugar companies similar to power companies? You haven't described particular regulatory or administrative policies that hurt Venezuela and will be applied here. Every thing isn't equivalent to every other thing.
Why is it automatically the case that (for example) administrative policies set in place by government regulators in Venezuela couldn't already be set in place by PG&E's private administrators?
You can't just respond to every federal agency with "just like sugar companies in Venezuela". It's absurd.
Which nationalized entity would you like to emulate? Please provide one nationalized company that is an example of quality and value we can emulate. Would you like your power to operate like the DMV?
Apart from the schools, the roads, the post office, the hospitals? No I can't think of many. Electricity and banking would have been on that list before they were privatized though.
As for Venezuela, they've also been subject to US sanctions when the privatize something, so cause and effect are hard to determine.
> Why is it automatically the case that (for example) administrative policies set in place by government regulators in Venezuela couldn't already be set in place by PG&E's private administrators?
PG&E employees are not guaranteed salaries, pensions and benefits by the state. This means they need to stay competitive as they may get fired if revenues drop.
PG&E is a monopoly. In the vast majority of cases you can't shop around for electricity or gas service, the only alternative is to go without electricity and/or gas service. In the event that a competitor tries to enter the market it will take a colossal capital outlay just to connect the first customer with no guarantee of profit. Nobody is going to do it. Lastly the rates are set by the state not PG&E so their income is quite predictable. Working harder at PG&E doesn't mean you're going to affect their bottom line, this isn't a factory making widgets or software company making code.
Depends on the country, but in mine the breakup coincided with the internet boom that resulted in improved quality and reduced prices. Then they let the infrastructure rot for 20 years and the government had to step in to rebuild it.
Supposedly a key problem with those nationalizations is nepotism. Venezuela nationalizes this or that company, and replaces their leadership & upper management with friends & allies of the regime- who happen to know nothing at all about producing sugar or oil.
Presumably if California nationalized PG&E, it would be run by people with experience running utilities, not Hunter Newsom.
Government entities have NO incentive to improve their quality of service from year to year. If they fix it, they get less tax money. If they don't fix it, they get more money. This over the years becomes a self fulfilling prophecy. Look at all the failed communist states and you will see the same pattern. Remember Venezuela was one of the most educated, wealthiest latin countries at the end of the 90's.
Neither do monopolies, like PG&E. Their profits are guaranteed at 10%, they can raise utility rates as they see fit, to cover expenses (The state has some influence, but it does not exercise it), and the shareholders are not personally liable for any malfeasance by the firm.
It's essentially a license to print money, with no incentives to improve. If you don't like their service, there's no competing power provider you can switch to. If you don't like them starting wildfires, you can sue them, and end up paying for your own lawsuit out of your next power bill. If you don't like them deferring maintenance, while paying shareholders dividends, you can... Complain on the internet?
At least with a state-owned utility, if you don't like how it's ran, you can always exercise your democratic rights to vote someone in who can fix it. Surely, of the 39.5 million people in California, you may be able to find one politician who knows how to run a business? Or knows how to hire managers that know how to run a business?
Why not simply cancel their government-mandated monopoly, as was done with the phone line carriers, and let companies like Tesla compete on a per-city basis?
Who granted Comcast monopoly over your coaxial cable? Your local government. Luckily free market competition is finding ingenious solutions around it, such as DSL, 5G wireless, and SpaceX's satellite internet.
> Remember Venezuela was one of the most educated, wealthiest latin countries at the end of the 90's.
Then the price of Oil skyrocketed in the '00s, and the USA began destroying and sanctioning the economy to keep those oil rates high. This is the same reason Iran has sanctions, protecting the USA and OPEC.
All I can tell you is that my municipal utility (electric & freshwater/stormwater/wastewater) has been running for decades, and has very competitive costs & high customer satisfaction. Oh, and all our power lines are buried.
Please tell me that there will be no golden parachutes for any of the executives.
From the cheap seats it sure looks like they squeezed every cent they could out of the utility rather than ensuring it had a future. There may even be a breach of fiduciary duty, given how disinterested in a future for the company they seemed by doing so.
I'm going to use the DMV as a benchmark of the ability of the state to get anything done, and then ask everyone to imagine PG&E being run like the DMV. Bureaucracies only succeed in optimizing additional red tape, and it baffles me that CA residents are cheering on this takeover!!
The post office is chronically underfunded as a result of hostile federal regulation (mostly put in place by people who want to privatize it and prevent rural customers from getting the low-cost service mandated by law).
So yeah, the post office is a great example: Of what happens when critical services are underfunded.
The post office is also not a traditional federal agency - a directly state-operated power company would have a very different administrative and funding structure.
What’s wrong with the dmv. I just got my real id, made an appointment online, showed up and was out in 15 minutes. Everything I need is automated. My car needs smog so I send in payment and go smog my car. Tabs come in the mail the next week.
Experience is subjective and varies depending on which one you go to, my first interaction was at the Oakland DMV where I had an appointment for the drive test, they got round to me close to 2hrs after my appointment. The DMV in San Francisco has horrendously long lines with very slow processing times.
I'm going to use my municipal utility as the benchmark. It's awesome. I previously was under SCE. After moving, I'm now serviced by my city-owned utility.
They're faster for service, cheaper on rates, don't shut my power off when it's windy, their website is better.
The DMV is always the go-to when people fear government providing a service. Why? Yeah, wait times can be up to a couple hours. But the service I get when I'm called has always been fine. And the only reason I have to appear in person is when I've been lazy about paying registration or getting my smog check.
For 90% of what I want to do, I just use their website on my own time and with no hassle. Or AAA. Or make an appointment at the DMV and wait about 30 minutes.
Complaining about the DMV is like complaining about airline food. Neither of those are really that bad, and I suspect if the money was spent to make them first-class experiences, we'd all just start complaining about the cost instead.
Private sector companies only perform better than the government when they're in a competitive space. As far as I'm concerned, a private monopoly is usually worse than the equivalent government-provided service. (see: Comcast vs. municipal broadband)
PG&E has close to 16 million customers and over 70K square miles, I doubt there's any municipal utility that operates at that scale but I could be wrong.
Could address this by splitting PG&E up into a bunch of smaller scale utilities that are responsive to the needs of their customers, and model them on other successful small-scale utilities.
First... how can they fuck things up worse than PG&E has? Right now they have unreliable power, dangerous infrastructure, and some of the shittiest rates.
There is very little of the animosity towards these utilities I used to see in California about PG&E. They are run well and keep rates reasonable. I just wish we had a similarly run replacement for Comcast.
Whether California could do something similar, I have no idea. It's pretty surprising how different the culture about this kind of thing is between the two adjacent states. The big issue is item 1 above... PG&E sets an awfully low bar. Maybe if PG&E's management got personally fined when a fire broke out and stopped getting paid when there was a blackout.
Right but basically every CCE in California has cheaper rates than PG&E. So "more expensive" is very unlikely on power generation. It may be more expensive because PG&E decided to extract all of the cash and neglect maintenance, unlike other California investor-owned utilities (SoCal Edison, SDG&E). But that boat has already sailed.
Its size could lead to that sort of outcome, but if nationalized it could be broken up in the process. There are quite a number of very popular & inexpensive municipal utilities in this country.
I live in Santa Clara city and my utilities except gas are provided by the city run Silicon Valley Power. It's cheaper than PG & E and i've had no reliability issues. I guess even a government run utility would perform far better than PG & E since the bar is too low.
Even if a local utility company is privatized that doesn't automatically make it impossible for it to run well. We have many examples of both local privatized and public power companies, so we know that either system can work well if managed correctly. Given that PG&E isn't running properly as a privatized one and we have examples for how the government can do it right, we might as well take over and imitate those successes.
I'd personally have more faith in a privatized company or a government entity (rather than a public company) because the lack of ability to freely trade shares means shareholders are more aligned with the long-term mission of the company.
With public companies, the people who own the company don't even live here and they only own it to make a quick buck. They'll live in an armchair in Wall Street and short sell in a heartbeat to make quick bucks on the downturn, not realizing that their trigger-happy, short-selling behavior is actually hurting California residents who depend on the company to be funded at the worst of times to fix problems and upgrade infrastructure.
Short-selling doesn't take away money from the company. Except for startups looking to fund their current growth by issuing new stock, a dip in the stock price shouldn't affect their operations at all.
As of January 1, 2015, SVP and the City of Santa Clara have the lowest average system rates for electricity in California for any electric utility serving over 10,000 customers.
Silicon Valley Power still relies on some PG&E transmission lines to bring power in that is generated outside Santa Clara. My point is just that PG&E has an influence on most every electricity user in its territory (even those with community or county run local distribution grids).
Saying they rely on some PG&E transmission lines is a massive understatement. Also, how cool is it that you can deep link to a map showing a minor utility's transmission lines?
SVP doesn’t use relatively cheap-to-supply-but-higher-income urban customers to subsidize expensive-to-supply-but-lower-income rural residents, which PG&E does some of, maybe?
During the Enron-caused blackouts (of which my father was partially responsible. When working at Perot Systems, he was on the team which build the technology enabling Enron to rob Californians blind ) we lived in Santa Clara. It was nice knowing my power wouldn't go out, which was good because the daily blackouts meant my Mountain View office was closed at least once a week for a month or two.
In computer science terms this is increasing technical debt. Your app is fundamentally broken. Instead of addressing the primary issue, we try to patch via a law suit. The patch introduces 2 new bugs: bankruptcy and blackouts. Solution: NEW PATCH!
"Technical debt" is not a computer science term. And, the most canonically tech-world facet of your hot take is complaining about something and then failing to recommend a solution.
PG&E has government mandated monopoly in these cities. "Buying out PG&E" means let mismanaged cities like San Francisco handle electricity like they handle the homelessness, transportation, sanitation and housing.
So you're saying it's impossible to fix bugs with patches? Not that the content of the patches is what matters?
If the bankruptcy and blackouts don't work, we need a new approach to the bug fixes. De-privatizing the power company is one thing that might work, given that it's a technique that works for other areas' power.
I think the extended blackouts in the Bay Area make a compelling case for cities to create micro-grids with Solar/batteries so they're not at the complete mercy of PG&E. Also, California needs to start implementing controlled burns more often to compensate for the poor forest management from the last 100 years.
Aren’t there laws preventing fire hazard brush around electrical equipment from being cleaned up? They need a legal way to handle those situations no matter who the owner is.
I have experience with municipally owned utilities. They are the worst run organizations. I really think a bunch of mayors will do a lot worse than bankruptcy. The mayors end up hiring an expensive executive - who still negotiates a golden parachute. The mayors look up to exec because of the exec's pedigree or career experience and don't have the guts or knowledge to fire him when things are going bad. Tax payers often don't know how bad things are because there is no stock price to reflect it, so they keep paying and paying. A bottomless pit.
I'm amazed that anyone thinks that the state that passed all the policies that led to this disaster should but out the company so that it can fix the problems it helped create in the first place. Talk about failing up.
Why aren't all the big tech companies generating revenue from customer data...customer owned?
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