4 ms·

Sorry, PG&E's accounting says otherwise.

by hunterpayne 3mo ago

deleted 3mo ago
[deleted]
otterley 3mo ago
What exactly does their accounting say?
colechristensen 3mo ago
PG&E is incentivized to spend more money on capex because the state guarantees a return on investment, a perverse incentive which causes them to make stupid money decisions to realize more profit. For example doubling the cost of energization by having a large proportion of it done by external contractors. 24% of PG&E's revenue (that is customer rate payments) goes to wildfire related costs.
- otterley 3mo ago
  The flip side of the incentive to spend more on capex is that rates are regulated by the PUC. So it’s not like the utilities get blank checks.
  - tancop 3mo ago
    if pg&e was state owned (with good management, thats the hard part) it would operate at ~zero profit and pass through all savings to customers. that means rates as low as they can possible be at the current state of the grid and generation system. most infra projects get taxpayer money through subsidies or partnerships anyway. taking it public would only kick out the investors with misaligned goals and replace them with fixed cost debt funding. you dont need to create incentives that hurt consumers when the state can invest directly.
    - otterley 3mo ago
      I don’t follow. Taking what public? Most utility companies operating in CA are already publicly traded. Do you mean “nationalizing” (or whatever the state equivalent is)? There are already some municipally owned utilities like DWP in LA and Santa Clara Power, but those began as municipal services and weren’t converted from independent businesses. The tendency over the past century has been to spin off public entities, not to take them in.
  - epistasis 3mo ago
    Having watched CPUC in action, it's not quite a blank check, but damn close. Utility comes in and says "we desperately need a rate hike to fund $X00 million" then CPUC gets them down to x-1 or x-2 and the whole thing could hav been avoided by better management from the start.

Sorry, PG&E's accounting says otherwise.

deleted 3mo ago

[deleted]

otterley 3mo ago

What exactly does their accounting say?

colechristensen 3mo ago

PG&E is incentivized to spend more money on capex because the state guarantees a return on investment, a perverse incentive which causes them to make stupid money decisions to realize more profit. For example doubling the cost of energization by having a large proportion of it done by external contractors. 24% of PG&E's revenue (that is customer rate payments) goes to wildfire related costs.

otterley 3mo ago
The flip side of the incentive to spend more on capex is that rates are regulated by the PUC. So it’s not like the utilities get blank checks.
- tancop 3mo ago
  if pg&e was state owned (with good management, thats the hard part) it would operate at ~zero profit and pass through all savings to customers. that means rates as low as they can possible be at the current state of the grid and generation system. most infra projects get taxpayer money through subsidies or partnerships anyway. taking it public would only kick out the investors with misaligned goals and replace them with fixed cost debt funding. you dont need to create incentives that hurt consumers when the state can invest directly.
  - otterley 3mo ago
    I don’t follow. Taking what public? Most utility companies operating in CA are already publicly traded. Do you mean “nationalizing” (or whatever the state equivalent is)? There are already some municipally owned utilities like DWP in LA and Santa Clara Power, but those began as municipal services and weren’t converted from independent businesses. The tendency over the past century has been to spin off public entities, not to take them in.
- epistasis 3mo ago
  Having watched CPUC in action, it's not quite a blank check, but damn close. Utility comes in and says "we desperately need a rate hike to fund $X00 million" then CPUC gets them down to x-1 or x-2 and the whole thing could hav been avoided by better management from the start.