
PG&E wildfire state bill blasted as bailout by some, deemed vital by others - masonic
https://www.mercurynews.com/2018/07/17/pge-wildfire-state-bill-blasted-as-bailout-by-some-deemed-vital-by-others/
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masonic
Favorite quote:

    
    
      Complicating matters, PG&E employs (new bill author Assemblymember) Quirk’s son.
    

Witness the magic that is CA Democrats' "gut and amend" process for yourselves
(red type is the original bill contents):

[http://leginfo.legislature.ca.gov/faces/billVersionsCompareC...](http://leginfo.legislature.ca.gov/faces/billVersionsCompareClient.xhtml?bill_id=201720180AB33)

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nerdponx
So this was a bill about plug-in hybrid electric vehicles, and they just re-
wrote the whole thing to be about wildfires? What's the point?

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jdavis703
I'm assuming it's a bargaining chip that lawmakers can use. E.g., it you vote
for this thing I care about, you can rewrite my bill (that probably wasn't
going anywhere anyways) for your own ends. Maybe someone with more insight in
to state politics could weigh in...

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nerdponx
Right. But why not just make it a different bill?

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mjcl
If you’re looking for fast legislation, you have to ‘gut’ an existing bill
because the CA constitution requires a 30 day wait after you introduce a bill
(with an exception for budget bills).

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masonic

      CA constitution requires a 30 day wait
    

Where do you see that in the CA Constitution?

Either house can have _rules_ about that, but such rules are routinely waived
by the Democrat leadership.

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cdransf
My mother in law lost her home in the Butte Fire that was also a result of
negligence on the part of PG&E. They don't deserve a bailout of any kind.

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asah
My cousins lost their home too.

Insurance doesn't replace 50 years of memories.

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cdransf
Sorry to hear it. We had our wedding there and we're glad it was well
documented, but it was devastating all the same.

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amorphid
> However, AB 33 could potentially mean that PG&E customers are on the hook to
> repay the secured bonds.

Aren't customers on the hook regardless? PG&E gets it's money from customers,
which would imply that customers are paying would be the ones to pay down the
debt. Maybe they mean customers are a captive audience, and rates could be
raised to cover the costs of the debt without impacting PG&E's profits.

~~~
yayana
That's part of the pointlessness of allowing private monopolies. All profits
go to stockholders normal losses from things like gross inefficiency are
replaced with price hikes.

But a drastic expense can cause bankruptcy, taking ownership from the
stockholders and cause a resale bellow book value to new risk takers that now
factor in this kind of risk, pressure the new management to avoid it
repeating, and are more or less happy with current rates given their lower
investment.

Watch them cast that as an injustice that our corporate social net needs to
prevent instead of the correct result.

Giving them a sweet bond deal essentially gives them the opportunity to turn
it into longterm price hikes and reward current shareholders for owning a fire
hazard (or really not claw back that reward by killing the stock price as it
has already been paid out in years of higher dividends due to lower safety
costs.)

~~~
Scipio_Afri
This is good analysis. Not to say that the "correct result" is the best result
- we'd find a way (laws) to force profits to prevent fairly likely disasterous
events from happening in the first place. In a competitive marketplace with
enforcement of the spirit of those laws that would mean companies try to
innovate and drive down the costs of implementing those changes. It would also
mean that competition woult keep a lid on profits from becoming too great,
creating motivation for companies to simply pursue the most profitable thing.
As a natural market (essentially infrastructure) monopoly, things are
different.

If infrastructure/natural monopolies are run by the state, that is a decent
solution so long as people are elected into power that understand they're
making decisions to maximize the benefit of the citizens.

What is needed is tighter enforcement or a framework which incentivizes
entities for innovating ways to improve services to their customers and
minimize societial impact. While bankruptcy and the bond market is a decent
check on that behavior, those who enacted those policies and made more profit
with them enriched themselves and simply had the clock run out on their corner
cutting not causing external damage (externalities on society). It doesn't
prevent that behavior but it does prevent it from continuing.. for some time
until the new board looks for ways to further their return on investment.
Which eventually leads to the similar damaging behavior.

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NelsonMinar
PG&E is a breathtaking example of regulatory capture by business. This was
most apparent after the San Bruno pipeline explosion, in which PG&Es
undocumented and unmaintained gas pipelines killed eight people. The original
penalty the California Public Utilities Commission approved was zero dollars.
Then it came out that various CPUC members were very cozy with PG&E, working
with them in secret to shop the case around to a friendly judge. There's
various corruption investigations still ongoing.
[https://en.wikipedia.org/wiki/San_Bruno_pipeline_explosion#S...](https://en.wikipedia.org/wiki/San_Bruno_pipeline_explosion#State_of_California)

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fiter
What's our expectation on wildfires starting versus the damage they cause? We
can obviously do better to control fires started by malfunctioning power
equipment, but there's natural risks (lightning) as well as other human risks.
Should we plan for wildfires and take the precautions to protect buildings or
sue whoever happened to start the fire this time? I guess we can have this
conversation after we get what we believe is the low hanging fruit of these
power lines.

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jdavis703
If I start a fire I am responsible for either stopping it or paying the
damages. I live in an apartment. If I create a cooking fire that damages my
neighbors' apartments, I will be liable for the damage (well my renters
insurance will be). The standard should be no different if a massive
corporation started a fire.

~~~
fiter
Well, if you don't have enough money, then what's the plan? Besides, who pays
for lightening?

What I'm trying to get at is that this feels like a brittle strategy for
something that is as easy to start as a fire. The Chicago fire is an example.

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gimmeThaBeet
ianal, but this honestly seems odd to me.

I'm assuming in this case all the issues are with transmission, which is afaik
mostly regulated by FERC and CAISO in this case, but California's weird for
these sort of things so who knows. Mostly you go through FERC, sort out what
transmission work you want to do, do the work and get rate recovery from your
customers. That's sort of the system I've been familiar with.

But this sort of uncompensated liability just doesn't track very well. It
sounds nice in a 'stick it to the man' sort of way, but doesn't fit with how
transmission regulation works in the US.

If this were a government operated utility, there's no question ratepayers
would be the ultimate people dealing with potential liabilities of affected
parties. California's stance is that the liability is consistent between a
government and non-government utility, so why isn't the recovery mechanism?

It sounds bad, but imo the proper answer is that PG&E should be able to seek
recovery for equipment attributable losses not caused by negligence. Whatever
form that takes, bonds, rate increases, that's sort of a secondary issue.

However, I would probably not trust whatever bill Quirk has put forth, Captain
Conflict of Interest doesn't sound very trustworthy.

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stickfigure
I don't understand the outrage.

PG&E is a public utility. That it is not officially an arm of the government
is a mere technicality. It has two potential sources of income - ratepayers,
and taxpayers. Where do you think the money is going to come from?

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dragonwriter
> PG&E is a public utility.

No, it's a publicly regulated private utility.

> That it is not officially an arm of the government is a mere technicality.

No, it's not.

> It has two potential sources of income - ratepayers, and taxpayers. Where do
> you think the money is going to come from?

It should come from ratepayers, because significant portions of the state are
served by different (sometimes actually public, e.g., SMUD) utilities instead
of PG&E.

And I say that as a PG&E ratepayer.

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kelnos
I'm a PG&E ratepayer as well. I disagree that we should pay for it. PG&E is a
publicly-traded utility. The shareholders should pay for it through reduced
dividends. They're ultimately responsible for PG&E's management, who is
responsible for the failed process that led to their culpability in the
wildfires.

If PG&E doesn't have enough cash on hand, they should be forced to borrow it.
If that wipes out dividends for investors for years to come, so be it.

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lozaning
The Forum program on NPR this week at one point covered this. The ceo of the
company said on the last earnings call that this would not bankrupt them. I
dont recall if they had cash, or just had secured financing for the repayment
amount, but they can cover at least this fire okay.

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kelnos
Then what's going on here? Why is AB33 a thing? Just greed?

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bobwaycott
It’s a systemic imperative of capitalism to externalize the costs of
extracting profits from society onto society itself. Governments are
incentivized to facilitate this because they have long been captured by and
dependent on capital for continued support and existence. If there is a path
for increasing profits by offloading costs onto the public, it will be pursued
to the maximum extent.

But yeah, most of us who wind up shouldering the public burden of externalized
costs to maximize private profit would call it greed.

