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I have an acquaintance that works a PG&E, and he said something to the effect that the infrastructure cost for the electric grid is what actually costs money, a

I have an acquaintance that works a PG&E, and he said something to the effect that the infrastructure cost for the electric grid is what actually costs money, and the actual generation cost is relatively negligible. The customer cost structure although is inverted based on generation, and not on grid fees. He also talked about how the CA govt uses them as a subsidy funding source and that can create a state where PG&E is close to insolvency sometimes. He also talked about the utility death spiral: https://www.greentechmedia.com/articles/read/this-is-what-the-utility-death-spiral-looks-like https://www.greentechmedia.com/articles/read/this-is-what-th...

toomuchtodo 8y ago
Utilities will have to come to the realization that they will transition into small scale ISO/grid operator roles vs monopolies that get a guaranteed return on generation and transmission.
dragonwriter 8y ago
> The customer cost structure although is inverted based on generation, and not on grid fees. He also talked about how the CA govt uses them as a subsidy funding source and that can create a state where PG&E is close to insolvency sometimes. PG&E has expended large sums on lobbying, particularly against expansion of public power companies into areas PG&E currently serves. Presumably your friend would explain this has PG&E charitably protecting it's opportunity to lose money, but I think that doesn't quite reflect the reality.
- azernik 8y ago
  Precisely the opposite. The issue is that this distorted cost structure really doesn't work in a market where there's cost competition on the generation side and customers are being exposed to that competition, as PG&E's cost doesn't go down by nearly as much as customer's bills when cheaper energy sources are used. Their distortion of public policy through lobbying is a bad thing, but their incentives are actually pretty understandable given the wacko market structure.
  - dragonwriter 8y ago
    > The issue is that this distorted cost structure really doesn't work in a market where there's cost competition on the generation side and customers are being exposed to that competition, as PG&E's cost doesn't go down by nearly as much as customer's bills when cheaper energy sources are used. That doesn't explain why, if the market is regulated in such a way that PG&E is losing money serving customers to the point of near insolvency, they spend large amounts of money fighting the transfer of those money-losing customers to expansion of municipal utilities.
    - azernik 8y ago
      So far as I can tell from quick reading, PG&E's lobbying is focused on: 1. Pushing liability for disasters (natural and artificial) from the company onto customers and taxpayers. 2. Getting regulators to allow them to lower the safety margins on their infrastructure (a major cause behind the San Bruno explosion). 3. Fighting Community Choice Aggregation programs, which sound most similar to what you describe. CCA programs are not as you described - they would not remove PG&E from the electricity market in cities. Rather, they allow cities to generate or purchase their own electricity and deliver it over PG&E grids. As I described, this takes away PG&E's major revenue stream (per-kWh rates) while leaving them with their fixed cost (grid maintenance).
      - dragonwriter 8y ago
        > Fighting Community Choice Aggregation programs, which sound most similar to what you describe. No, I'm taking about campaign spending (lobbying was imprecise) against things like the recent move to expand SMUD service area into West Sacramento. (Not the only recent proposed public utility expansionart they've opposed, but the one I'm most familiar with.)
        azernik 8y ago
        Well yeah. As long as they can fight off these changes that fuck up their business model, they're still profitable.

toomuchtodo 8y ago

Utilities will have to come to the realization that they will transition into small scale ISO/grid operator roles vs monopolies that get a guaranteed return on generation and transmission.

dragonwriter 8y ago

> The customer cost structure although is inverted based on generation, and not on grid fees. He also talked about how the CA govt uses them as a subsidy funding source and that can create a state where PG&E is close to insolvency sometimes. PG&E has expended large sums on lobbying, particularly against expansion of public power companies into areas PG&E currently serves. Presumably your friend would explain this has PG&E charitably protecting it's opportunity to lose money, but I think that doesn't quite reflect the reality.

azernik 8y ago
Precisely the opposite. The issue is that this distorted cost structure really doesn't work in a market where there's cost competition on the generation side and customers are being exposed to that competition, as PG&E's cost doesn't go down by nearly as much as customer's bills when cheaper energy sources are used. Their distortion of public policy through lobbying is a bad thing, but their incentives are actually pretty understandable given the wacko market structure.
- dragonwriter 8y ago
  > The issue is that this distorted cost structure really doesn't work in a market where there's cost competition on the generation side and customers are being exposed to that competition, as PG&E's cost doesn't go down by nearly as much as customer's bills when cheaper energy sources are used. That doesn't explain why, if the market is regulated in such a way that PG&E is losing money serving customers to the point of near insolvency, they spend large amounts of money fighting the transfer of those money-losing customers to expansion of municipal utilities.
  - azernik 8y ago
    So far as I can tell from quick reading, PG&E's lobbying is focused on: 1. Pushing liability for disasters (natural and artificial) from the company onto customers and taxpayers. 2. Getting regulators to allow them to lower the safety margins on their infrastructure (a major cause behind the San Bruno explosion). 3. Fighting Community Choice Aggregation programs, which sound most similar to what you describe. CCA programs are not as you described - they would not remove PG&E from the electricity market in cities. Rather, they allow cities to generate or purchase their own electricity and deliver it over PG&E grids. As I described, this takes away PG&E's major revenue stream (per-kWh rates) while leaving them with their fixed cost (grid maintenance).
    - dragonwriter 8y ago
      > Fighting Community Choice Aggregation programs, which sound most similar to what you describe. No, I'm taking about campaign spending (lobbying was imprecise) against things like the recent move to expand SMUD service area into West Sacramento. (Not the only recent proposed public utility expansionart they've opposed, but the one I'm most familiar with.)
      - azernik 8y ago
        Well yeah. As long as they can fight off these changes that fuck up their business model, they're still profitable.