PG&E to file for bankruptcy
February 3, 2019 2:18 PM Subscribe
The California Energy Utility That May Have Sparked the Deadly Camp Fire Has Filed for Bankruptcy Pacific Gas and Electric, the country's largest utility company is filing for chapter 11. PG&E faces billions of dollars in liability from wildfires exacerbated by rising temperatures and drought. The Problems with PG&E in the state have only grown since The 2010 San Bruno Pipeline Explosion, and now to avoid liability for multiple fires in the state that were caused by the utility, they're filing for bankruptcy.
This might hurt California's efforts to combat climate change, as PG&E might try to weasel out of environmental commitments as part of their filing. Perhaps all this trouble will lead to more counties in California to choose public power in the face of repeated malfeasance on the part of Pacific Gas and Electric.
This might hurt California's efforts to combat climate change, as PG&E might try to weasel out of environmental commitments as part of their filing. Perhaps all this trouble will lead to more counties in California to choose public power in the face of repeated malfeasance on the part of Pacific Gas and Electric.
Matt Levine, Money stuff posted by the man of twists and turns at 2:45 PM on February 3, 2019 [9 favorites]
Yeah, assholes gotta do it. Dogs forbid the CEO and major stockholders don't get their big profits. Somebody has already profited big time from skating close to the edge and ignoring regulations, and that somebody will profit bigly after the bankruptcy.
Nobody has to go to jail.
posted by BlueHorse at 2:53 PM on February 3, 2019 [15 favorites]
Nobody has to go to jail.
posted by BlueHorse at 2:53 PM on February 3, 2019 [15 favorites]
generally keep operating and try to maximize your revenues and minimize your expenses like, you know, a regular company.
Or they could declare bankruptcy to dodge a major liability like, you know, a regular company.
posted by Tell Me No Lies at 3:10 PM on February 3, 2019 [7 favorites]
Or they could declare bankruptcy to dodge a major liability like, you know, a regular company.
posted by Tell Me No Lies at 3:10 PM on February 3, 2019 [7 favorites]
-SMUD Is Showing How California Can Lead the Way
-Newsom Nominates Former SMUD Official For California Utility Regulator
-Genevieve Shiroma: "Thank you Governor Newsom for this incredible opportunity."
posted by kliuless at 3:14 PM on February 3, 2019 [3 favorites]
-Newsom Nominates Former SMUD Official For California Utility Regulator
-Genevieve Shiroma: "Thank you Governor Newsom for this incredible opportunity."
posted by kliuless at 3:14 PM on February 3, 2019 [3 favorites]
And PG&E operates the last Nuclear Power Plant on the West Coast, the too-appropriately named Diablo Canyon plant near San Luis Obispo (and only 7 miles west of my residence for 13 years). Considering their other safety failures, I'm somewhat surprised Diablo has never had a major meltdown there. And they've announced their intention to shut it down in 2025 because it would cost less than bringing the 40+ year old facility up to 21st century standards. But as a sidebar to the big story, there is now some doubt when and whether the shutdown will happen... the plant could have to remain in operation for several more years. Eep.
posted by oneswellfoop at 3:50 PM on February 3, 2019 [3 favorites]
posted by oneswellfoop at 3:50 PM on February 3, 2019 [3 favorites]
Sorry, can someone explain this to me?
PG&E operate an electricity grid in a state that's a tinderbox due to droughts and heatwaves. This state has always been susceptible to fire, but it's now catching fire more often due to climate change. The costs of these fires are going up as communities are increasingly being built in the most fire-intense areas. PG&E's equipment may have initiated some of the recent fires, but if they hadn't then the conditions were ripe for fires initiated by other sources.
And the response to this is to make this company liable for all the damages from those fires? That seems like blaming Archduke Franz Ferdinand's driver for World War I.
posted by happyinmotion at 4:15 PM on February 3, 2019 [13 favorites]
PG&E operate an electricity grid in a state that's a tinderbox due to droughts and heatwaves. This state has always been susceptible to fire, but it's now catching fire more often due to climate change. The costs of these fires are going up as communities are increasingly being built in the most fire-intense areas. PG&E's equipment may have initiated some of the recent fires, but if they hadn't then the conditions were ripe for fires initiated by other sources.
And the response to this is to make this company liable for all the damages from those fires? That seems like blaming Archduke Franz Ferdinand's driver for World War I.
posted by happyinmotion at 4:15 PM on February 3, 2019 [13 favorites]
PG&E has raised rates repeatedly while failing to do even basic maintainance on their equipment. Check the link to the 2010 San Bruno pipeline explosion- this is not new. It’s failure after failure and people. Are. Dying. The conditions due to climate change aren’t going away, but if PG&E had done even a little due dilligance both the Camp fire and the earlier Sonoma conflagration would not have happened. They should be taken over by the state and held criminally liable for every death. Instead they’re going to go bankrupt so they won’t have to pay the survivors a penny.
posted by Homo neanderthalensis at 4:23 PM on February 3, 2019 [30 favorites]
posted by Homo neanderthalensis at 4:23 PM on February 3, 2019 [30 favorites]
Another way to look at it is that this is a very good reason that private companies shouldn't be in charge of national or regional utilities.
posted by runcibleshaw at 4:24 PM on February 3, 2019 [56 favorites]
posted by runcibleshaw at 4:24 PM on February 3, 2019 [56 favorites]
I'm starting to think that infrastructure in general should not be handled by for-profit companies., especially in an environment where regulatory capture is far too common. Like, if someone screws up on a batch of set-top DVD players, that's kinda sucky but not likely to kill a bunch of people.
posted by Enturbulated at 5:05 PM on February 3, 2019 [15 favorites]
posted by Enturbulated at 5:05 PM on February 3, 2019 [15 favorites]
I have always been surprised that companies like this are private. Growing up I heard all this nonsense about how the US is such a bastion of democracy and so on and yet we agreed to an arrangement like this where these companies have our lives in our hands and aren't answerable to us at all? Just admit the whole thing is fucked and go.
posted by bleep at 5:16 PM on February 3, 2019 [8 favorites]
posted by bleep at 5:16 PM on February 3, 2019 [8 favorites]
Stockholders get wiped out in 99% of bankruptcies.
But this is actually a pretty complicated situation. California actually places a much greater liability burden on their public utilities. They have something called "inverse condemnation" which basically says any damage from any fire caused by a utilities equipment they are 100% liable for all damages no questions asked. The preemptive bankruptcy is an attempt to get this principle overturned and to allow those liability costs to be passed onto the ratepayer when there hasnt been gross negligence. This goes to the point that a regulatory regime had to allow a utility to earn an appropriate return and in current California the climate change impact makes that impossible. It's just a complicated thing that doesn't at first glance make sense. But it more legal/regulatory posturing than anything else. Tho interestingly there is a big famous hedge fund that's been buying the insurance claims against pg&e.
posted by JPD at 5:19 PM on February 3, 2019 [6 favorites]
I think this is really bad news for rural California. There are these extreme fire conditions where something is bound to start a fire, whether it is lightning, or a vehicle fire, or high winds blowing down power lines. Finding the person or company "at fault" for the fire and punishing them isn't going to help the people who lost their homes or lives, and it will just make it more difficult and expensive to provide electricity.
posted by Maxwell's demon at 5:20 PM on February 3, 2019 [3 favorites]
posted by Maxwell's demon at 5:20 PM on February 3, 2019 [3 favorites]
I have always been surprised that companies like this are private. Growing up I heard all this nonsense about how the US is such a bastion of democracy and so on and yet we agreed to an arrangement like this where these companies have our lives in our hands and aren't answerable to us at all? Just admit the whole thing is fucked and go.
They are massively regulated like every possible way - including how they do the most mundane things imaginable up to how much profit they can make. They aren't regular public businesses at all.
posted by JPD at 5:22 PM on February 3, 2019
They are massively regulated like every possible way - including how they do the most mundane things imaginable up to how much profit they can make. They aren't regular public businesses at all.
posted by JPD at 5:22 PM on February 3, 2019
Where are we on seizing, as a general strategy?
Isn’t civil asset forfeiture a thing? Or do we only use that on people who can’t fight back?
posted by schadenfrau at 5:23 PM on February 3, 2019 [7 favorites]
Isn’t civil asset forfeiture a thing? Or do we only use that on people who can’t fight back?
posted by schadenfrau at 5:23 PM on February 3, 2019 [7 favorites]
extreme fire conditions where something is bound to start a fire
In the case of the Sonoma fire PG&E had stopped trimming the trees and bushes and overgrowth around a transformer- so when a spark occurred- FWOOM. If they had been less negligent Sonoma county wouldn't have been devastated. They can't change the climate issues, but they can trim the trees and brush around their equipment as they are required to do.
Finding the person or company "at fault" for the fire and punishing them isn't going to help the people who lost their homes or lives
Well- it can't bring back the dead, but in the case of people who's homes went up in flames punishing them through lawsuits can give them the money to restart their lives. And making sure PG&E can never do this again, whether through very tight regulation or taking the company over completely can ensure that this sort of negligence never happens again.
posted by Homo neanderthalensis at 5:28 PM on February 3, 2019 [10 favorites]
In the case of the Sonoma fire PG&E had stopped trimming the trees and bushes and overgrowth around a transformer- so when a spark occurred- FWOOM. If they had been less negligent Sonoma county wouldn't have been devastated. They can't change the climate issues, but they can trim the trees and brush around their equipment as they are required to do.
Finding the person or company "at fault" for the fire and punishing them isn't going to help the people who lost their homes or lives
Well- it can't bring back the dead, but in the case of people who's homes went up in flames punishing them through lawsuits can give them the money to restart their lives. And making sure PG&E can never do this again, whether through very tight regulation or taking the company over completely can ensure that this sort of negligence never happens again.
posted by Homo neanderthalensis at 5:28 PM on February 3, 2019 [10 favorites]
Thanks, JPD, I hadn't thought of it that this could be a strategy to change the way blame is placed for these disasters. This isn't a situation like the San Bruno gas pipeline rupture that was entirely preventable, and entirely the company's fault. It's just that Smoky the Bear was wrong- we can't prevent wildfires
posted by Maxwell's demon at 5:29 PM on February 3, 2019
posted by Maxwell's demon at 5:29 PM on February 3, 2019
I just don't buy the tree trimming negligence thing. I lived in the Santa Cruz mountains for five years, and this is one reason I don't anymore. If the utilities managed vegetation to the degree needed to prevent all fires from a windstorm, they would need to have 200ft right of ways for every power line, and there is no way the residents would allow it.
posted by Maxwell's demon at 5:34 PM on February 3, 2019 [3 favorites]
posted by Maxwell's demon at 5:34 PM on February 3, 2019 [3 favorites]
we can't prevent wildfires
but... we absolutely can! controlled burns, cutting back brush and trees, planned planting, ash regulations, burn laws and education can absolutely control most wildfires. It's just that yeah sometimes it's lightning or windstorms, but we can't just give up in the face of climate change! There are steps we can take, and I don't care if you don't buy the "tree trimming negligence" thing, because that's what happened!
posted by Homo neanderthalensis at 5:38 PM on February 3, 2019 [11 favorites]
but... we absolutely can! controlled burns, cutting back brush and trees, planned planting, ash regulations, burn laws and education can absolutely control most wildfires. It's just that yeah sometimes it's lightning or windstorms, but we can't just give up in the face of climate change! There are steps we can take, and I don't care if you don't buy the "tree trimming negligence" thing, because that's what happened!
posted by Homo neanderthalensis at 5:38 PM on February 3, 2019 [11 favorites]
I just mean it's easy to find negligence after the fact. When I see 200ft trees over power lines, I can see that it is just a matter of time before a fire starts. Who is to blame then? Given enough money, we could underground all the utilities, but otherwise, no one will stand for cutting down these trees, nor should they.
posted by Maxwell's demon at 5:44 PM on February 3, 2019 [3 favorites]
posted by Maxwell's demon at 5:44 PM on February 3, 2019 [3 favorites]
I am not saying we should give up in the face of climate change. I just think there are landscapes that are not suitable for permanent human habitation, and as lovely as they are, I believe redwood and ponderosa pine forests are some of these. Managed retreat is the name of the game for climate change, and giving back some of these areas that should never have been settled in the first place is the first step
posted by Maxwell's demon at 5:56 PM on February 3, 2019 [4 favorites]
posted by Maxwell's demon at 5:56 PM on February 3, 2019 [4 favorites]
I appreciate there are people arguing that companies shouldn't pay for damage they're responsible for, and even saying it's too hard not to take actions to prevent these things from occurring.
posted by Carillon at 6:01 PM on February 3, 2019 [7 favorites]
posted by Carillon at 6:01 PM on February 3, 2019 [7 favorites]
But let's let pge privatize profit and publicize risk, I'm sure that's the fault of the regulatory regime in CA.
posted by Carillon at 6:02 PM on February 3, 2019 [8 favorites]
posted by Carillon at 6:02 PM on February 3, 2019 [8 favorites]
That's actually not what's been argued here.
Essentially what pg&e is saying is that by the standards set by the regulator they have followed the fire protection rules, and yet given California's stricter than normal liability rules they're on the hook for a massive sum of money. They claim that in this circumstance those costs are part of their normal cost of doing business that is supposed to be in the allowed costs used to set regulated revenues, and the ratepayers should pay for this over time.
You can't think of a regulated utility like a private company with managerial discretion over their decision. You should take a look at a rate case.
The reasonable contra argument is that they didnt follow the rules and the shareholders should pay. Which is broadly correct I think
But that's basically the question PG&E claims they followed the rules and are willing to play a huge game of chicken with the regulator over it.
posted by JPD at 6:12 PM on February 3, 2019 [4 favorites]
Essentially what pg&e is saying is that by the standards set by the regulator they have followed the fire protection rules, and yet given California's stricter than normal liability rules they're on the hook for a massive sum of money. They claim that in this circumstance those costs are part of their normal cost of doing business that is supposed to be in the allowed costs used to set regulated revenues, and the ratepayers should pay for this over time.
You can't think of a regulated utility like a private company with managerial discretion over their decision. You should take a look at a rate case.
The reasonable contra argument is that they didnt follow the rules and the shareholders should pay. Which is broadly correct I think
But that's basically the question PG&E claims they followed the rules and are willing to play a huge game of chicken with the regulator over it.
posted by JPD at 6:12 PM on February 3, 2019 [4 favorites]
A bankruptcy normally wipes out the shareholders and forces some of the bond holders to take a haircut. The plantiffs in the liability case will end up with the equity.
If the CPUC doesn't change their mind ( or lose in court) that what this bankruptcy does. To say it's privatizing the risk is 100% absolutely wrong.
posted by JPD at 6:19 PM on February 3, 2019
If the CPUC doesn't change their mind ( or lose in court) that what this bankruptcy does. To say it's privatizing the risk is 100% absolutely wrong.
posted by JPD at 6:19 PM on February 3, 2019
The important legal point is that if PG&E weren't a regulated utility their legal liability would be much smaller.
posted by JPD at 6:21 PM on February 3, 2019
posted by JPD at 6:21 PM on February 3, 2019
I've had PG&E refuse to come out for a downed LIVE power line. As in, the wire was buzzing on the side of the road starting the twigs and leaves smoking.
The neighborhood solution was to have a parent sit out next to the downed line so when the kids were walking home from school, he could tell them to stay away from the wire.
Now, this was during a winter storm, so it probably wasn't going to start a wildfire. And PG&E was really, really busy with storm repairs that day, I get that. But still, I was pretty surprised they just point blank said "no, call back tomorrow."
posted by ryanrs at 6:38 PM on February 3, 2019 [10 favorites]
The neighborhood solution was to have a parent sit out next to the downed line so when the kids were walking home from school, he could tell them to stay away from the wire.
Now, this was during a winter storm, so it probably wasn't going to start a wildfire. And PG&E was really, really busy with storm repairs that day, I get that. But still, I was pretty surprised they just point blank said "no, call back tomorrow."
posted by ryanrs at 6:38 PM on February 3, 2019 [10 favorites]
Toronto Star:
After the San Bruno catastrophe, an independent study into the company’s safety culture was ordered by the utility commission. The final report, delivered in May 2017, runs to more than 300 pages and allows that while PG&E has made some “fragmented progress” in developing a safety culture, the initiatives “do not yet add up to a consistent, robust, and accountable corporate wide safety program.”posted by salvia at 6:53 PM on February 3, 2019 [13 favorites]
It was due to the “persistence” of safety incidents that the investigation was ordered. The culture was deemed “dysfunctional,” hosting an “appearance-led strategy” and an “insularity that impeded its ability to judge its effectiveness.” And this: the company was found to have “an overemphasis on financial performance.”
Municipalize PG&E
posted by The Whelk at 7:07 PM on February 3, 2019 [5 favorites]
posted by The Whelk at 7:07 PM on February 3, 2019 [5 favorites]
Municipalize PG&E
From your lips to Newsom's ears.
posted by Homo neanderthalensis at 7:14 PM on February 3, 2019 [1 favorite]
From your lips to Newsom's ears.
posted by Homo neanderthalensis at 7:14 PM on February 3, 2019 [1 favorite]
I was in Napa during the big one last year. Some initially suspected arson because the fires appeared to start EXPLICITLY in the most remote areas. Turns out that was because they started in areas where it was EXPLICITLY difficult and expensive to trim the branches around the power lines. PG&E was responsible. No joke: that wind storm that night like nothing I've ever seen. It was alien to see wind that hard with no moisture, and then the camp fire smell. But I've also only been in CA for two years, and even so I was well aware how much fires had become a problem over the last ten years.
Like most places, the local power company is a virtual monopoly. They have an absolute responsibility to uphold the trust the cities and counties put in them. Let PG&E fold. Regulate the ever-loving shit out of everyone else.
posted by es_de_bah at 7:23 PM on February 3, 2019 [6 favorites]
Like most places, the local power company is a virtual monopoly. They have an absolute responsibility to uphold the trust the cities and counties put in them. Let PG&E fold. Regulate the ever-loving shit out of everyone else.
posted by es_de_bah at 7:23 PM on February 3, 2019 [6 favorites]
The big fire in Santa Rosa, the Tubbs Fire, wasn't caused by PG&E according to fire investigators.
posted by spork at 7:52 PM on February 3, 2019
posted by spork at 7:52 PM on February 3, 2019
Oh, it's all fine then. They only blew up one town and they say they followed all the rules. Nothing we can do I guess.
posted by runcibleshaw at 8:22 PM on February 3, 2019 [4 favorites]
posted by runcibleshaw at 8:22 PM on February 3, 2019 [4 favorites]
p.s. if I can make a criticism of our govt wildfire procedures in general, can we please never again name a specific wildfire something like "Camp Fire"? No "Forrest Fire" or "Wilde Fire" either. I don't care if the fire started in Wilde, CA, just please pick a different name. kthxbye
posted by ryanrs at 8:42 PM on February 3, 2019 [7 favorites]
posted by ryanrs at 8:42 PM on February 3, 2019 [7 favorites]
I was a stock analyst for a big brokerage firm covering Electric Utilities early in my career.
This is way more complicated than blame them. As JPD has tried to point out, them being regulated (heavily regulated) adds a lot to the level of complexity here. The bottom line is that regardless of who is deemed legally liable, the ratepayers will ultimately be footing the bill regardless of who runs the company, the shareholders or the state if they try to take them over. As a person who grew up on Long Island that had electric heat, I can tell you that when the state took over LILCo, rates went up not down.
To me, the decision is either short term or long term. In the short term it is easy to make the shareholders pay, but still, it will be passed on to the ratepayers. In the long-term no matter who pays for the damages, the state and its taxpayers and the ratepayers will be allocated those costs.
I do not know if it is the case, but if PCG is self insured, the state utility commission should make them start to build up a reserve to cover their insurance costs that comes out of shareholder dividends not ratepayers.
I have not taken the time to look it up, but I am willing to bet the money I won on the Superbowl that Calpers is the largest shareholder if not a top one. Most of their shareholders are pension funds and older folks looking for steady dividends. If the shareholders pay, it is not the capitalist pigs many of you think will be affected, it is the everyday person with a pension fund or who is scraping by on social security and dividend payments.
posted by AugustWest at 8:44 PM on February 3, 2019 [7 favorites]
This is way more complicated than blame them. As JPD has tried to point out, them being regulated (heavily regulated) adds a lot to the level of complexity here. The bottom line is that regardless of who is deemed legally liable, the ratepayers will ultimately be footing the bill regardless of who runs the company, the shareholders or the state if they try to take them over. As a person who grew up on Long Island that had electric heat, I can tell you that when the state took over LILCo, rates went up not down.
To me, the decision is either short term or long term. In the short term it is easy to make the shareholders pay, but still, it will be passed on to the ratepayers. In the long-term no matter who pays for the damages, the state and its taxpayers and the ratepayers will be allocated those costs.
I do not know if it is the case, but if PCG is self insured, the state utility commission should make them start to build up a reserve to cover their insurance costs that comes out of shareholder dividends not ratepayers.
I have not taken the time to look it up, but I am willing to bet the money I won on the Superbowl that Calpers is the largest shareholder if not a top one. Most of their shareholders are pension funds and older folks looking for steady dividends. If the shareholders pay, it is not the capitalist pigs many of you think will be affected, it is the everyday person with a pension fund or who is scraping by on social security and dividend payments.
posted by AugustWest at 8:44 PM on February 3, 2019 [7 favorites]
August: looks like CALpers is not heavy into PGE:
https://www.sacbee.com/news/politics-government/the-state-worker/article225349940.html
posted by armoir from antproof case at 9:11 PM on February 3, 2019 [2 favorites]
https://www.sacbee.com/news/politics-government/the-state-worker/article225349940.html
posted by armoir from antproof case at 9:11 PM on February 3, 2019 [2 favorites]
And for the Tubbs fire, at least PG&E has deep pockets. Can you imagine being the private homeowner who, let's say had rats chew through wiring in her garage attic or something, which then burned it down along with the rest of the county? There are such enormous consequences for really minor and mundane causes, that I don't see how the whole blame for the fire can be placed on the circumstances where it starts
posted by Maxwell's demon at 9:21 PM on February 3, 2019 [1 favorite]
posted by Maxwell's demon at 9:21 PM on February 3, 2019 [1 favorite]
The DSA wants to have a public takeover of PG&E.
I was a contractor working at PG&E until very recently. (Just before the bankruptcy announcement, they laid off huge swarms of contractors who weren't directly working in Safety & Compliance.)
If the utilities managed vegetation to the degree needed to prevent all fires from a windstorm, they would need to have 200ft right of ways for every power line, and there is no way the residents would allow it.
This is what I'd heard from the inside. One the one hand, yeah, it takes a lot of staff and equipment to keep up with vegetation clearance limits, and it's possible they hadn't. On the other... residents DO NOT WANT 10'+ clearance around all power lines, much less more than that for high wind conditions. Current requirement is something like 8-12 feet. Laws recently changed, or compliance standards recently changed, to increase that in the "above" area - previously, as long as they kept X feet above the power lines clear, they were in compliance; more recently, it's been noted that no, is not okay to have tree branches 20 feet over the power lines. But the laws weren't written with gravity in mind.
PG&E claims climate change is the big problem, and they are probably at least somewhat correct: the methods they used 20 years ago for rural fire management mostly worked, and they have stopped working recently because trees catch fire more easily now than they used to. Aside from paying for damages, they need a lot more vegetation control, a lot more power-line maintenance, a lot more quick responses to potential dangers - and someone is going to have to pay for those changes.
I have no idea what the solutions are; I like the idea of nationalizing (municipalizing?) but have no real understanding of how that would work.
posted by ErisLordFreedom at 10:29 PM on February 3, 2019 [5 favorites]
I was a contractor working at PG&E until very recently. (Just before the bankruptcy announcement, they laid off huge swarms of contractors who weren't directly working in Safety & Compliance.)
If the utilities managed vegetation to the degree needed to prevent all fires from a windstorm, they would need to have 200ft right of ways for every power line, and there is no way the residents would allow it.
This is what I'd heard from the inside. One the one hand, yeah, it takes a lot of staff and equipment to keep up with vegetation clearance limits, and it's possible they hadn't. On the other... residents DO NOT WANT 10'+ clearance around all power lines, much less more than that for high wind conditions. Current requirement is something like 8-12 feet. Laws recently changed, or compliance standards recently changed, to increase that in the "above" area - previously, as long as they kept X feet above the power lines clear, they were in compliance; more recently, it's been noted that no, is not okay to have tree branches 20 feet over the power lines. But the laws weren't written with gravity in mind.
PG&E claims climate change is the big problem, and they are probably at least somewhat correct: the methods they used 20 years ago for rural fire management mostly worked, and they have stopped working recently because trees catch fire more easily now than they used to. Aside from paying for damages, they need a lot more vegetation control, a lot more power-line maintenance, a lot more quick responses to potential dangers - and someone is going to have to pay for those changes.
I have no idea what the solutions are; I like the idea of nationalizing (municipalizing?) but have no real understanding of how that would work.
posted by ErisLordFreedom at 10:29 PM on February 3, 2019 [5 favorites]
the ratepayers will ultimately be footing the bill regardless of who runs the company, the shareholders or the state if they try to take them over.
I'm pretty sure, as a California resident, that I prefer the one where I just pay the bill for the damages, not that bill plus the bill for protecting the shareholders' precious precious profits and share value. Every single penny should come first out of the shareholders and only when the value is down to 0 should the bill touch ratepayers.
posted by tavella at 10:33 PM on February 3, 2019 [9 favorites]
I'm pretty sure, as a California resident, that I prefer the one where I just pay the bill for the damages, not that bill plus the bill for protecting the shareholders' precious precious profits and share value. Every single penny should come first out of the shareholders and only when the value is down to 0 should the bill touch ratepayers.
posted by tavella at 10:33 PM on February 3, 2019 [9 favorites]
The big fire in Santa Rosa, the Tubbs Fire, wasn't caused by PG&E according to fire investigators.
The interesting thing about that conclusion is that it means that a ton of liability money that PG&E thought it was going to owe won't have to be paid out. It's enough that it probably means that PG&E isn't actually bankrupt, and now at least one of their major shareholders is incredibly pissed and wants to get rid of the entire board of directors for continuing to push for bankruptcy when the company likely has enough cash to avoid it.
posted by Copronymus at 11:20 PM on February 3, 2019
The interesting thing about that conclusion is that it means that a ton of liability money that PG&E thought it was going to owe won't have to be paid out. It's enough that it probably means that PG&E isn't actually bankrupt, and now at least one of their major shareholders is incredibly pissed and wants to get rid of the entire board of directors for continuing to push for bankruptcy when the company likely has enough cash to avoid it.
posted by Copronymus at 11:20 PM on February 3, 2019
San Jose Mercury News, "PG&E violated safety rules, was late on thousands of Wine Country electricity inspections and work orders" --
In one instance, the audit revealed that tree branches or foliage were found to be less than 18 inches away from a primary electrical line for a power pole in the Sonoma divisionAssociated San Jose Mercury News editorial:
Bay Area News Group’s George Avalos reported Thursday on the state audit by the PUC showing that PG&E violated electricity-grid safety regulations at least 11 times in the North Bay in the years prior to this fall’s ferocious fires. The PUC said that the utility had also failed in thousands of instances over a five-year period to conduct timely inspections and work orders required by the state regulator.blockquoteposted by salvia at 1:14 AM on February 4, 2019 [9 favorites]
That’s since the 2010 San Bruno gas line explosion that killed eight people and destroyed 38 homes.
During the same five-year period, PG&E pocketed about $1 billion in profits every year.
The PUC should immediately reduce PG&E’s guaranteed profit level. When the utility went bankrupt in 2001, the PUC guaranteed shareholders an 11.3 percent return on equity, about a percentage point above the industry standard. If cutting their profit doesn’t get PG&E’s attention, it may be time to begin the complex process of breaking up PG&E and to seek another, safer system to provide gas and electrical service to its 16 million customers.
PG&E is a convicted felon. It was fined $1.6 billion for negligence in the San Bruno disaster. A U.S. District Court jury in San Francisco found the utility guilty of deliberately impeding the investigation by the National Transportation Safety Board.
PG&E also has a long history of diverting maintenance funds into profits for shareholder dividends and executive bonuses. It has fought attempts by legislators to make the utility more transparent...
PG&E operate an electricity grid in a state that's a tinderbox due to droughts and heatwaves. This state has always been susceptible to fire, but it's now catching fire more often due to climate change. The costs of these fires are going up as communities are increasingly being built in the most fire-intense areas. PG&E's equipment may have initiated some of the recent fires, but if they hadn't then the conditions were ripe for fires initiated by other sources.
And the response to this is to make this company liable for all the damages from those fires? That seems like blaming Archduke Franz Ferdinand's driver for World War I.
Well there's really a few parallel things going on here:
1) Should utilities be privately owned but economically regulated or publicly owned? (in either case they would need to follow safety regulations and in either case they sometimes won't).
2) How should we cover the damage from fires to people's property, however they were caused?
3) What is an effective regulation design, given the prevailing circumstances to manage such a company, whether or not it is private?
4) What are the technical measures you can use to prevent these fires?
I'll leave the first question aside except to note that while I'm sympathetic with public ownership for other reasons, I don't think it would have made any difference here. As long as someone or something has fixed a total budget (whether that is shareholders looking of a dividend or a state assembly looking to keep taxes low) someone will make an allocation decision about where to spend their capital and operational budgets.
Fundamentally, moving large amounts of energy around is an activity which risks release of that energy. There are good practices which can and should be used to limit those releases but they can never be entirely prevented. These releases can come from trees contacting conductors, from overloaded transformers, from air insulated circuit breakers, or from other sources on the network.
The issue with the current regime is that it does not discriminate between a spark due to suboptimal but within regulations maintenance, a spark from an unpredictable event, and a spark due to a flagrant breach of regulations. Also, a single spark, from any event, can cause an enormous fire because of conditions in California.
It solves the problem of who pays for the damage without really looking at causes of ignition and fire control regimes.
Electrical assets cause sparks everywhere in the world, it is only in dry conditions that these result in a massive blaze. It's windy in England today and I guarantee that even in networks which are super attentive to maintaining clearance around their overhead assets, branches are touching conductors on-and-off over the course of the day somewhere on their networks. Are they better at running a distribution network than PG&E because England is wetter than California.
If you doubled the size of all the overhead line rights of way (good luck getting that agreed), you'd still have occasional ignition events. When one spark is all it takes, reducing the number of potential ignitions may have a much slower than linear effect on the number of catastrophic fires.
posted by atrazine at 4:00 AM on February 4, 2019 [8 favorites]
And the response to this is to make this company liable for all the damages from those fires? That seems like blaming Archduke Franz Ferdinand's driver for World War I.
Well there's really a few parallel things going on here:
1) Should utilities be privately owned but economically regulated or publicly owned? (in either case they would need to follow safety regulations and in either case they sometimes won't).
2) How should we cover the damage from fires to people's property, however they were caused?
3) What is an effective regulation design, given the prevailing circumstances to manage such a company, whether or not it is private?
4) What are the technical measures you can use to prevent these fires?
I'll leave the first question aside except to note that while I'm sympathetic with public ownership for other reasons, I don't think it would have made any difference here. As long as someone or something has fixed a total budget (whether that is shareholders looking of a dividend or a state assembly looking to keep taxes low) someone will make an allocation decision about where to spend their capital and operational budgets.
Fundamentally, moving large amounts of energy around is an activity which risks release of that energy. There are good practices which can and should be used to limit those releases but they can never be entirely prevented. These releases can come from trees contacting conductors, from overloaded transformers, from air insulated circuit breakers, or from other sources on the network.
The issue with the current regime is that it does not discriminate between a spark due to suboptimal but within regulations maintenance, a spark from an unpredictable event, and a spark due to a flagrant breach of regulations. Also, a single spark, from any event, can cause an enormous fire because of conditions in California.
It solves the problem of who pays for the damage without really looking at causes of ignition and fire control regimes.
Electrical assets cause sparks everywhere in the world, it is only in dry conditions that these result in a massive blaze. It's windy in England today and I guarantee that even in networks which are super attentive to maintaining clearance around their overhead assets, branches are touching conductors on-and-off over the course of the day somewhere on their networks. Are they better at running a distribution network than PG&E because England is wetter than California.
If you doubled the size of all the overhead line rights of way (good luck getting that agreed), you'd still have occasional ignition events. When one spark is all it takes, reducing the number of potential ignitions may have a much slower than linear effect on the number of catastrophic fires.
posted by atrazine at 4:00 AM on February 4, 2019 [8 favorites]
For the seemingly missing term between "nationalize" and "municipalize", I'm going with "statalize" (cf. "parastatal").
Statalize PG&E!
posted by afiler at 7:37 AM on February 4, 2019
Statalize PG&E!
posted by afiler at 7:37 AM on February 4, 2019
To expand on my snarky comment above, the point isn't whether or not PG&E caused the fires, or whether a government run utility would have done any better. The point is that, at least in theory, a government run utility would be accountable to everyone, not just its shareholders.
posted by runcibleshaw at 7:44 AM on February 4, 2019 [2 favorites]
posted by runcibleshaw at 7:44 AM on February 4, 2019 [2 favorites]
From the other coast, we hiss in anger at National Grid, who manages the power lines here in New England, because they also suck at maintaining the lines.
With some regularity now I get texts before a big storm, warning that they are standing by with crews and trucks for downed lines. I also see branches growing under, along, and over power lines all over my damn town and state. My dudes, you can fix this before it happens!
There's a multi-year project ongoing to replace the big transmission lines with newer, presumably-stronger towers -- and I am hunky-dory with them clear-cutting great swaths through the state around these rights-of-way. But could you guys also come to the neighborhoods and trim back the branches, please, so my power doesn't go out in the first place?!
posted by wenestvedt at 8:13 AM on February 4, 2019 [1 favorite]
With some regularity now I get texts before a big storm, warning that they are standing by with crews and trucks for downed lines. I also see branches growing under, along, and over power lines all over my damn town and state. My dudes, you can fix this before it happens!
There's a multi-year project ongoing to replace the big transmission lines with newer, presumably-stronger towers -- and I am hunky-dory with them clear-cutting great swaths through the state around these rights-of-way. But could you guys also come to the neighborhoods and trim back the branches, please, so my power doesn't go out in the first place?!
posted by wenestvedt at 8:13 AM on February 4, 2019 [1 favorite]
...
I do not know if it is the case, but if PCG is self insured, the state utility commission should make them start to build up a reserve to cover their insurance costs that comes out of shareholder dividends not ratepayers.
...
posted by AugustWest at 12:44 AM on February 4 [3 favorites +] [!]
Dude, we know. We will pay to not be on fire.
posted by es_de_bah at 8:15 AM on February 4, 2019 [2 favorites]
I do not know if it is the case, but if PCG is self insured, the state utility commission should make them start to build up a reserve to cover their insurance costs that comes out of shareholder dividends not ratepayers.
...
posted by AugustWest at 12:44 AM on February 4 [3 favorites +] [!]
Dude, we know. We will pay to not be on fire.
posted by es_de_bah at 8:15 AM on February 4, 2019 [2 favorites]
One of the ways PG&E was (is?) looking at for reducing fire risks: In high-wind, low-humidity conditions, cut power to rural areas if there's a known risk of fire. I have no idea what kind of assessment they use for "fire risk," but the result would be "cut off power to entire regions until we send someone out to check every power line in the area" - no power for a minimum of several days.
Providing power to cities is relatively simple, and easy to make profitable. It's fairly easy to stay safe, because when unsafe conditions happen, they get warnings from lots of people. (I know they have often ignored them. The point is, another org that took over, could pay more attention--those warnings are at least easy to track.) Providing power to rural areas costs a whole lot of maintenance and liability risk for few customers. And they don't get warnings often; there's not multiple people in line-of-sight of every power line. There isn't going to be any simple answer for dealing with that.
That said, one of the starting points can be, "the state manages utilities, and isn't trying to make a profit on them; as long as they cover their own expenses, they're fine. Upper management gets paid well but no multi-million dollar salaries, and no shareholder money," which would free up a lot of money for doing maintenance and upgrades. (Oh, and they could hire the contractors instead of having a constant churn of people who know crucial procedures and information.)
I do worry that municipalizing at any level smaller than the state is going to mean rural areas get screwed - that without a larger org that's standardizing costs across several regions, rural areas are going to have to pay a lot more for less service.
posted by ErisLordFreedom at 9:53 AM on February 4, 2019 [2 favorites]
Providing power to cities is relatively simple, and easy to make profitable. It's fairly easy to stay safe, because when unsafe conditions happen, they get warnings from lots of people. (I know they have often ignored them. The point is, another org that took over, could pay more attention--those warnings are at least easy to track.) Providing power to rural areas costs a whole lot of maintenance and liability risk for few customers. And they don't get warnings often; there's not multiple people in line-of-sight of every power line. There isn't going to be any simple answer for dealing with that.
That said, one of the starting points can be, "the state manages utilities, and isn't trying to make a profit on them; as long as they cover their own expenses, they're fine. Upper management gets paid well but no multi-million dollar salaries, and no shareholder money," which would free up a lot of money for doing maintenance and upgrades. (Oh, and they could hire the contractors instead of having a constant churn of people who know crucial procedures and information.)
I do worry that municipalizing at any level smaller than the state is going to mean rural areas get screwed - that without a larger org that's standardizing costs across several regions, rural areas are going to have to pay a lot more for less service.
posted by ErisLordFreedom at 9:53 AM on February 4, 2019 [2 favorites]
Even a state owned utility has to generate enough profit to pay it's debt and reinvest in growth. Something like a 5-6% return on capital vs 8-9% for a private utility.
The pro private argument is the efficiency of a private firm is greater than the spread in required returns so consumers win. I'm not totally sure that's true, but I'm also not sure the people are generally happier with state owned utilities or that state owned utilities are safer and more environmentally friendly.
posted by JPD at 12:18 PM on February 4, 2019
The pro private argument is the efficiency of a private firm is greater than the spread in required returns so consumers win. I'm not totally sure that's true, but I'm also not sure the people are generally happier with state owned utilities or that state owned utilities are safer and more environmentally friendly.
posted by JPD at 12:18 PM on February 4, 2019
oneswellfoop: And PG&E operates the last Nuclear Power Plant on the West Coast
Unless Washington State is no longer considered part of the West Coast. I mean, the Columbia Generating Station is inland a bit, but there's a big river that leads directly to the ocean. People do tend to forget about it, what with it being part of the Hanford Site, but it does provide about 10% of Washington State's power.
posted by monopas at 5:57 PM on February 4, 2019
Unless Washington State is no longer considered part of the West Coast. I mean, the Columbia Generating Station is inland a bit, but there's a big river that leads directly to the ocean. People do tend to forget about it, what with it being part of the Hanford Site, but it does provide about 10% of Washington State's power.
posted by monopas at 5:57 PM on February 4, 2019
ErisLordFreedom, I'm sorry that you're suffering the fallout of this. To my knowledge, PG&E management has been rather shitty to personnel for at least 45 years.
Thank you, and to JPD and maxell's demon as well, for your comments here.
This bankruptcy is just as messed up and inevitable as the last one was.
posted by monopas at 7:31 PM on February 4, 2019 [1 favorite]
Thank you, and to JPD and maxell's demon as well, for your comments here.
This bankruptcy is just as messed up and inevitable as the last one was.
posted by monopas at 7:31 PM on February 4, 2019 [1 favorite]
PG&E has been scapegoating trees for recent fires caused by its own obsolete infrastructure. Alas, people start believing lies they keep hearing.
Trees and branches near powerlines do not start fires. Improperly maintained live wires ignite nearby flammable fuels.
Distribution lines running down tree-lined streets can and should be replaced with tree wire or aerial cable to reduce faults from conductors contacting vegetation and longterm vegetation management expense while sparing valuable shade trees. Other utilities operating in High Fire-Threat areas of California have voluntarily commenced this changeout.
PG&E has chosen instead to misrepresent the recently revised vegetation clearance guidelines (12' radius at time of trim) as the actual requirements (48" clearance) while suppressing the exemption (6" clearance) for sturdy trunks and branches unlikely to grow or blow into the wires. PG&E's "enhanced vegetation management" diagram with clearance all the way to the sky is entirely its own invention, not required or recommended by any state agency.
Transmission lines operate at voltages which are impractical to insulate, so those lines run through clearcut swaths. These breaks in the canopy engender small-diameter brush and grasses which become kindling in California's long dry season. Then when PG&E's facilities fail due to neglect, sparks land in beds of tinder from which fires quickly spread.
Lines can be preemptively de-energized when extreme fire weather is forecast. PG&E did so on October 14 and restored power one to three days later. When similar conditions were forecast for November 8, PG&E alerted customers to a potential "public safety power shutoff" but elected not to de-energize.
Most of the lines involved in the October event were distribution lines serving largely residential customers, but a few were transmission lines serving a few commercial customers or none at all. In the November event, it would have been possible to de-energize the Caribou-Palermo transmission line with minimal impact to customers reliant on grid power. PG&E would just have had to forgo a few hours of proceeds from its hydro facilities -- yet chose not to do so.
Conditions on November 8 were ripe for fire. The dry season had been unusually dry and unprecedentedly hot. Surface fuels were practically kiln-baked. Katabatic winds would be funneled through the Feather River Canyon, increasing in speed downslope. Poe Dam and the transmission line taking its 143 megawatts to market were at the bottom of this tinderbox. Any spark could have ignited it, but not lightning -- dewpoints in the single digits Fahrenheit are not lightning weather.
A utility operator answerable to its customers or not motivated by profit might have made a different decision than PG&E made that day.
PG&E's corporate disregard for maintenance and public safety is well established. This is a criminal enterprise, convicted for the San Bruno explosion, which has repeatedly violated its probation since. The dozen fires PG&E started in October 2017 were willful negligence. The conscious decision not to de-energize the damaged transmission line November 8, 2018 was reckless indifference of Ghost Ship proportions.
PG&E has earned the corporate death penalty. It deserves to be liquidated, with the power generation facilities going to more responsible operators, the distribution facilities to municipal districts, and every dollar to the victims of PG&E's malfeasance.
There are more victims than the deceased and dispossessed. Thousands have been able to return to their homes but have lost their incomes. Thousands more have surviving homes but no potable water. And ten million downwind were breathing toxic smoke for two weeks. The total economic impact dwarfs the property damage, and the longterm health impact dwarfs the official death toll.
This part of rural California produces far more electricity than it consumes thanks to an abundance of hydro plants. Generation and transmission costs would come down if this district were separated from power importers downstream, and overhead would come down if separated from PG&E mismanagement. Even if distribution costs were higher than districts with more customers per line-mile, a public utility would still be a step forward.
It is unreasonable to assert that the evacuated areas should remain depopulated and for that assertion to remain unchallenged. Similar pronouncements were made in 2005 regarding St. Bernard Parish and the Lower Ninth Ward. And there is an argument that as sea levels rise and precipitation patterns change, some formerly ideal locations may become unsustainable. But just as the floodwaters in New Orleans came from a mismanaged canal, the ember storm in Paradise came from a mismanaged transmission line. The displaced did not choose to make their homes in fragile communities; they had robust communities destroyed through the malfeasance of others. They should be welcomed back to the hills they called home.
It is PG&E, not Paradise, that should disappear. A bankrupt demise like Enron's is appropriate.
posted by backwoods at 11:49 AM on February 5, 2019 [7 favorites]
Trees and branches near powerlines do not start fires. Improperly maintained live wires ignite nearby flammable fuels.
Distribution lines running down tree-lined streets can and should be replaced with tree wire or aerial cable to reduce faults from conductors contacting vegetation and longterm vegetation management expense while sparing valuable shade trees. Other utilities operating in High Fire-Threat areas of California have voluntarily commenced this changeout.
PG&E has chosen instead to misrepresent the recently revised vegetation clearance guidelines (12' radius at time of trim) as the actual requirements (48" clearance) while suppressing the exemption (6" clearance) for sturdy trunks and branches unlikely to grow or blow into the wires. PG&E's "enhanced vegetation management" diagram with clearance all the way to the sky is entirely its own invention, not required or recommended by any state agency.
Transmission lines operate at voltages which are impractical to insulate, so those lines run through clearcut swaths. These breaks in the canopy engender small-diameter brush and grasses which become kindling in California's long dry season. Then when PG&E's facilities fail due to neglect, sparks land in beds of tinder from which fires quickly spread.
Lines can be preemptively de-energized when extreme fire weather is forecast. PG&E did so on October 14 and restored power one to three days later. When similar conditions were forecast for November 8, PG&E alerted customers to a potential "public safety power shutoff" but elected not to de-energize.
Most of the lines involved in the October event were distribution lines serving largely residential customers, but a few were transmission lines serving a few commercial customers or none at all. In the November event, it would have been possible to de-energize the Caribou-Palermo transmission line with minimal impact to customers reliant on grid power. PG&E would just have had to forgo a few hours of proceeds from its hydro facilities -- yet chose not to do so.
Conditions on November 8 were ripe for fire. The dry season had been unusually dry and unprecedentedly hot. Surface fuels were practically kiln-baked. Katabatic winds would be funneled through the Feather River Canyon, increasing in speed downslope. Poe Dam and the transmission line taking its 143 megawatts to market were at the bottom of this tinderbox. Any spark could have ignited it, but not lightning -- dewpoints in the single digits Fahrenheit are not lightning weather.
A utility operator answerable to its customers or not motivated by profit might have made a different decision than PG&E made that day.
PG&E's corporate disregard for maintenance and public safety is well established. This is a criminal enterprise, convicted for the San Bruno explosion, which has repeatedly violated its probation since. The dozen fires PG&E started in October 2017 were willful negligence. The conscious decision not to de-energize the damaged transmission line November 8, 2018 was reckless indifference of Ghost Ship proportions.
PG&E has earned the corporate death penalty. It deserves to be liquidated, with the power generation facilities going to more responsible operators, the distribution facilities to municipal districts, and every dollar to the victims of PG&E's malfeasance.
There are more victims than the deceased and dispossessed. Thousands have been able to return to their homes but have lost their incomes. Thousands more have surviving homes but no potable water. And ten million downwind were breathing toxic smoke for two weeks. The total economic impact dwarfs the property damage, and the longterm health impact dwarfs the official death toll.
This part of rural California produces far more electricity than it consumes thanks to an abundance of hydro plants. Generation and transmission costs would come down if this district were separated from power importers downstream, and overhead would come down if separated from PG&E mismanagement. Even if distribution costs were higher than districts with more customers per line-mile, a public utility would still be a step forward.
It is unreasonable to assert that the evacuated areas should remain depopulated and for that assertion to remain unchallenged. Similar pronouncements were made in 2005 regarding St. Bernard Parish and the Lower Ninth Ward. And there is an argument that as sea levels rise and precipitation patterns change, some formerly ideal locations may become unsustainable. But just as the floodwaters in New Orleans came from a mismanaged canal, the ember storm in Paradise came from a mismanaged transmission line. The displaced did not choose to make their homes in fragile communities; they had robust communities destroyed through the malfeasance of others. They should be welcomed back to the hills they called home.
It is PG&E, not Paradise, that should disappear. A bankrupt demise like Enron's is appropriate.
posted by backwoods at 11:49 AM on February 5, 2019 [7 favorites]
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