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California's stringent green energy initiatives and regulations have cut into the budget allocated for updating transmission lines. The same people that pass th

California's stringent green energy initiatives and regulations have cut into the budget allocated for updating transmission lines. The same people that pass those laws, also pass laws limiting the maximum profit of a utility to 10% and then lambast them for being greedy and not updating their lines. Yet if you look at the balance sheets of PG&E there isn't much net profit.

onlyrealcuzzo 7y ago
Do the regulators set the price? PG&E could easily fix the lines and pass the price onto the consumers. If anything, if their profits are limited to 10%, you'd think there would exist a perverse cost+ incentive on PG&E's part.
- uxp100 7y ago
  Yes, well, regulators have a say at least.
- bzbarsky 7y ago
  The regulators get to set the consumer-facing rates, yes.
triceratops 7y ago
They paid dividends fairly regularly from 2011 to 2017.[1] They couldn't have used that money for updates and maintenance? You can't really claim to be profitable if you're deferring necessary maintenance expenses. Isn't that defrauding shareholders, in a way? 1. https://www.streetinsider.com/dividend_history.php?q=PCG https://www.streetinsider.com/dividend_history.php?q=PCG
- wpietri 7y ago
  You're not the only person wondering about whether PG&E has defrauded investors: https://www.courthousenews.com/investors-sue-pge-over-wildfire-prevention-blackouts/ https://www.courthousenews.com/investors-sue-pge-over-wildfi...
- bzbarsky 7y ago
  > They couldn't have used that money for updates and maintenance? My understanding is that they could not, yes, because state regulators exercise line-by-line control over PG&E's budgets, including how much money will be distributed as dividends and how much money will be spent on maintenance.
tomjakubowski 7y ago
Wouldn't investing revenues into infrastructure be a way to lower profit on their balance sheet? It seems like the profit cap would be an incentive to reinvest.
- deleted 7y ago
  [deleted]
- bcrosby95 7y ago
  Any rate hike has to go through CPUC. Whether or not they would fight it depends upon the reasonableness of the request. There are other organizations that would likely fight it though.
kevingadd 7y ago
Well, their net profit would be higher if they hadn't spent over $25m in executive compensation in 2019. That's a healthy amount of money for some electrical line maintenance, even if it wouldn't cover the cost of all of it. With how poorly the company is being run right now you can't really argue that compensation is buying The Best Executive Leadership... Keep in mind that even if PG&E is doing their best to keep costs low, the cost of wildfires is being passed on to the consumer anyway (in some cases the cost is being passed on as dead humans instead of higher electrical costs). Is it better for PG&E to be able to have a profit margin of 25%, or for their lines to not cause wildfires? What about a low profit margin stops them from maintaining lines? If the state and/or counties are operating the electrical company, profit need no longer be an issue. If they aren't making enough money to cover maintenance cost, that can come out of tax dollars or state-issued bonds just like road maintenance does. It's not as if electrical infrastructure isn't important. Taxpayers may not like higher taxes, but they also don't like having their power cut off or their houses destroyed.
deleted 7y ago
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aodin 7y ago
For 2013-2017, PG&E had a total net income of $6.1 billion, or about $1.2 billion a year from an average revenue of $16.9 billion [1]. Only in 2018 did they incur a loss of $6.8 billion, mainly because of the $11.5 billion in charges for their role in starting wildfires. [1] https://www.macrotrends.net/stocks/charts/PCG/pacific-gas-electric/financial-statements https://www.macrotrends.net/stocks/charts/PCG/pacific-gas-el...
deleted 7y ago
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onlyrealcuzzo 7y ago

Do the regulators set the price? PG&E could easily fix the lines and pass the price onto the consumers. If anything, if their profits are limited to 10%, you'd think there would exist a perverse cost+ incentive on PG&E's part.

uxp100 7y ago
Yes, well, regulators have a say at least.
bzbarsky 7y ago
The regulators get to set the consumer-facing rates, yes.

triceratops 7y ago

They paid dividends fairly regularly from 2011 to 2017.[1] They couldn't have used that money for updates and maintenance? You can't really claim to be profitable if you're deferring necessary maintenance expenses. Isn't that defrauding shareholders, in a way? 1. https://www.streetinsider.com/dividend_history.php?q=PCG https://www.streetinsider.com/dividend_history.php?q=PCG

wpietri 7y ago
You're not the only person wondering about whether PG&E has defrauded investors: https://www.courthousenews.com/investors-sue-pge-over-wildfire-prevention-blackouts/ https://www.courthousenews.com/investors-sue-pge-over-wildfi...
bzbarsky 7y ago
> They couldn't have used that money for updates and maintenance? My understanding is that they could not, yes, because state regulators exercise line-by-line control over PG&E's budgets, including how much money will be distributed as dividends and how much money will be spent on maintenance.

tomjakubowski 7y ago

Wouldn't investing revenues into infrastructure be a way to lower profit on their balance sheet? It seems like the profit cap would be an incentive to reinvest.

deleted 7y ago
[deleted]
bcrosby95 7y ago
Any rate hike has to go through CPUC. Whether or not they would fight it depends upon the reasonableness of the request. There are other organizations that would likely fight it though.

kevingadd 7y ago

Well, their net profit would be higher if they hadn't spent over $25m in executive compensation in 2019. That's a healthy amount of money for some electrical line maintenance, even if it wouldn't cover the cost of all of it. With how poorly the company is being run right now you can't really argue that compensation is buying The Best Executive Leadership... Keep in mind that even if PG&E is doing their best to keep costs low, the cost of wildfires is being passed on to the consumer anyway (in some cases the cost is being passed on as dead humans instead of higher electrical costs). Is it better for PG&E to be able to have a profit margin of 25%, or for their lines to not cause wildfires? What about a low profit margin stops them from maintaining lines? If the state and/or counties are operating the electrical company, profit need no longer be an issue. If they aren't making enough money to cover maintenance cost, that can come out of tax dollars or state-issued bonds just like road maintenance does. It's not as if electrical infrastructure isn't important. Taxpayers may not like higher taxes, but they also don't like having their power cut off or their houses destroyed.

deleted 7y ago

[deleted]

aodin 7y ago

For 2013-2017, PG&E had a total net income of $6.1 billion, or about $1.2 billion a year from an average revenue of $16.9 billion [1]. Only in 2018 did they incur a loss of $6.8 billion, mainly because of the $11.5 billion in charges for their role in starting wildfires. [1] https://www.macrotrends.net/stocks/charts/PCG/pacific-gas-electric/financial-statements https://www.macrotrends.net/stocks/charts/PCG/pacific-gas-el...

deleted 7y ago

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