
California Mayors Join Campaign to Buy Out PG&E - spking
https://www.wsj.com/articles/california-mayors-join-campaign-to-make-pg-e-a-cooperative-11572955201?mod=rsswn
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jayd16
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.

~~~
vkou
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.

~~~
AcerbicZero
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.

~~~
dickeytk
I don’t see a reason in your response other than “the political system is bad”

I’d be more curious if you had a reason why you think state-owned would be
worse than state-regulated.

To me it seems better for sure. A panacea? No, but better than where we’re at
today

~~~
mensetmanusman
One questions is why other states near CA (with similar natural settings)
haven’t had the same failure mode as CA? Is it just population density?

~~~
dickeytk
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.

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shadykiller
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.

~~~
kevingadd
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.

~~~
dheera
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.

~~~
icebraining
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.

------
s3r3nity
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.

~~~
RcouF1uZ4gsC
> 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.

~~~
JumpCrisscross
> _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.

~~~
m463
One question I have - which model is the best for stewardship of a resource?

~~~
JumpCrisscross
> _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.)

~~~
wpietri
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.

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subsaharancoder
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!!

*Apologies to anyone who works at the DMV

~~~
adrr
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.

~~~
subsaharancoder
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.

~~~
viklove
I once had to deal with <private company> and they made me wait an <exorbitant
amount of time> therefore, all private companies are inefficient.

Did I do it right?

~~~
wpietri
Excellent point. I've never waited as long at the DMV as I I do for weekend
brunch.

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Aaronstotle
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.

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smsm42
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?

~~~
kevingadd
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.

~~~
smsm42
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.

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motohagiography
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.

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neonate
[http://archive.is/zl4v3](http://archive.is/zl4v3)

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mfer
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.

------
newfangle
I dont want to own PGE though

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TheChaplain
I am curious if a power company like PG&E could be bought out and made into a
cooperative like a credit union, where every member have a part.

Would it be better or worse?

~~~
vonmoltke
Sure. Structures like that already exist for rural utilities in many places.
The question is, would one that large function effectively?

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WalterBright
There's no particular reason a power generation plant must be the same company
as the one that operates the distribution lines.

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blackflame
What about SDG&E? Why should the people of San Diego have to pay taxes for a
public utility they don't benefit from?

~~~
kevingadd
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.

~~~
blackflame
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.

------
ars
Why do they need to buy it? Why can't they just pass some regulations on
safety issues?

Is there no public utility oversight board?

~~~
kevingadd
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.

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dangjc
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.

~~~
smsm42
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.

~~~
bcrosby95
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.

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billions
Venezuela nationalized sugar factories with similar reasoning with little
success: [https://www.latimes.com/world/mexico-americas/la-fg-
venezuel...](https://www.latimes.com/world/mexico-americas/la-fg-venezuela-
imports-20160809-snap-story.html)

~~~
billions
Lots of downvotes - can HN offer any counter arguments? Surely you guys use
logic to build circuits and algorithms, not down votes.

~~~
kevingadd
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.

~~~
billions
> 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.

~~~
gitgreen
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.

~~~
billions
What happened when the phone line monopolies were terminated? What happened to
the quality and price of calls?

~~~
gitgreen
You do recall what happened the last time California opened up the electricity
markets?

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crimsonalucard
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.

~~~
kevingadd
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.

~~~
crimsonalucard
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.

------
flatiron
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)

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Waterluvian
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.

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algaeontoast
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...

~~~
kevingadd
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?

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billions
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!

~~~
lucasmullens
Can you explain it in regular terms? I don't really follow what you're going
for here. Buying out PG&E sounds like a bit more than a patch.

~~~
billions
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.

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appleiigs
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.

~~~
kinghajj
That's why we should adopt the customer-owned utility model used for SMUD in
Sacramento county.

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throwaway_law
Although a tangent, its impossible to read this and not ask:

Why aren't all the big tech companies generating revenue from customer
data...customer owned?

~~~
jrhurst
Same reason most businesses that are generating wealth from employees are not
employee owned?

~~~
chillacy
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.

~~~
andromeduck
Your compensation is in the form of services rendered.

~~~
throwaway_law
Yes, that is the big tech talking point.

However, the reality is big tech needs customer data, customer data does not
need big tech.

