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Public utilities should not be for profit companies, especially public listed companies. They shouldn’t aim to maximize profits. If they were to instead maximiz

Public utilities should not be for profit companies, especially public listed companies. They shouldn’t aim to maximize profits. If they were to instead maximize utility, they may re-invest in infrastructure more heavily and put power lines under ground. Maybe I am missing something and someone can offer a counter argument.

tonyedgecombe 7y ago
The key is regulation, we have privatised utilities in the UK and although they aren’t perfect they appear to be much better than what Californians are putting up with. Before they were privatised they suffered from terrible under investment as every right wing government would squeeze their finances.
beams_of_light 7y ago
They're regulated in such a way that they basically print money, in certain circumstances. I do agree though, power companies should not be publicly operated at this point in time. It might have made sense when electricity being delivered to homes and businesses was a new and somewhat optional concept, but we've reached a point where it's exceedingly rare to _not_ have electricity available at all times. I believe PG&E is essentially telling the state of California, "So, you're going to sue us for billions of dollars because of wildfires you think our transformers caused? I guess we'll have to retalia...er, shut off the power sometimes in order to prevent fires."
patfla 7y ago
Putting power lines underground is very expensive - meaning, very nearly prohibitively so. Or actually prohibitively so when you consider that PG&E has to serve vast areas of wilderness in California. Paradise (Camp fire) was sufficiently west that I think its own power lines did not travel through Natl Forest however if I'm not mistaken it was hit by fire from the east (pushed by a wind out of the east), further up into the Sierra, and almost certainly there power lines were in the wilderness.
- maxerickson 7y ago
  If there are areas that we can't afford to safely provide power to, we shouldn't provide power to those areas anymore. This is course a bummer given the past effort to provide power to those areas, but maybe it's okay to acknowledge mistakes.
  - patfla 7y ago
    Unlikely to happen (at least now) in a place that's, uh, culturally like the US. We're in California and are in a community that was affected by PG&E's power shut off. I think one problem in California is that since I first arrived in the 1980s, the population has grown from 22 to close to 40 mln. And given, again, US cultural proclivities, there's a significant number of people who'd love to move out into at least near-wilderness - but they still expect to be provided with their utilities. Some may be fine living off-grid - but not others. And there's no way, in the US, you can tell them that they can't have their cake and eat it too. Especially if they're rich and some portion of those people moving out into their dream home in or near wilderness are rich and figure that entitles them to having it all.
    - maxerickson 7y ago
      They are welcome to pay for it, especially if they are rich and want it bad.
      - inferiorhuman 7y ago
        They are welcome to pay for it, especially if they are rich and want it bad. Why shouldn't PG&E pay for it? They blew their safety budget on executive bonuses. Hell, look at how many hundreds of millions PG&E spends annually on stock buybacks to appease the shareholders.
        maxerickson 7y ago
        The other poster is talking about people moving into the near wilderness. I don't support other utility customers paying for that. I doubt you do either. That's who pays if PG&E foots the bill.
golemiprague 7y ago
It is not so much about being "public utility", it is about competition, if you can't have competition there is no point giving the rights to some private company which acts like a monopoly. Transportation is also public utility and yet it makes sense to have different taxi companies or airlines. The interesting question is when you got something that you can't compete with directly like a train line but can compete using other methods like buses or airlines. In that case there might be more incentive to a train line operator to give a good service because of the competition.
milofeynman 7y ago
I agree. Dallas has this problem. It basically took a girl dying in a gas explosion for the lines to be repaired: https://www.dallasnews.com/news/courts/2019/05/30/atmos-settles-lawsuit-with-family-of-12-year-old-dallas-girl-killed-in-2018-gas-explosion/ https://www.dallasnews.com/news/courts/2019/05/30/atmos-sett... Just a line item...
rb808 7y ago
You'll say that until the company is full of public service workers who dont care and electricity costs 3x as much. Pretty much every developed country has privatized electricity generation to keep prices down.
- cranky_coder 7y ago
  Why do we have to assume a publicly owned utility wouldn’t be able to focus on safety and efficiency at the same time? I mean, there’s data on Medicare being more efficient than private insurance[0]. Why is this different? I’m not sure I’m convinced that the profit incentive needs to exist for them to worry about costs. [0] https://www.consumerwatchdog.org/blog/private-insurance-vs-medicare-truth-numbers https://www.consumerwatchdog.org/blog/private-insurance-vs-m...
- Scoundreller 7y ago
  I don’t think that’s matched Americans’ experience with internet prices, and that’s with a few competitors.
- electic 7y ago
  This isn't accurate. In the Bay Area some cities have decided to run their own public utilities instead of relying on PG&E. For example, Santa Clara runs their own public utility[2]. The average resident pays about 10.4 cents per KWh. That's about 30 percent less than rates PG&E charges. Also, their energy is greener and their infrastructure is better maintained. The problem with for profit utilities is that they are incentivized to keep things as lean as possible. They neglect maintenance of their infrastructure and use that money for bonuses and dividends. You can see that played out here [1]. [1] https://www.sfgate.com/bayarea/article/PG-E-diverted-safety-money-for-profit-bonuses-2500175.php https://www.sfgate.com/bayarea/article/PG-E-diverted-safety-... [2] http://www.siliconvalleypower.com/ http://www.siliconvalleypower.com/
  - roenxi 7y ago
    > The problem with for profit utilities is that they are incentivized to keep things as lean as possible. They neglect maintenance of their infrastructure and use that money for bonuses and dividends. They aren't incentivised to be excessively lean. The incentive structure for someone who has spent a fortune on expensive capital investment is to maintain it. There is no point incentive to build a vast system of poles and wires then letting it degrade over time. Anyway, it won't be capitalist incentives at work; it will be something in the details of the regulations. In Australia, due to poor market regulations, we have the opposite problem where our utilities spend far too much on grid maintenance.
kolbe 7y ago
I think one glaring hole is that it’s very hard to incentivize people to maximize someone else’s utility. You don’t just say the words “maximize utility” and it just gets done.
- Gibbon1 7y ago
  I keep coming back to; simpleton economic incentives can't fix a lack of good faith. I first noted that when reading Samuel Pepys diary entry where he crows both about the fat kick back he got on an order timber for ships masts. And the really good price he got as well.
- simpsond 7y ago
  This is a good point. What is utility here? I think the primary utility is highly available electricity. How is that maximized? I don't know how to do that tactically, so I should stop talking... but strategically it's about minimizing risk. I suppose that involves having a highly connected grid to many power sources (solar, wind, nuclear, hydroelectric, etc) to mitigate a SPOF. It should also involve low risk transmission (underground where possible, multipath, etc). This all comes at a great cost... but if profit is important (or required for the CEO to keep his job), not all money goes to improving the system, but to lining pockets of investors. So yeah, there needs to be a plan, but the current plan is keep things working and yield dividends to shareholders.
saalweachter 7y ago
My general metric for whether something should be a function of government (or so heavily regulated by government that the distinction is moot) is "Does this business function best as a monopoly?" By default, I assume everything that does should be a government function, and everything that shouldn't should be regulated to avoid becoming a monopoly. So by default, I would assume that electricity distribution should be a government function, but electric generation could probably work fine as a set of non-monopolies competing to feed energy into the publicly-run grid at the lowest prices.
- simpsond 7y ago
  I agree that distribution should be gov regulated, and it is. I also agree that generation should be open market (it is, and those companies are still regulated by NERC, etc). That said, the distribution companies in CA are publicly traded... and that is a problem IMO.
Spooky23 7y ago
They should be what they used to be, pre-regulation. Boring companies that generate a near fixed return in assets, enforced by a heavy regulatory hand. I don’t know about PG&E specifically, but in my region deregulation led to an attritted workforce and suspension of capital improvements. Shockingly, the infrastructure is a dumpster fire 20 years later.
hadlock 7y ago
By law PG&E can only make X from their utilities by state law, this regulation is audited and is pretty well documented.

tonyedgecombe 7y ago

The key is regulation, we have privatised utilities in the UK and although they aren’t perfect they appear to be much better than what Californians are putting up with. Before they were privatised they suffered from terrible under investment as every right wing government would squeeze their finances.

beams_of_light 7y ago

They're regulated in such a way that they basically print money, in certain circumstances. I do agree though, power companies should not be publicly operated at this point in time. It might have made sense when electricity being delivered to homes and businesses was a new and somewhat optional concept, but we've reached a point where it's exceedingly rare to _not_ have electricity available at all times. I believe PG&E is essentially telling the state of California, "So, you're going to sue us for billions of dollars because of wildfires you think our transformers caused? I guess we'll have to retalia...er, shut off the power sometimes in order to prevent fires."

patfla 7y ago

Putting power lines underground is very expensive - meaning, very nearly prohibitively so. Or actually prohibitively so when you consider that PG&E has to serve vast areas of wilderness in California. Paradise (Camp fire) was sufficiently west that I think its own power lines did not travel through Natl Forest however if I'm not mistaken it was hit by fire from the east (pushed by a wind out of the east), further up into the Sierra, and almost certainly there power lines were in the wilderness.

maxerickson 7y ago
If there are areas that we can't afford to safely provide power to, we shouldn't provide power to those areas anymore. This is course a bummer given the past effort to provide power to those areas, but maybe it's okay to acknowledge mistakes.
- patfla 7y ago
  Unlikely to happen (at least now) in a place that's, uh, culturally like the US. We're in California and are in a community that was affected by PG&E's power shut off. I think one problem in California is that since I first arrived in the 1980s, the population has grown from 22 to close to 40 mln. And given, again, US cultural proclivities, there's a significant number of people who'd love to move out into at least near-wilderness - but they still expect to be provided with their utilities. Some may be fine living off-grid - but not others. And there's no way, in the US, you can tell them that they can't have their cake and eat it too. Especially if they're rich and some portion of those people moving out into their dream home in or near wilderness are rich and figure that entitles them to having it all.
  - maxerickson 7y ago
    They are welcome to pay for it, especially if they are rich and want it bad.
    - inferiorhuman 7y ago
      They are welcome to pay for it, especially if they are rich and want it bad. Why shouldn't PG&E pay for it? They blew their safety budget on executive bonuses. Hell, look at how many hundreds of millions PG&E spends annually on stock buybacks to appease the shareholders.
      - maxerickson 7y ago
        The other poster is talking about people moving into the near wilderness. I don't support other utility customers paying for that. I doubt you do either. That's who pays if PG&E foots the bill.

golemiprague 7y ago

It is not so much about being "public utility", it is about competition, if you can't have competition there is no point giving the rights to some private company which acts like a monopoly. Transportation is also public utility and yet it makes sense to have different taxi companies or airlines. The interesting question is when you got something that you can't compete with directly like a train line but can compete using other methods like buses or airlines. In that case there might be more incentive to a train line operator to give a good service because of the competition.

milofeynman 7y ago

I agree. Dallas has this problem. It basically took a girl dying in a gas explosion for the lines to be repaired: https://www.dallasnews.com/news/courts/2019/05/30/atmos-settles-lawsuit-with-family-of-12-year-old-dallas-girl-killed-in-2018-gas-explosion/ https://www.dallasnews.com/news/courts/2019/05/30/atmos-sett... Just a line item...

rb808 7y ago

You'll say that until the company is full of public service workers who dont care and electricity costs 3x as much. Pretty much every developed country has privatized electricity generation to keep prices down.

cranky_coder 7y ago
Why do we have to assume a publicly owned utility wouldn’t be able to focus on safety and efficiency at the same time? I mean, there’s data on Medicare being more efficient than private insurance[0]. Why is this different? I’m not sure I’m convinced that the profit incentive needs to exist for them to worry about costs. [0] https://www.consumerwatchdog.org/blog/private-insurance-vs-medicare-truth-numbers https://www.consumerwatchdog.org/blog/private-insurance-vs-m...
Scoundreller 7y ago
I don’t think that’s matched Americans’ experience with internet prices, and that’s with a few competitors.
electic 7y ago
This isn't accurate. In the Bay Area some cities have decided to run their own public utilities instead of relying on PG&E. For example, Santa Clara runs their own public utility[2]. The average resident pays about 10.4 cents per KWh. That's about 30 percent less than rates PG&E charges. Also, their energy is greener and their infrastructure is better maintained. The problem with for profit utilities is that they are incentivized to keep things as lean as possible. They neglect maintenance of their infrastructure and use that money for bonuses and dividends. You can see that played out here [1]. [1] https://www.sfgate.com/bayarea/article/PG-E-diverted-safety-money-for-profit-bonuses-2500175.php https://www.sfgate.com/bayarea/article/PG-E-diverted-safety-... [2] http://www.siliconvalleypower.com/ http://www.siliconvalleypower.com/
- roenxi 7y ago
  > The problem with for profit utilities is that they are incentivized to keep things as lean as possible. They neglect maintenance of their infrastructure and use that money for bonuses and dividends. They aren't incentivised to be excessively lean. The incentive structure for someone who has spent a fortune on expensive capital investment is to maintain it. There is no point incentive to build a vast system of poles and wires then letting it degrade over time. Anyway, it won't be capitalist incentives at work; it will be something in the details of the regulations. In Australia, due to poor market regulations, we have the opposite problem where our utilities spend far too much on grid maintenance.

kolbe 7y ago

I think one glaring hole is that it’s very hard to incentivize people to maximize someone else’s utility. You don’t just say the words “maximize utility” and it just gets done.

Gibbon1 7y ago
I keep coming back to; simpleton economic incentives can't fix a lack of good faith. I first noted that when reading Samuel Pepys diary entry where he crows both about the fat kick back he got on an order timber for ships masts. And the really good price he got as well.
simpsond 7y ago
This is a good point. What is utility here? I think the primary utility is highly available electricity. How is that maximized? I don't know how to do that tactically, so I should stop talking... but strategically it's about minimizing risk. I suppose that involves having a highly connected grid to many power sources (solar, wind, nuclear, hydroelectric, etc) to mitigate a SPOF. It should also involve low risk transmission (underground where possible, multipath, etc). This all comes at a great cost... but if profit is important (or required for the CEO to keep his job), not all money goes to improving the system, but to lining pockets of investors. So yeah, there needs to be a plan, but the current plan is keep things working and yield dividends to shareholders.

saalweachter 7y ago

My general metric for whether something should be a function of government (or so heavily regulated by government that the distinction is moot) is "Does this business function best as a monopoly?" By default, I assume everything that does should be a government function, and everything that shouldn't should be regulated to avoid becoming a monopoly. So by default, I would assume that electricity distribution should be a government function, but electric generation could probably work fine as a set of non-monopolies competing to feed energy into the publicly-run grid at the lowest prices.

simpsond 7y ago
I agree that distribution should be gov regulated, and it is. I also agree that generation should be open market (it is, and those companies are still regulated by NERC, etc). That said, the distribution companies in CA are publicly traded... and that is a problem IMO.

Spooky23 7y ago

They should be what they used to be, pre-regulation. Boring companies that generate a near fixed return in assets, enforced by a heavy regulatory hand. I don’t know about PG&E specifically, but in my region deregulation led to an attritted workforce and suspension of capital improvements. Shockingly, the infrastructure is a dumpster fire 20 years later.

hadlock 7y ago

By law PG&E can only make X from their utilities by state law, this regulation is audited and is pretty well documented.