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1. State takes it over, destroys the shareholders (they've mismanaged the company, so I'm not terribly sympathetic to them) 2. State releases them from their l

by cmurf 7y ago

1. State takes it over, destroys the shareholders (they've mismanaged the company, so I'm not terribly sympathetic to them) 2. State releases them from their liabilities, gets nothing but debt and lawsuits out of the deal, effectively insures the shareholders bad management. 3. State refuses to release them from liability, shareholders take a haircut or perhaps worst case are destroyed, and state is caught holding a large amount of the liability anyway in the ensuing bankruptcy. The state should not be blackmailed. Option 1 has the least moral hazard and there's an option for the state to spin it off as a private company later, and California citizens profit.

jessaustin 7y ago
IANAL, but ISTM you'd need to suffer through a bit of #3 before judges would let you try #1...
- kelnos 7y ago
  Didn't we already do that, a year ago?
gimmeThaBeet 7y ago
The problem with 1 and 3 that isn't accounted for is that then you have go on dealing with your other utilities acting like you didn't just eat their neighbor's heart on national television. When utilities bring their rate cases to the CPUC, they're factoring in the liabilities they face. If now you're one fire away from the State of California ruining you, their going to argue they need higher return on investment, higher rates, higher revenues to accommodate infrastructure, and they're going to be right. Policy people aren't going to swallow that sitting down because it's political poison, they burn the state down so you grant them rate increases. No matter whose hands their in, most of the risk is going to be borne by the ratepayers. Public or private, short of redesigning the entire grid, that risk doesn't go away.
- jdashg 7y ago
  Other utilities being terrified is a feature, if it prevents the reckless disregard for public good we've seen at PG&E. Private utilities live by the grace of the public, for the service of the public. Fail the public, get replaced. The state is blessed with the ability to push water uphill via the taxbase coffers, if no reasonable rate is viable.
- kelnos 7y ago
  I don't think anyone is arguing that if PG&E needs more funding to actually fix the problem, they shouldn't get it. I think it's fair to be skeptical, though. PG&E had $1.66B in profit in 2017. Why was that money not put toward paying down maintenance debt throughout the year? I fully expect PG&E to be bailed out yet again. At the end of the day, repairs need to be made, and it's hard to do that when you're bankrupt. But there need to be consequences. I worry about CA's ability to manage PG&E directly, but maybe it's time. At the very least, a power company should not be a profit-seeking corporation. It should not be paying out dividends. Every penny (minus some cash set aside for a rainy-day fund) it brings in should be reinvested in the grid, immediately. I see other utilities being freaked out by this to be a good thing. Act in the public interest, or we will take over your operations. You serve at the pleasure of the public, not your shareholders.

by cmurf 7y ago

jessaustin 7y ago

IANAL, but ISTM you'd need to suffer through a bit of #3 before judges would let you try #1...

kelnos 7y ago
Didn't we already do that, a year ago?

gimmeThaBeet 7y ago

The problem with 1 and 3 that isn't accounted for is that then you have go on dealing with your other utilities acting like you didn't just eat their neighbor's heart on national television. When utilities bring their rate cases to the CPUC, they're factoring in the liabilities they face. If now you're one fire away from the State of California ruining you, their going to argue they need higher return on investment, higher rates, higher revenues to accommodate infrastructure, and they're going to be right. Policy people aren't going to swallow that sitting down because it's political poison, they burn the state down so you grant them rate increases. No matter whose hands their in, most of the risk is going to be borne by the ratepayers. Public or private, short of redesigning the entire grid, that risk doesn't go away.

jdashg 7y ago
Other utilities being terrified is a feature, if it prevents the reckless disregard for public good we've seen at PG&E. Private utilities live by the grace of the public, for the service of the public. Fail the public, get replaced. The state is blessed with the ability to push water uphill via the taxbase coffers, if no reasonable rate is viable.
kelnos 7y ago
I don't think anyone is arguing that if PG&E needs more funding to actually fix the problem, they shouldn't get it. I think it's fair to be skeptical, though. PG&E had $1.66B in profit in 2017. Why was that money not put toward paying down maintenance debt throughout the year? I fully expect PG&E to be bailed out yet again. At the end of the day, repairs need to be made, and it's hard to do that when you're bankrupt. But there need to be consequences. I worry about CA's ability to manage PG&E directly, but maybe it's time. At the very least, a power company should not be a profit-seeking corporation. It should not be paying out dividends. Every penny (minus some cash set aside for a rainy-day fund) it brings in should be reinvested in the grid, immediately. I see other utilities being freaked out by this to be a good thing. Act in the public interest, or we will take over your operations. You serve at the pleasure of the public, not your shareholders.