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      10-10-2019, 08:54 AM   #33

Drives: BMW
Join Date: Feb 2012
Location: USA

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PG&E is a public utility, investor owned, regulated by the state of California and subject to all of its and the federal government’s laws and regulations. Basic model is investors put up capital in expectation of a return. PUC sets rates in order to provide a reasonable (not excessive) return. Company manages expenses to maximize that return. PUC enforces requirements like maintenance of plant, poles, lines and right-of-way and provides cost recovery.

This normally works just fine, but CA seems to have a couple of problems. One is they don’t want to clear underbrush in forests (used to do that when I was a youth, back in the last century). Enviros don’t like any management of right-of-way in the forests, but the PUC or courts decide. And the PUC has not been providing adequate funding for this (PG&E position, not sure the PUC agrees).

Also CA politics including PUC drove utilities there to buy renewables in a declining cost environment, so they all have a lot of contract/assets that are high cost compared to today’s costs, thus under-water financially. PUC doesn’t want rates to increase to cover all of this, but company can’t afford it so in bankruptcy seeks to have those contracts modified (repriced) or cancelled, which could cascade the problem to the project owners.

Allowing communities to form smallish utilities undercuts the rate base for the incumbent utility, forcing their fixed costs (lines, line maintenance, etc) to be spread over fewer customers - rate increase. Politics makes the rate increase difficult or impossible.

So CA has squeezed the utilities ever since the ENRON debacle. Utilities no doubt have made some bad decisions/choices, too.

My understanding is SF wants to take over PG&E within the city and make it a muni (this is a great way for city councils to get another source of funds without accountability); I don’t know of a state-wide effort to take over PG&E or SCE.