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If California doesn't like PG&E making $550M profit, and would like PG&E spend more on maintenance, it should set lower profit target, and allow PG&E spend more

by xyzzyz 6y ago

If California doesn't like PG&E making $550M profit, and would like PG&E spend more on maintenance, it should set lower profit target, and allow PG&E spend more money on maintenance. PG&E operates based on decisions of California Public Utilities Commission, which decides, among other things, how much money PG&E is allowed to make, and how much it is allowed to spend on maintenance. Here's what it looks like: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M102/K361/102361873.PDF https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M102/K... PG&E would love to spend more money on maintenance. It doesn't cut into their profits, because their expenses and profits are set by state government commission anyway. Of course, the government commission has some incentive to keep the rate low, to make citizens happy, which makes it limit how much money PG&E can make and spend. The above is not meant to imply that if PG&E worked like any normal company, they'd maintain their shit better -- I have no idea if they would. However, in the current regime, where CPUC exercises so much control over what PG&E does and how much money it makes and spends, the blame cannot be solely placed on PG&E side.

zzapplezz 6y ago
> If California doesn't like PG&E making ... profit.. it should set lower profit target, and allow PG&E spend more money on maintenance Who makes decisions at the CPUC? It's a self-fulfilling prophecy. This is circular logic.
- rayiner 6y ago
  Political appointees who have enormous incentives to keep electricity prices as low as possible.
  - pmalynin 6y ago
    And yet California has one of the highest electricity costs in the country. Things definitely don’t add up.
dragonwriter 6y ago
> PG&E would love to spend more money on maintenance Yeah, their series of felony convictions for violating the law regarding maintenance, and obstructing investigations into those failures, tells a very different story.
laumars 6y ago
Why is it people will argue that there should be fewer regulations to allow companies more freedom to operate but when those companies, unsurprisingly, put money ahead of safety, it’s then the government’s fault for not regulating those companies? At some point companies need to take responsibility and be held accountable for their (in)actions. I know this is an unpopular opinion for HN, given its venture funding roots, but companies shouldn’t be given a free pass every time they screw up due to placing greed above all else.
- xyzzyz 6y ago
  I don’t think you understood my comment. PG&E is as regulated as you can possibly get without literally being part of government. When PG&E wants to spend $100M on maintenance, it has to ask government for permission, and CPUC needs to approve this expense. My point here is not to argue that with less regulation, PG&E would do better job when it comes to maintenance — I don’t know if it would. However, considering how deeply regulated it actually is, and how much the regulator controls everything it does, some blame must also be placed on the regulator’s side.
  - Dylan16807 6y ago
    > When PG&E wants to spend $100M on maintenance, it has to ask government for permission, and CPUC needs to approve this expense. ...and did they ask? It's their job to ask. You can't blame the oversight organization's interference if it didn't interfere.
    - setum 6y ago
      If you have to ask a government committee every time you go to washroom, you will notice a significant drop in your washroom visits.
      - kixiQu 6y ago
        if people die when I stop going to the washroom, I am willing to evaluate the idea that I may have some culpability in deciding to not do that
senux 6y ago
> PG&E operates based on decisions of California Public Utilities Commission... As clarification, your statement makes it sound like CPUC makes unilateral decisions about what PG&E can or cannot do when, in fact, CPUC makes those decisions based on requests made by PG&E. While CPUC does have a certain level of decision making power, a lot of their decisions are made based on what PG&E says is the right/necessary thing to do.
cskinner 6y ago
IMO, this is the most important comment here (so far) in understanding the investment & maintenance decision making and constaints of PG&E. From the linked CPUC Decision Making in the above comment, there are multiple examples where PG&E have advocated for increased spending for safety purposes, but organisations such as the Division of Ratepayer Advocates and The Utility Reform Network were pushing back. Ultimately, however, it is the CPUC that weighs the arguments of the different parties and determines allowable spending.

by xyzzyz 6y ago

zzapplezz 6y ago

> If California doesn't like PG&E making ... profit.. it should set lower profit target, and allow PG&E spend more money on maintenance Who makes decisions at the CPUC? It's a self-fulfilling prophecy. This is circular logic.

rayiner 6y ago
Political appointees who have enormous incentives to keep electricity prices as low as possible.
- pmalynin 6y ago
  And yet California has one of the highest electricity costs in the country. Things definitely don’t add up.

dragonwriter 6y ago

> PG&E would love to spend more money on maintenance Yeah, their series of felony convictions for violating the law regarding maintenance, and obstructing investigations into those failures, tells a very different story.

laumars 6y ago

Why is it people will argue that there should be fewer regulations to allow companies more freedom to operate but when those companies, unsurprisingly, put money ahead of safety, it’s then the government’s fault for not regulating those companies? At some point companies need to take responsibility and be held accountable for their (in)actions. I know this is an unpopular opinion for HN, given its venture funding roots, but companies shouldn’t be given a free pass every time they screw up due to placing greed above all else.

xyzzyz 6y ago
I don’t think you understood my comment. PG&E is as regulated as you can possibly get without literally being part of government. When PG&E wants to spend $100M on maintenance, it has to ask government for permission, and CPUC needs to approve this expense. My point here is not to argue that with less regulation, PG&E would do better job when it comes to maintenance — I don’t know if it would. However, considering how deeply regulated it actually is, and how much the regulator controls everything it does, some blame must also be placed on the regulator’s side.
- Dylan16807 6y ago
  > When PG&E wants to spend $100M on maintenance, it has to ask government for permission, and CPUC needs to approve this expense. ...and did they ask? It's their job to ask. You can't blame the oversight organization's interference if it didn't interfere.
  - setum 6y ago
    If you have to ask a government committee every time you go to washroom, you will notice a significant drop in your washroom visits.
    - kixiQu 6y ago
      if people die when I stop going to the washroom, I am willing to evaluate the idea that I may have some culpability in deciding to not do that

senux 6y ago

> PG&E operates based on decisions of California Public Utilities Commission... As clarification, your statement makes it sound like CPUC makes unilateral decisions about what PG&E can or cannot do when, in fact, CPUC makes those decisions based on requests made by PG&E. While CPUC does have a certain level of decision making power, a lot of their decisions are made based on what PG&E says is the right/necessary thing to do.

cskinner 6y ago

IMO, this is the most important comment here (so far) in understanding the investment & maintenance decision making and constaints of PG&E. From the linked CPUC Decision Making in the above comment, there are multiple examples where PG&E have advocated for increased spending for safety purposes, but organisations such as the Division of Ratepayer Advocates and The Utility Reform Network were pushing back. Ultimately, however, it is the CPUC that weighs the arguments of the different parties and determines allowable spending.