The case for ratepayer control of PG&E
The crunch of bald tires on a deep rutted gravel road leading to a tiny parcel of a once tree-studded land cradling a modest retirement home fails to reverberate on soil scraped clean by a hazmat crew on both sides of the road as far as the eye can see.
A single glove with three fingers missing hangs stiffly from a rusted and bent mailbox flag.
Husband and wife had both quickly forgotten the sole cup of coffee purchased 80 miles away long gone cold.
Glancing at the PG&E stock certificate on the seat between them, a solitary tear disappears into white stubble as the car rolls to a stop on land that used to be a respectable testament to the American Dream. Some 3.7 million tons of toxic detritus of some 19,000 lives were hauled away from Paradise, California.
In response to the Camp Fire that killed 86 people and reduced virtually every home and business of the 19,000 people living and working in Paradise to ash, PG&E issued following statement: “We remain deeply sorry about the role our equipment had in this tragedy and we apologize to all those impacted by the devastating Camp Fire (Wall Street Journal).”
PG&E knew its Caribou-Palermo line (origin of the Camp Fire) that went into operation in 1921 had reached the end of its useful life. In 2010, a PG&E report suggested the company needed to climb a sample of its towers to determine whether they were holding up. PG&E didn’t follow its own suggestion. The origin of the Camp Fire was “no isolated incident, but rather indicative of an overall pattern of inadequate inspection and maintenance if PG&E’s transmission facilities (California Public Utility Commission-CPUC).”
PG&E filed for Chapter 11 bankruptcy in January 2019 to protect shareholders rather than its ratepayers who helped generate $16.8 billion in revenue in 2018 alone. In what constitutes the biggest utility bankruptcy in U.S. history, PG&E has proposed a settlement of $11 billion to insurance companies, $1 billion to local governments, and $13.5 billion — to be paid out over 18 months; half cash and half PG&E stock — to some 100,000 wildfire claimants. Following PG&E’s announcement of the proposed settlement, its stock went up 11% and 16% in consecutive weeks. (Los AngelesTimes).
In order for PG&E to qualify for access to a California taxpayer generated wildfire fund of some $21 billion, it must settle all claims by June 2020.
The CPUC passed Rule 20A over 10 years ago to allow PG&E to increase utility rates for purposes of burying power lines for “aesthetic reasons.” Until 2017, PG&E was allowed to “relocate those funds as the need arose.” Between 2007 and 2017, PG&E diverted $123 million from the Rule 20A program for things “it deemed more important” (San Francisco Chronicle).
Evidence of PG&E spending priorities was the installation of smart meters to track and collect revenue from ratepayers rather than inspecting and repairing the equipment later determined as the primary source of catastrophic wildfires.
All three privately held power companies in California have socialized profits established by the CPUC; PG&E is guaranteed 10.25% annually. For every dollar PG&E spends building electric or gas infrastructure, it is allowed return $.10 in pure profit. PG&E claims: “Maintaining a safe and reliable service…requires capital in which the investors deserve a fair return.” (Los Angeles Times).
PG&E, in its demurrer to rescind “inverse condemnation” in California bankruptcy law that mandates utilities to pay any damages caused by its equipment whether or not it is determined to be at fault, evidenced informed knowledge of the environmental threats to its transmission lines: five years of record breaking drought; bark beetle infestation leading to extreme tree mortality crisis; heavy rainfall in the winter of 2016 creating new vegetation growth, hottest summer on record in 2017, and more than 210 million trees in its service territory that could contact or fall into overhead electric lines. PG&E’s electrical equipment has sparked more than a fire a day on average since 2014 (Los Angeles Times).
PG&E does not possess the fidelity to its ratepayers to identify and take the actions necessary to protect them from catastrophic wildfires and serial blackouts during the annual wildfire season that has grown by 75 days in the last four decades. As long as the CPUC guarantees PG&E shareholders a socialized annual profit the task of eliminating wildfire threats by burying its transmission lines and implementing other protective measures will never be implemented in a comprehensive and expedited manner.
It is elemental to our continued health, safety, and economic well-being that we ratepayers take operational control of PG&E.
John D. Murphy