PG&E should be fined $166M for botched power shut-offs, watchdog says

https://www.latimes.com/environment/story/2020-10-30/pge-fine-recommended-power-outages

by sir692 • 6 years ago

104 91 6 years ago

wesleyy• 6 years ago

How does any kind of fine for PG&E not end up being a regressive tax? As long as they are the only supplier in NorCal the costs will just be passed on to all NorCal residents.

labster3• 6 years ago

Because the rates they charge customers are highly regulated. PG&E is simply not allowed to raise rates to pay fines.

Also, they are not the only supplier in NorCal, SMUD and many community choice energy organizations exist.

lotsofpulp4• 6 years ago

Where will the money come from to pay the fines?

coding123• 6 years ago

The property I just bought in northern CA was a trip. In the full title report I got documents dating back to 1880 - all hand written. I got to read about various families that owned the land, and transferred ownership to various companies, including "Northern California Power Company Consolidated" in 1917 and eventually "Pacific Gas and Electric Company" as of December 10th 1948.

It is a total mind-fuck how tied up we are with that company.

But, I do have some hope that at some point in the future mini-grid technology will replace these large juggernauts.

zbrozek• 6 years ago

Fines are probably harder to deliberately mislabel as capex, and therefore less likely to get approved by the CPUC to be passed on to ratepayers. That said, I think these proposed fines are silly. PG&E did actually try really hard to get the word out, burying folks under a mountain of mailers and text messages and social media posts and advertising.

Pointing to medical baseline customers as some ultra-vulnerable population and claiming that PG&E has extra responsibility to keep their power on feels disingenuous. Those are precisely the users who should be most keenly aware of their uptime requirements and have their own backups provisioned.

It felt weird writing that. It makes me sound like a PG&E apologist. Changing focus...

PG&E has optimized its business to reduce transparency and accountability, while also engaging in creative accounting to drive up costs and improve their take under a cost-plus model. Read the Camp Fire report (it's well-written and engaging) to get a better picture of the firm and its habits: https://www.buttecounty.net/Portals/30/CFReport/PGE-THE-CAMP...

(As an aside, reading that report, it's clear that Californians surely share some of the blame here. Overzealous conservationist regulation has made it unnecessarily difficult to do infrastructure maintenance. You can't do work in one season because the weather makes it dangerous or you're not allowed downtime. You can't do work in the other season because there's nesting birds on your poles. Or you can't cut down that protected heritage tree. And things like CEQA make building new unreasonably difficult, so you have to live with what you've got.)

Prior to 2014, the CPUC was run by a dude soliciting bribes from those he regulated. So it's not surprising that the organization isn't doing a great job of putting consumer interests first. Corporate culture flows from the top: https://www.sfgate.com/bayarea/article/CPUC-head-Michael-Pee...

PG&E has taken all of us for a ride, and has managed to do it despite a huge degree of regulatory oversight. We pay some of the highest rates for electricity in the United States, through some of the most complicated rate plans, and still don't manage to keep the lights on or avoid setting fires. And the rate of price increases make healthcare and higher education almost look sensible. See slide 28: https://www.cpuc.ca.gov/uploadedFiles/CPUCWebsite/Content/Ne...

systemvoltage• 6 years ago

Can someone explain how utility companies aren't part of the gov in the US of A? How is it in other countries? Are they private enterprises?

It terrifies me that some private corporation is in charge of public infrastructure that cannot be controlled in capitalistic marketplace. For e.g., water utility company has no interest in the safety of water as far as there aren't any laws preventing them from saving money, and there isn't much of a competition for the public to choose from.

With government handling public utilities, it comes with other challenges such as inefficiencies and quality of service but lot of US gov departments do well - US National Park Service, US National Labs, why can't Dept of Energy run utility companies?

momokoko• 6 years ago

PG&E is kind of public. We just structure it in a way that it’s technically private. This has a lot of clever tricks like the fact that if it loses a ton of money it can go bankrupt without the state of California going bankrupt or having to cover all the losses.

Also, PG&E cannot just set whatever prices they want etc. the state has quite a bit of say over it.

labster3• 6 years ago

PG&E is only public in the same sense as in IPO. They are regulated more than most industries, but make their own decisions on profits and investments. Which is why SoCal Edison and SDG&E are so much better off, better corporate boards.

The state owns no share of the company, like say Norway does from its national oil company. California is prohibited from owning a portion of a company (outside of things like CALPERS), so it really cannot impose a true socialist model without violating the state constitution. It must own 100% or 0% only.

qgrgergfqgfev• 6 years ago

Legitimate question, not sure why you are getting downvoted.

dylan6043• 6 years ago

Of all of the utilities, power & water should be considered basic rights. Yet, I find it curious how cities provide water and sewage, yet power utilities are private. Solid waste also tends to be private. There are a few cities that provide power. Burbank, CA is one that I have personally had an account. I would include gas in that, but if you have power & water, you can do with out gas.

In today's age, I think a basic internet connection (5mbps down/1Mbps up) should be required at all addresses, and then premium packages with higher speeds could be purchased. But that's a can I'd be happy to kick down the road if we could get power&water guaranteed to all first.

dylan6043• 6 years ago

Can someone explain how utility companies aren't part of the gov in the US of A?

Ronald Reagan. His administration started the deregulation of public utilities. While that's a bit different than taking gov't run services private, but I see deregulation of industries as the cause for a lot of issues of today. It took a while for them to take rot and fester, but we are seeing the results of it all today.

refurb2• 6 years ago

Ronald Reagan? Was he around when Edison Electric was formed as a private company in NY?

I'd say private utilities pre-date Reagan by decades.

hindsightbias• 6 years ago

The very last thing in the universe the Governor wants to do is take over PG&E.

Then they’d be reposnible for it all. Better to have public “oversight” and whip them everytime something goes wrong. If Newsom were making the blackout decisions, he’d be recalled already.

master-litty2• 6 years ago

It's about control. Some people feel a public utility is closer to everyone's control, as they feel we have a good reign on our government. Others feel corporations are closer to everyone's control, as anyone can start an opposing corporation and compete on even ground, or influence an existing corporation by leveraging social cues.

It's also about trust. If you are an individual that can more naturally give and help with little in return, it is easier to see the government as an altruistic and balanced entity that will do good in the end, especially if you feel empowered to assist or even lead those efforts. If you are often more worried about being hurt by other people, it is easier to see corporations as powerful tribes that can collectively protect us in the end, especially if you possess the skills to succeed in such environments and gain access to their benefits.

On your example, it is a great benefit not having to worry about money, but there are still many reasons why a public water utility still might not deliver safe water, some of which still revolve around money: If the utility is not adequately funded, it may still be unable to deliver safe water. Consider the difficult situation we have today with lead pipes. It's not any easier for private corporations to deal with, but theoretically I think each one would feel a greater sense of urgency to fix the problem first.

As for your terror, I find it comforting to see it this way: If an entity fails to use public infrastructure constructively, regardless of whether it be a public utility or private corporation, it will be modified or replaced until we find something that works. It will take time but we will get there, as long as we're in the company of good faith -- and we certainly are.

sokoloff• 6 years ago

as they feel we have a good reign on our government

That is probably not the homonym you meant (though it does describe how some feel about the government’s interaction with its citizens).

Rein is something you use to control a horse (or government).

Reign is something a king does.

olivermarks3• 6 years ago

The 'botched power shut-offs' details

"The California Public Utilities Commission’s independent consumer watchdog arm is recommending that Pacific Gas & Electric be fined nearly $166 million for the company’s failure to properly warn customers of a series of intentional power outages last fall.

At their height, the so-called public safety power shut-offs of October 2019 left nearly 1 million PG&E customers across 38 counties without electricity, some for as long as a week.

...the San Francisco-based company failed to notify tens of thousands of customers that blackouts were imminent, including hundreds who depended on steady electricity to power life-sustaining medical devices. Many people couldn’t access PG&E’s website for several days, as it was overwhelmed by visits from Northern and Central California residents scrambling for information".

PG&E are between a rock and a hard place: they have huge problems with aged infrastructure that catastrophically fails during fall wind events, causing ignition of dry vegetation, some of which they are responsible for maintaining.

After being previously fined for previous fire damage (the money was distributed to affected counties such as Sonoma) they are erring on the side of caution by shutting down when the wind becomes too strong during 'red flag' fire risk periods.

Sonoma County isn't spending their windfall PG&E fine money on fire prevention though, they are spending it on buying hotels to house street people in permanent 'home' hotel rooms, augmenting Governor Newsom's 'Homekey' cash handouts.

This is a core California infrastructure problem, and along with crumbling roads and bridges is symptomatic of the challenges California citizens have to deal with more and more.

ehnto2• 6 years ago

This is a core California infrastructure problem, and along with crumbling roads and bridges is symptomatic of the challenges California citizens have to deal with more and more.

A core infrastructure problem at the whim of shareholders instead of citizens, it's not hard to see why their goals don't align with their purpose.

The state should either come down hard with regulations mandating minimum power delivery and safety that takes these new issues into consideration. Or they should be made a public company.

If they can't afford to run the grid infrastructure given new requirements then it's obvious a private company is not a safe caretaker of the states key infrastructure and the state will need to take up the costs so that California can remain a first world state. That's why you all pay taxes, to provide services not make profit.

chaostheory• 6 years ago

I feel a reason the state doesn’t want to take over is because of the liability. Would a good middle ground be having a cooperative take over instead? That way the state wouldn’t face liability and the new organization would have more goals aligned with customers. Another option is to have the state fund more incentives for solar

lettergram• 6 years ago

They’re shutting down in this manner because the government came down so hard on them it put them into bankruptcy already.

California has a really strange set of thoughts here... strictly punishing power shutdowns (based on wind speeds, which are only semi-predictable) and strictly punishing not shutting down. They’re to bare the full cost of fires and deaths they cause. Unfortunate... they also regulate PG&E with the CPUC and other local governments to make it so they can’t do anything but maintain cables (not improve them).

Not to mention they have an insanely high estimate to “underground” the cables and some crazy regulations basically pushing politicians and people in general simply to avoid putting cables underground - https://www.cpuc.ca.gov/General.aspx?id=4403

What does this lead to? Well either massive fires OR no power. PG&E is just an easy scape goat for an incompetent government with too much regulation.

jjeaff• 6 years ago

You seem to imply that it's a bad thing they are spending the money trying to get "street people" off the street.

How would you recommend they handle the homelessness crisis?

pishpash4• 6 years ago

I read the comment and find no such implication.

fastball4• 6 years ago

By kicking NIMBYism in the balls, mostly.

Homelessness is either a housing shortage problem or a mental health problem. The former is fixed by increasing the supply of housing – that is the only real solution. The latter is fixed by providing better mental healthcare.

Neither is fixed by sticking people in existing housing.

jessaustin2• 6 years ago

...spending their windfall PG&E fine money on fire prevention...

Do people in California still believe fires can be "prevented"? You live in an arid climate. The undergrowth will burn every year, or everything will burn every decade. There is no other option.

bawolff2• 6 years ago

You can still manage the risk (e.g. controlled burns in critical areas, cut lines to prevent spread). The goal isn't neccesarily to stop everything from ever burning, just to stop everything from burning at the same time.

olivermarks3• 6 years ago

@jessaustin http://www.propublica.org/article/they-know-how-to-prevent-m...

ashtonkem2• 6 years ago

No, not every fire can be prevented, but one can:

1. Reduce known and common sources of ignition, reducing their frequency (PG&E should be involved in this)

2. Regularly do controlled burns so that huge fires are rarer

3. Improve standoff room so that when fires do happen, they do less damage to where the people actually are. (This is the town and property owner's responsibility)

Number 3 is really important, because some of the worst hit areas in CA were built way too close to the interface between wilderness and urban areas. Living among the trees might be really nice, but when the fire comes there will be no stopping it at all.

8f2ab37a-ed6c2• 6 years ago

I wonder how much of this is a consequence of a political monopoly on CA. Would the situation be better if CA voters could elect another party to run the state than the one that's been in power for the last 30 years?

dragonwriter6• 6 years ago

Would the situation be better if CA voters could elect another party to run the state than the one that's been in power for the last 30 years?

In the past 30 years, California has had a Republican governor for a majority of the time (16 years); at least one Republican statewide constitutional officer excluding the Governor (or Lt. Governor, but they've never had that office in the period in question) for 20 years (California, unlike the federal government, has a divided rather than unitary executive), a Republican Assembly majority for two years, and Republican strength in at least one house of the legislature sufficient to stop a budget from being passed without their consent for 24 years, and enough strength in at least one house of the legislature to block any bill that increased any tax for 27 years.

To the extent that California has a "political monopoly", its only been for the last couple years, not the last 30.

dragonwriter6• 6 years ago

Sonoma County isn't spending their windfall PG&E fine money on fire prevention though

Nor are they supposed to; its compensation for fire damage, not funding earmarked for prospective fire prevention work. Paying for fire damage doesn't transfer the responsibility for future work.

This is a core California infrastructure problem, and along with crumbling roads and bridges is symptomatic of the challenges California citizens have to deal with more and more.

Well, yes, that it is a core infrastructure problem and leaving it to a private, in principal regulated (though it continues to fail to do its regulated duties and to conceal that with fraud) utility clearly isn't working, which is why PG&E's assets ought to have been expropriated by the State and its function made public.

laurent92• 6 years ago

Even if it is made public, the problem is still money, not decision-making. It will require a massive investment from the state.

Why wouldn’t they just be allowed to double prices? The state won’t do better given the same money, they would raise money through taxation, which is still money.

lultimouomo2• 6 years ago

Many people couldn’t access PG&E’s website for several days, as it was overwhelmed by visits from Northern and Central California residents scrambling for information

While I'll grant that updating electrical distribution infrastructure is surely a lengthy and costly process, updating your website infrastructure so that it can serve enough read only viewers is not. This seems like basic incompetence to me.

DarthGhandi• 6 years ago

updating your website infrastructure so that it can serve enough read only viewers is not. This seems like basic incompetence to me.

This is modern webdev in a nutshell though.

It's not "incompetence", it's industry standard.

appleflaxen• 6 years ago

it sounds like they need to declare bankruptcy; the state should use the opportunity to take the assets of the company for a public good which was clearly being plundered by stockholders - taking cash while letting critical infrastructure decay shouldn't necessarily be criminal, but it should mean you forfeit your ownership.

edit: i see in comments that they are already in bankruptcy. sad, but it's their bed to sleep in. now the state should take their assets and assume control of the power grid.

indymike• 6 years ago

That bankruptcy was exactly the kind of deal you are advocating - one where the state of California would buy the company if it could make certain milestones on it's bankruptcy (one in June and one in September).

andromeduck3• 6 years ago

Why would the state want assume control? They already have it.

dheera• 6 years ago

This is a core California infrastructure problem, and along with crumbling roads and bridges

To fix crumbling infrastructure we should be funding them more, not less -- although with heavy audits about how those funds are used. Fining them will only result in internal budget cuts on their end, which perpetuates a vicious cycle.

WarOnPrivacy• 6 years ago

Let me guess who would ultimately pay a fine like that. Anyone except shareholders and the people responsible.

pishpash4• 6 years ago

If the government regulates everything about the company why is it not at least partly responsible?

casefields• 6 years ago

Because this is a one-party state, and in this climate no one is going to blame themselves. Way easier to a boogeyman of a private company to rail against. It's the Ticketmaster of politics.

dragonwriter6• 6 years ago

If the government regulates everything about the company why is it not at least partly responsible?

Because the company keeps not following the regulations and committing fraud to cover it up (and sometimes, after that, committing obstruction of justice to cover that up.)

I mean, just based on their 91 state and federal felony convictions in the last several years.

cyansmoker• 6 years ago

In 2020, again, we have seem the same precautionary outages (last week)

What really bothers me if knowing that this is happening in part because their customers are paying for the company's unwillingness to perform preventive maintenance, as evidence by the Camp Fire.

themodelplumber• 6 years ago

Some parts of the state must be different. We (rural NorCal) had a 4-day outage here last year but not a single outage this year, and I'm told that was due to preventative work. I also see lots of laser-mapping vegetation control helicopters doing preventative work as well, and I never saw a single one last year.

hatchnyc• 6 years ago

Utilities are in a thankless position. Everyone wants rock-bottom low rates, but also wants 100% solar, distribution lines in their neighborhood buried underground, and every new development in the middle of the wilderness supplied with reliable power at the same price paid by people in dense city apartments. Major infrastructure is near universally well past its designed end-of-life across the United States, but no one wants to pay for replacing it. Poor people complain, rich homeowners complain, state legislature complains and blames the utility for all the woes of the state, environmentalists complain, anti and pro nuke advocates complain, the newspapers publishes idiotic articles written by journalists with no idea what they're talking about bashing the utility, every dollar spent is scrutinized at length, but at the end of the day everyone expects the lights to come on like magic whatever the weather or demand is like and doesn't even think about it.

Everyone always thinks there is some grand nefarious plot in play out to fraudulently overcharge them, suppress solar power, or emit mind control waves into their brain, but the system is really just the result of all the many demands placed on it by many different and frequently opposed interests. Generally they understand their role is to "play the bad guy" and be a foil for politicians to look good in public by standing up to a big bad villain. At least in my experience, a utility is a big boring company full of people doing their best to provide their customers with reliable service given whatever constraints are put on them.

jariel3• 6 years ago

In Ontario, over 77% of 'Hydro One' (roughly equivalent entity) earn over $100 000, average pay is well over $100K for 'basically skilled labour'. They are paid nearly double market rates, tons of vacation, grate benefits, 0 layoffs and quite difficult to get fired. The intangible benefits are worth probably 10% extra.

Many of these people live in more rural area where cost of living is 30-40% lower than otherwise.

If that's not enough - they are paid glorious retirement benefits for decades after retirement - it's hard to fathom the 'net present value' of those benefits.

With overtime, semi-skilled line workers can easily earn over $200K.

Counting the cost of education and overhead and retirement package - if you live in a rural area, you're going to make more money doing 'semi skilled line work' for Hyro One than you will as a Doctor or frankly anything else.

Have a look [1]

While I think you are very correct in your concerns - Public Sector Unions have an iron grip over such infrastructure and they will seek as much profit as they can from their monopoly.

They have no incentive to do anything other than the minimum and extract from their guild monopolization of that bit of infrastructure.

There's no way we can make any significant progress with those kinds of institutional barriers so there needs to be progress there as well.

[1] https://www.ontariosunshinelist.com/employers/pnfx

dubcanada• 6 years ago

You're basically arguing against unions. There is nothing proven that unions result in

"They have no incentive to do anything other than the minimum and extract from their guild monopolization of that bit of infrastructure."

So most of what you said is purely speculation.

There is incentive to do "anything other than the minimum", it's called a decent wage.

spaced-out• 6 years ago

Everyone always thinks there is some grand nefarious plot in play out to fraudulently overcharge them ... but the system is really just the result of all the many demands placed on it by many different and frequently opposed interests

I wouldn't call it a "grand nefarious plot", but instead a dynamic driven by the fact that PG&E's interests are not aligned with the citizens of California.

In years when PG&E makes money, they distribute bonuses and dividends. When they lose money, or have to pay for significant infrastructure upgrades, they argue they need to raise rates because "somebody's got to pay for it". The solution is this "Public Utilities Commission", which besides accusations of regulatory capture, you now have citizens paying the commission board members to enforce regulations, and paying PG&E's lawyers (through their rates) to push back against that enforcement.

The executives at PG&E know their job is to make money for the shareholders, so any way they can push expenses to rate payers or liability to the state (for example, the San Bruno pipeline explosion, caused by their negligence, yet they only paid for a fractions of the damages), just makes sense.

Americans across the country are getting overcharged by their for-profit utilities, PG&E is just one of the most predatory.

ncmncm• 6 years ago

Maybe, criminal charges against executives? Clawback from board members and major stockholders? Maybe confiscate the company assets and turn them over to a Public Utility District.

Fining the company just makes the victims pay for having been victimized.

PG&E should be fined $166M for botched power shut-offs, watchdog says

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