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.
If California doesn't like PG&E making $550M profit, and would like PG&E spend more on maintenance, it should set lower profit target, and allow PG&E spend more money on maintenance. PG&E operates based on decisions of California Public Utilities Commission, which decides, among other things, how much money PG&E is allowed to make, and how much it is allowed to spend on maintenance. Here's what it looks like: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M102/K...
PG&E would love to spend more money on maintenance. It doesn't cut into their profits, because their expenses and profits are set by state government commission anyway. Of course, the government commission has some incentive to keep the rate low, to make citizens happy, which makes it limit how much money PG&E can make and spend.
The above is not meant to imply that if PG&E worked like any normal company, they'd maintain their shit better -- I have no idea if they would. However, in the current regime, where CPUC exercises so much control over what PG&E does and how much money it makes and spends, the blame cannot be solely placed on PG&E side.
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."
but make their own decisions on profits and investments
I'm not so sure about that. I can't find the link, but someone posted the CPUC minutes on the discussion of PG&E's budget. It was a 900 page document.
It has things like "PG&E recommends replacing the chain link fence surrounding the substation located 10 miles outside Modesto, CA". Then a comment by CPUC like "We find this request unreasonable as the fence still prevents site access and has an estimated remaining lifespan of 10 years".
The way the minute read was PG&E doesn't make any decisions around where money is spent with the CPUC approving it. But maybe it's not binding? Either way the CPUC is deeply embedded with how PG&E operates.
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.
I don’t think you understood my comment. PG&E is as regulated as you can possibly get without literally being part of government. When PG&E wants to spend $100M on maintenance, it has to ask government for permission, and CPUC needs to approve this expense.
My point here is not to argue that with less regulation, PG&E would do better job when it comes to maintenance — I don’t know if it would. However, considering how deeply regulated it actually is, and how much the regulator controls everything it does, some blame must also be placed on the regulator’s side.
PG&E is already a highly regulated company. So much so that one could say that it is really state controlled [1].
"Among its stated goals for energy regulation are to establish service standards and safety rules, authorize utility rate changes, oversee markets to inhibit anti-competitive activity, prosecute unlawful utility marketing and billing activities, govern business relationships between utilities and their affiliates, resolve complaints by customers against utilities, implement energy efficiency and conservation programs and programs for the low-income and disabled, oversee the merger and restructure of utility corporations, and enforce the California Environmental Quality Act for utility construction."
CPUC (California Public Utilities Commission) sets what profits PG&E makes. Any lack of money spent on maintenance and wildfire prevention necessarily goes into ratepayers pockets in the form of lower electricity rates, and the Office of Ratepayer Avocates in CPUC ensures this remains the case. PG&E is extremely regulated - anything characterized by "stealing the money" or "paying out dividends instead of doing maintenance" is elected and/or appointed officials scapegoating PG&E for complying with their regulatory decisions.
> PG&E operates based on decisions of California Public Utilities Commission...
As clarification, your statement makes it sound like CPUC makes unilateral decisions about what PG&E can or cannot do when, in fact, CPUC makes those decisions based on requests made by PG&E.
While CPUC does have a certain level of decision making power, a lot of their decisions are made based on what PG&E says is the right/necessary thing to do.
PG&E is kind of public. We just structure it in a way that it’s technically private. This has a lot of clever tricks like the fact that if it loses a ton of money it can go bankrupt without the state of California going bankrupt or having to cover all the losses.
Also, PG&E cannot just set whatever prices they want etc. the state has quite a bit of say over it.
PG&E can’t fill their toilet paper dispensers in their bathrooms without CPUC’s ok. Ok, a slight exaggeration, but things like replacing a chain link fence on a substation that costs $200k gets rejected. That’s how detailed CPUC gets into PG&E’s operation and finances. Keep in mind it took 3 years for PG&E and CPUC to finalize these rates. They started in 2020.
You’re probably asking, who the hell is CPUC? And who nominates those on the CPUC board? Governor Newsom. He nominates them directly.
My theory is keeping PG&E private provides a convenient whipping boy for the state politicians. If it was made public then all those problems would be Newsom’s (political) problems? Right now? Newsom gets votes for his “tough talk” about PG&E which is hilarious to me.
It's very similar to the dumpster fire that is PG&E electrical rates.
PG&E is a private company, but the CPUC has strict controls over it's operations. You can read the CPUC meeting minutes for yourself. Things like "PG&E would like to replace the chain link fence surrounding substation X at a cost of $150,000 - DENIED".
CPUC is a commission whose members are selected by the governor. They are the defacto decisionmakers. Yet Gavin Newsom will give quotes to the media on how "PG&E will need to be punished for it's mismanagement".
My only theory is that keeping PG&E private provides a convenient scapegoat for the utter mismanagement by CPUC.
> PG&E pays out dividends out of profits. The amount of profit it makes is strictly regulated by the government, based on the California Public Utility Commission’s rate-making.
If you want to blame the state for PG&E management decisions, you are essentially saying that PG&E’s shareholder ownership and its own management are irrelevant, in which case they are at best a superfluous expense that should be avoided by making PG&E’s functions the domain of a publicly-operated utility.
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.
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