4 ms·

Can the CA govt just impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free?

kevinburke 2y ago
PG&E already went bankrupt recently, and taking over the whole state wouldn't really help very much. The problem is largely liability rules that make it very expensive to provide power to wildfire zones and rural areas. PG&E and the state have decided to pay for that by charging people who live in cities very high rates for electricity. It's perverse that people who live in safe, urban areas are subsidizing people who live in wildfire zones. The savings come largely from not doing that anymore.
- CobaltFire 2y ago
  I bang this drum all the time, but you are the first other person I've seen state it online. If we stop subsidizing the foothills by creating urban utility districts it would solve the PG&E problem. We would have a new problem of causing a ton of people to be unable to continue living in those areas without some kind of off-grid program. Long term I think this is the only sane way forward though.
  - thatguy0900 2y ago
    Long term I don't see how it's possible to continue to let people live in areas so fire prone that insurance cannot be done, it seems to me. Unless you want to live in a concrete castle or something
    - mindslight 2y ago
      Construction itself isn't that expensive. It's certainly possible to self insure and accept that living in an area prone to fires means your house might burn down. It goes against the prevailing culture of the ever-growing housing bubble, but financialization has to hit its limits some time.
      - mauvehaus 2y ago
        Self-insuring is probably not going to fly with your mortgage lender. If nobody can get a mortgage, and everyone has to self-insure, it's going to 1) drive down housing prices (fewer cash buyers) and 2) guarantee that only people of pretty substantial means can afford to live there (even with lower prices, most people can't come up with a cash payment for a house).
        coryrc 2y ago
        If prices were sane, anybody who bought a house ten years ago currently has enough equity to pay cash.
        mindslight 2y ago
        I did acknowledge it would go against housing bubble culture. It certainly wouldn't be a financially prudent way of obtaining primary shelter, but rather for vacation homes or whatnot. We're mostly talking about rural properties in the woods, right?
      - deleted 2y ago
        [deleted]
    - trinsic2 2y ago
      You mean like a brick building? like how structures were originally built? Seems like a good idea to me for house to be made of stone in high fire related areas. Obviously the cost would be astronomical.
      - arrosenberg 2y ago
        Brick buildings don't do well with earthquakes. California also happens to sit on a major, active fault line. While it is technically possible to make a brick or stone building earthquake-proof, I would imagine it's cost prohibitive for large scale single-family housing projects. Apartment towers are already built with a multistory steel-reinforced concrete base that is built to withstand earthquakes, but it would increase costs significantly to build to the top like that.
  - abeppu 2y ago
    > We would have a new problem of causing a ton of people to be unable to continue living in those areas without some kind of off-grid program. But people in those areas are likely to be able to benefit from solar, so maybe being "off the grid" in the sense of not having long runs of power lines surrounded by trees to your house in the country is reasonable, and perhaps also cheaper for those rural residents anyway?
  - marssaxman 2y ago
    > a ton of people to be unable to continue living in those areas That sounds like more of a solution than a problem: those places are going to burn, so it's better that people stop living there.
    - UncleEntity 2y ago
      Ironically, if they just let them naturally burn in the first place there wouldn't be even a fraction of damage caused by these modern wildfires.
      - Qwertious 2y ago
        IIRC it's a funding problem - controlled burns require a ton of manpower to control, and the longer since the last burn, the harder it is to control.
- amluto 2y ago
  This whole model is nonsensical, though. Averaging costs among customers doesn’t give anyone the right incentives: - Urban customers should have an incentive to use electricity over gas, which they would if rates were reasonable. - Urban customers should not pay per kWh even if one thinks they should subsidize rural customers. It should be some kind of tax with reasonable allocation. - Undercharging rural customers for provision of service and overcharging per kWh messes up incentives, too. If suburban or rural communities faced the actual cost of transmission to their area and distribution within it, they could make real decisions, for example: # Technologies exist to reduce the risk that a power line fault starts a fire. Search for “ground fault neutralizer” or “REFCL.” Similarly common reclosers take a very YOLO approach to deal with a faulted line, and other approaches exist. PG&E, of course, doesn’t want to use these because the ridiculous CPUC rules let them make more profit by spending more money trimming trees. # Communities could maintain their own lines and have actual locally enforced codes about vegetation. # Communities could install batteries at their end of transmission lines to help ride through public safety power shutdowns and to level out their own loads. And they could even build small wind turbines optimized for operation in high winds (which are rather strongly correlated with those shutdowns) to generate a few MW and keep those batteries charged. Heck, this could be automated: de-energize the line when the wind is high automatically, and there won’t even be a substantial inrush when re-energizing when the wind stops because the batteries can reduce load to zero. # A community could decide the cost isn’t worth it and build its own mini grid. This might spur interesting investment into things like small modular reactors :) - The ownership and regulatory structure right now sucks, amplifying all the problems above and the lack of real solutions.
- ahmeneeroe-v2 2y ago
  I am 90% in agreement with you. I do think that you should consider how rural/suburban areas have all of the generation and transmission which the cities rely on for their power. It's not exactly fair to treat those rural residents as burdens to the urban areas when they provide the means for the urban areas to exist.
  - janalsncm 2y ago
    > they provide the means for the urban areas to exist Unless you’re referring to farmers I don’t understand this point. As of right now it is the other way around.
    - ahmeneeroe-v2 2y ago
      No. Build the generation for urban areas within those same urban areas.
  - avidiax 2y ago
    > It's not exactly fair to treat those rural residents as burdens to the urban areas when they provide the means for the urban areas to exist. There's a difference between people that are in farming/ranching and industry vs. people that are rural to afford a more lavish home in the woods or on the hills. Even still, a system that doesn't appropriately price and apportion risk will always be under pressure.
    - ahmeneeroe-v2 2y ago
      >a system that doesn't appropriately price and apportion risk will always be under pressure Very well stated, I am stealing this. Also in agreement with rural resource types vs rich rural. Again I think it is more complex than just apportioning power costs. CA effectively has a state policy of not maintaining its forest/rural land (ditto feds and their land). My parents live adjacent to national forest and have fire evacuations nearly every year. There is nothing that the rural residents in their area can do to mitigate risk, even at their own cost. So we're asking them to bear the cost of the state/fed policy decisions. This is exactly the problem you describe of inappropriate price/risk apportionment.
rufus_foreman 2y ago
>> Can the CA govt just impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free I don't think so. Not currently. "nor shall private property be taken for public use, without just compensation" That's federal law. Supposedly, that applies to the states through the Fourteenth Amendment. All of the sudden, once the Fourteenth Amendment is passed, the Constitution applies to state governments, not just the federal government. So if that's the case, no. You can't just "scoop up the assets for free" because you can't take private property for public use without compensation. I'm kinda a little bit suspicious that it makes sense to interpret the Fourteenth Amendment that way. Sounds like a power grab. If you want to try and turn that around, I know just the guys to do it.
- rangestransform 2y ago
  It’s not unconstitutional to make utilities liable for fires that their power lines ignite, and it won’t be a taking without just compensation if the actual value of the company drops below zero
  - rufus_foreman 2y ago
    >> It’s not unconstitutional to make utilities liable for fires that their power lines ignite That's not the question under consideration. The question under consideration is if it constitutional for the government to "impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free". Under my understanding of the law, no you can't do that, due to the takings clause and it's incorporation under the 14th amendment. I think the law should be different, I don't agree with incorporation doctrine. But I still don't think the government should impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free. Hopefully that clears everything up for you.
bobthepanda 2y ago
This is generally a horrible idea. This is how public transit companies were generally acquired, but on the way to bankruptcy firms would defer maintenance to stave it off, which led to the sorry state of most mass transit systems today.
refurb 2y ago
Absolutely, barring the company bringing them to court for violating the "taking withouy compensation". But what people forget is that the CA state doesn't want PG&E. The state already exerts significant control over PG&E operations through the CPUC (members nominated by Gavin Newsom). CPUC approves/rejects all capital spending down to new fences for electrical substations. You can read about all the decisions in the 931 page rate decision, which is public. https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M520/K896/520896345.pdf https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M520/K... But what about executive compensation? Well, a separate CA state agency approves that as well. https://energysafety.ca.gov/what-we-do/electrical-infrastructure-safety/wildfire-mitigation-and-safety/executive-compensation/ https://energysafety.ca.gov/what-we-do/electrical-infrastruc... So at this point the CA state government basically runs PG&E. But if they purchased it, they'd be exposing themselves to all the political risk when things go bad. But right now, they get political air cover. Despite the tight level of control over how PG&E is run, the CA state government gets none of the blowback. It's the optimal setup from a political perspective.

kevinburke 2y ago

PG&E already went bankrupt recently, and taking over the whole state wouldn't really help very much. The problem is largely liability rules that make it very expensive to provide power to wildfire zones and rural areas. PG&E and the state have decided to pay for that by charging people who live in cities very high rates for electricity. It's perverse that people who live in safe, urban areas are subsidizing people who live in wildfire zones. The savings come largely from not doing that anymore.

CobaltFire 2y ago
I bang this drum all the time, but you are the first other person I've seen state it online. If we stop subsidizing the foothills by creating urban utility districts it would solve the PG&E problem. We would have a new problem of causing a ton of people to be unable to continue living in those areas without some kind of off-grid program. Long term I think this is the only sane way forward though.
- thatguy0900 2y ago
  Long term I don't see how it's possible to continue to let people live in areas so fire prone that insurance cannot be done, it seems to me. Unless you want to live in a concrete castle or something
  - mindslight 2y ago
    Construction itself isn't that expensive. It's certainly possible to self insure and accept that living in an area prone to fires means your house might burn down. It goes against the prevailing culture of the ever-growing housing bubble, but financialization has to hit its limits some time.
    - mauvehaus 2y ago
      Self-insuring is probably not going to fly with your mortgage lender. If nobody can get a mortgage, and everyone has to self-insure, it's going to 1) drive down housing prices (fewer cash buyers) and 2) guarantee that only people of pretty substantial means can afford to live there (even with lower prices, most people can't come up with a cash payment for a house).
      - coryrc 2y ago
        If prices were sane, anybody who bought a house ten years ago currently has enough equity to pay cash.
      - mindslight 2y ago
        I did acknowledge it would go against housing bubble culture. It certainly wouldn't be a financially prudent way of obtaining primary shelter, but rather for vacation homes or whatnot. We're mostly talking about rural properties in the woods, right?
    - deleted 2y ago
      [deleted]
  - trinsic2 2y ago
    You mean like a brick building? like how structures were originally built? Seems like a good idea to me for house to be made of stone in high fire related areas. Obviously the cost would be astronomical.
    - arrosenberg 2y ago
      Brick buildings don't do well with earthquakes. California also happens to sit on a major, active fault line. While it is technically possible to make a brick or stone building earthquake-proof, I would imagine it's cost prohibitive for large scale single-family housing projects. Apartment towers are already built with a multistory steel-reinforced concrete base that is built to withstand earthquakes, but it would increase costs significantly to build to the top like that.
- abeppu 2y ago
  > We would have a new problem of causing a ton of people to be unable to continue living in those areas without some kind of off-grid program. But people in those areas are likely to be able to benefit from solar, so maybe being "off the grid" in the sense of not having long runs of power lines surrounded by trees to your house in the country is reasonable, and perhaps also cheaper for those rural residents anyway?
- marssaxman 2y ago
  > a ton of people to be unable to continue living in those areas That sounds like more of a solution than a problem: those places are going to burn, so it's better that people stop living there.
  - UncleEntity 2y ago
    Ironically, if they just let them naturally burn in the first place there wouldn't be even a fraction of damage caused by these modern wildfires.
    - Qwertious 2y ago
      IIRC it's a funding problem - controlled burns require a ton of manpower to control, and the longer since the last burn, the harder it is to control.
amluto 2y ago
This whole model is nonsensical, though. Averaging costs among customers doesn’t give anyone the right incentives: - Urban customers should have an incentive to use electricity over gas, which they would if rates were reasonable. - Urban customers should not pay per kWh even if one thinks they should subsidize rural customers. It should be some kind of tax with reasonable allocation. - Undercharging rural customers for provision of service and overcharging per kWh messes up incentives, too. If suburban or rural communities faced the actual cost of transmission to their area and distribution within it, they could make real decisions, for example: # Technologies exist to reduce the risk that a power line fault starts a fire. Search for “ground fault neutralizer” or “REFCL.” Similarly common reclosers take a very YOLO approach to deal with a faulted line, and other approaches exist. PG&E, of course, doesn’t want to use these because the ridiculous CPUC rules let them make more profit by spending more money trimming trees. # Communities could maintain their own lines and have actual locally enforced codes about vegetation. # Communities could install batteries at their end of transmission lines to help ride through public safety power shutdowns and to level out their own loads. And they could even build small wind turbines optimized for operation in high winds (which are rather strongly correlated with those shutdowns) to generate a few MW and keep those batteries charged. Heck, this could be automated: de-energize the line when the wind is high automatically, and there won’t even be a substantial inrush when re-energizing when the wind stops because the batteries can reduce load to zero. # A community could decide the cost isn’t worth it and build its own mini grid. This might spur interesting investment into things like small modular reactors :) - The ownership and regulatory structure right now sucks, amplifying all the problems above and the lack of real solutions.
ahmeneeroe-v2 2y ago
I am 90% in agreement with you. I do think that you should consider how rural/suburban areas have all of the generation and transmission which the cities rely on for their power. It's not exactly fair to treat those rural residents as burdens to the urban areas when they provide the means for the urban areas to exist.
- janalsncm 2y ago
  > they provide the means for the urban areas to exist Unless you’re referring to farmers I don’t understand this point. As of right now it is the other way around.
  - ahmeneeroe-v2 2y ago
    No. Build the generation for urban areas within those same urban areas.
- avidiax 2y ago
  > It's not exactly fair to treat those rural residents as burdens to the urban areas when they provide the means for the urban areas to exist. There's a difference between people that are in farming/ranching and industry vs. people that are rural to afford a more lavish home in the woods or on the hills. Even still, a system that doesn't appropriately price and apportion risk will always be under pressure.
  - ahmeneeroe-v2 2y ago
    >a system that doesn't appropriately price and apportion risk will always be under pressure Very well stated, I am stealing this. Also in agreement with rural resource types vs rich rural. Again I think it is more complex than just apportioning power costs. CA effectively has a state policy of not maintaining its forest/rural land (ditto feds and their land). My parents live adjacent to national forest and have fire evacuations nearly every year. There is nothing that the rural residents in their area can do to mitigate risk, even at their own cost. So we're asking them to bear the cost of the state/fed policy decisions. This is exactly the problem you describe of inappropriate price/risk apportionment.

rufus_foreman 2y ago

>> Can the CA govt just impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free I don't think so. Not currently. "nor shall private property be taken for public use, without just compensation" That's federal law. Supposedly, that applies to the states through the Fourteenth Amendment. All of the sudden, once the Fourteenth Amendment is passed, the Constitution applies to state governments, not just the federal government. So if that's the case, no. You can't just "scoop up the assets for free" because you can't take private property for public use without compensation. I'm kinda a little bit suspicious that it makes sense to interpret the Fourteenth Amendment that way. Sounds like a power grab. If you want to try and turn that around, I know just the guys to do it.

rangestransform 2y ago
It’s not unconstitutional to make utilities liable for fires that their power lines ignite, and it won’t be a taking without just compensation if the actual value of the company drops below zero
- rufus_foreman 2y ago
  >> It’s not unconstitutional to make utilities liable for fires that their power lines ignite That's not the question under consideration. The question under consideration is if it constitutional for the government to "impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free". Under my understanding of the law, no you can't do that, due to the takings clause and it's incorporation under the 14th amendment. I think the law should be different, I don't agree with incorporation doctrine. But I still don't think the government should impose prohibitive fire prevention liabilities on utility companies, bankrupt them, and scoop up the assets for free. Hopefully that clears everything up for you.

bobthepanda 2y ago

This is generally a horrible idea. This is how public transit companies were generally acquired, but on the way to bankruptcy firms would defer maintenance to stave it off, which led to the sorry state of most mass transit systems today.

refurb 2y ago

Absolutely, barring the company bringing them to court for violating the "taking withouy compensation". But what people forget is that the CA state doesn't want PG&E. The state already exerts significant control over PG&E operations through the CPUC (members nominated by Gavin Newsom). CPUC approves/rejects all capital spending down to new fences for electrical substations. You can read about all the decisions in the 931 page rate decision, which is public. https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M520/K896/520896345.pdf https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M520/K... But what about executive compensation? Well, a separate CA state agency approves that as well. https://energysafety.ca.gov/what-we-do/electrical-infrastructure-safety/wildfire-mitigation-and-safety/executive-compensation/ https://energysafety.ca.gov/what-we-do/electrical-infrastruc... So at this point the CA state government basically runs PG&E. But if they purchased it, they'd be exposing themselves to all the political risk when things go bad. But right now, they get political air cover. Despite the tight level of control over how PG&E is run, the CA state government gets none of the blowback. It's the optimal setup from a political perspective.