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As a South African, the initial reaction is a knee-jerk, snide comment "get some", since we have frequent power outages due to a combination of institutional in

As a South African, the initial reaction is a knee-jerk, snide comment "get some", since we have frequent power outages due to a combination of institutional incompetence and malicious actors. (Apparently, at one point, we had outages that were "staged" in order for the Gupta family to make money from coal sales; I am not sure how it worked.) But as a more sober and conscientious observer, what are the reasons for this? Is it that fires have been causing too much damage? Is it that the utility companies are slacking? From the article it is not clear whether putting off the power is a successful mitigation strategy. It's a bit unimaginable for California to have the same problems that we have. In our case we have politics that inadequately qualified people are promoted to management and hence my question about whether there is logic to this. But the main difference is we don't have the same fire issues that California has, or at least, situations where the power lines are the cause of fires. Edit: We do have fires, but I think we have other (less straightforward/tangible) issues that we debate in our spare time.

claudeganon 7y ago
PG&E has been paying out dividends and executive bonuses instead of reinvesting in their infrastructure for years. And bought off a number of state politicians. Now that climate change is creating conditions for the already wildfire-prone landscape of California to suffer more frequent and severe events, the power companies are washing their hands of it. Short of some major state or federal investment in upgrading energy infrastructure (like the green new deal), I wouldn’t expect that to change.
- paganel 7y ago
  > PG&E has been paying out dividends and executive bonuses instead of reinvesting in their infrastructure for years. And bought off a number of state politicians. Re the dividends part, that's an issue on which our present society will have to work more and more, because afaik most of those dividends go into the coffers of pension funds/insurance companies/big institutional investors which by their very nature "trickle down" that money mostly to people aged over 45 or 50. Most of those reinvestments you mention will get their financial return in 20-30 years' time, by which point the age-group I mentioned earlier (the over 45-50) will either be dead or to old too care that much about it.
  - torpfactory 7y ago
    Shouldn’t PGE forgo payouts to shareholders in order to keep infrastructure to a better standard? Surely the long term value of PGE is diminished (and thus their ability to pay dividends) if they are found liable for fires or effect rolling blackouts as a “solution”. The pension funds could invest in something else instead.
    - javagram 7y ago
      They suspended dividends two years ago https://www.sfchronicle.com/business/article/PG-E-suspends-dividends-over-possible-wildfire-12445592.php https://www.sfchronicle.com/business/article/PG-E-suspends-d...
  - mikorym 7y ago
    RE: pension funds; that is something that bothers me eternally. How do you find a store of wealth for normal people? Financial managers have opted for shares and bonds and in the process risk economic instability through overvaluation. The French, being the French, instead makes you pay the current people's pension in taxes and in turn promise to do the same when you are a pensioner. Let's hope they don't do it "the South African way".
- jeanvalmarc 7y ago
  Bonuses are something that’s easy to get outraged by, but look like an infinitesimal fraction of the business numbers. A judge approved a $235M bonus structure across 10,000 employees[1], while the wildfire liabilities are at least $18B [2], their 4-year infrastructure investment plan is $28B [3], and their top-line annual revenue is $17B. How many competent execs are going to want any part of that shitshow? $235M doesn’t sound like enough… [1] https://www.sfchronicle.com/business/article/Judge-approves-235-million-in-bonuses-for-10-000-13789966.php https://www.sfchronicle.com/business/article/Judge-approves-... [2] https://www.latimes.com/business/story/2019-09-09/pge-looks-to-cap-wildfire-costs https://www.latimes.com/business/story/2019-09-09/pge-looks-... [3] https://www.pge.com/en/about/newsroom/newsdetails/index.page?title=20190422_pge_submits_updated_financing_proposal_for_safety_and_reliability_infrastructure_investments_for_16_million_customers_commits_to_working_toward_long-term_policy_solutions_to_best_serve_interests_of_customers_utility_and_california https://www.pge.com/en/about/newsroom/newsdetails/index.page...
  - ncmncm 7y ago
    Dividends was listed before bonuses. It is clear that the primary role of the bonuses is to generate outrage at them giving themselves bonuses for such bad performance. Dividends have been very substantial, and evidently outcompeted maintenance. The lawsuits will collect more data in discovery. Make no mistake, the outage and the threat are attempts at coercion, trying to force California to indemnify them, for free, against their own very deliberate negligence. If PGE does not want to be a public utility anymore, California should confiscate their assets and turn them over to someone who does.
johnmorrison 7y ago
Also South African here, I don't think it would be the same set of problems. Seems like less of an incompetence/malice thing and more like a long history of bad strategies with grid infrastructure and power generation. California has been constantly lowering its power stability throughout the day by shutting down reliable power plants for more intermittent solar and wind farms, without building the storage needed to avoid a blackout. On the infrastructure side, it seems like there hasn't been much recent investment, and as power sources get further and further from the consumer the likelihood of a problem on some section of the lines increases. Problems with power lines is an unfortunate reality of states where population centers are spread fairly far apart (we deal with this in Canada too). They're very expensive, especially long distance ones, so it can be hard to make incentives for infrastructure upgrades.
kevingadd 7y ago
Ultimately it's a consequence of privatization. Power in California (and particularly PG&E) has been poorly managed for decades and focused on profit at the expense of safety measures, maintenance, etc. Even if these blackouts were a necessary safety measure, the way they were performed is a great example of this - they failed to properly notify customers, their website was broken, their services available for people with medical needs were inadequate, etc. The only way to explain how poorly it was handled is cost-cutting - they had plenty of time in advance to prepare for this. I'm not really sure whether strong regulatory oversight of PG&E would fix things or if the state just needs to take over. I'm sure privatized power works in other places but I've lived in this state for decades and PG&E has always been a disaster company with a high death count that pays out to investors and execs aggressively.
- mikorym 7y ago
  In SA it's the opposite—govt entities are pitifully incompetent and in debt; Naspers, one of the only state owned companies that went private is I think now close to the most valuable company on the JSE (although they spinned off Prosus to compensate for undervalues Tencent shares). In any case, maybe Naspers is not what you would want all the state owned entities to turn into? There is always an argument for the risks of privitasation as well...
- masonic 7y ago
  it's a consequence of privatization No privatization occurred in CA -- it was never a public utility.

claudeganon 7y ago

PG&E has been paying out dividends and executive bonuses instead of reinvesting in their infrastructure for years. And bought off a number of state politicians. Now that climate change is creating conditions for the already wildfire-prone landscape of California to suffer more frequent and severe events, the power companies are washing their hands of it. Short of some major state or federal investment in upgrading energy infrastructure (like the green new deal), I wouldn’t expect that to change.

paganel 7y ago
> PG&E has been paying out dividends and executive bonuses instead of reinvesting in their infrastructure for years. And bought off a number of state politicians. Re the dividends part, that's an issue on which our present society will have to work more and more, because afaik most of those dividends go into the coffers of pension funds/insurance companies/big institutional investors which by their very nature "trickle down" that money mostly to people aged over 45 or 50. Most of those reinvestments you mention will get their financial return in 20-30 years' time, by which point the age-group I mentioned earlier (the over 45-50) will either be dead or to old too care that much about it.
- torpfactory 7y ago
  Shouldn’t PGE forgo payouts to shareholders in order to keep infrastructure to a better standard? Surely the long term value of PGE is diminished (and thus their ability to pay dividends) if they are found liable for fires or effect rolling blackouts as a “solution”. The pension funds could invest in something else instead.
  - javagram 7y ago
    They suspended dividends two years ago https://www.sfchronicle.com/business/article/PG-E-suspends-dividends-over-possible-wildfire-12445592.php https://www.sfchronicle.com/business/article/PG-E-suspends-d...
- mikorym 7y ago
  RE: pension funds; that is something that bothers me eternally. How do you find a store of wealth for normal people? Financial managers have opted for shares and bonds and in the process risk economic instability through overvaluation. The French, being the French, instead makes you pay the current people's pension in taxes and in turn promise to do the same when you are a pensioner. Let's hope they don't do it "the South African way".
jeanvalmarc 7y ago
Bonuses are something that’s easy to get outraged by, but look like an infinitesimal fraction of the business numbers. A judge approved a $235M bonus structure across 10,000 employees[1], while the wildfire liabilities are at least $18B [2], their 4-year infrastructure investment plan is $28B [3], and their top-line annual revenue is $17B. How many competent execs are going to want any part of that shitshow? $235M doesn’t sound like enough… [1] https://www.sfchronicle.com/business/article/Judge-approves-235-million-in-bonuses-for-10-000-13789966.php https://www.sfchronicle.com/business/article/Judge-approves-... [2] https://www.latimes.com/business/story/2019-09-09/pge-looks-to-cap-wildfire-costs https://www.latimes.com/business/story/2019-09-09/pge-looks-... [3] https://www.pge.com/en/about/newsroom/newsdetails/index.page?title=20190422_pge_submits_updated_financing_proposal_for_safety_and_reliability_infrastructure_investments_for_16_million_customers_commits_to_working_toward_long-term_policy_solutions_to_best_serve_interests_of_customers_utility_and_california https://www.pge.com/en/about/newsroom/newsdetails/index.page...
- ncmncm 7y ago
  Dividends was listed before bonuses. It is clear that the primary role of the bonuses is to generate outrage at them giving themselves bonuses for such bad performance. Dividends have been very substantial, and evidently outcompeted maintenance. The lawsuits will collect more data in discovery. Make no mistake, the outage and the threat are attempts at coercion, trying to force California to indemnify them, for free, against their own very deliberate negligence. If PGE does not want to be a public utility anymore, California should confiscate their assets and turn them over to someone who does.

johnmorrison 7y ago

Also South African here, I don't think it would be the same set of problems. Seems like less of an incompetence/malice thing and more like a long history of bad strategies with grid infrastructure and power generation. California has been constantly lowering its power stability throughout the day by shutting down reliable power plants for more intermittent solar and wind farms, without building the storage needed to avoid a blackout. On the infrastructure side, it seems like there hasn't been much recent investment, and as power sources get further and further from the consumer the likelihood of a problem on some section of the lines increases. Problems with power lines is an unfortunate reality of states where population centers are spread fairly far apart (we deal with this in Canada too). They're very expensive, especially long distance ones, so it can be hard to make incentives for infrastructure upgrades.

kevingadd 7y ago

Ultimately it's a consequence of privatization. Power in California (and particularly PG&E) has been poorly managed for decades and focused on profit at the expense of safety measures, maintenance, etc. Even if these blackouts were a necessary safety measure, the way they were performed is a great example of this - they failed to properly notify customers, their website was broken, their services available for people with medical needs were inadequate, etc. The only way to explain how poorly it was handled is cost-cutting - they had plenty of time in advance to prepare for this. I'm not really sure whether strong regulatory oversight of PG&E would fix things or if the state just needs to take over. I'm sure privatized power works in other places but I've lived in this state for decades and PG&E has always been a disaster company with a high death count that pays out to investors and execs aggressively.

mikorym 7y ago
In SA it's the opposite—govt entities are pitifully incompetent and in debt; Naspers, one of the only state owned companies that went private is I think now close to the most valuable company on the JSE (although they spinned off Prosus to compensate for undervalues Tencent shares). In any case, maybe Naspers is not what you would want all the state owned entities to turn into? There is always an argument for the risks of privitasation as well...
masonic 7y ago
it's a consequence of privatization No privatization occurred in CA -- it was never a public utility.