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Notes on the Valley

By Monith Ilavarasan

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About this blog: My parents, brother, and I moved to Pleasanton when I was in the seventh grade. I then graduated from Amador Valley High School, went to college at UC Davis and started out a career in tech. After several years working in large co...  (More)

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The sticker shock from electricity bills

Uploaded: Mar 22, 2023
As a kid power outages were an exciting experience. My parents would light candles throughout the house and it would feel like we were on a mystical adventure. As an adult, power outages are less exciting. You sit there refreshing your internet browser and wonder how on earth you’re going to finish all those Trader Joe's frozen meals stuck in your freezer.

This past week a massive windstorm destroyed power lines and left hundreds of thousands of Bay Area residents without power. After three full days, thousands of Pacific Gas & Electric customers continued to live without power.

This latest power outage is on top of historically high utility bills for households across the Bay Area. PG & E themselves project that residential energy bills from November 2022 through March 2023 will be about 32% higher than those from the previous year.

According to Mercury news, PG&E monthly bills have been rising well over three times as fast as the pace of the Bay Area inflation rate over the past year. The utility has some of the highest electricity rates in the country, in part due to costs from wildfire cleanup and long-overdue system upgrades that PG&E is passing along to consumers.

PG & E has taken a beating in the public square for a few years. While neglecting basic maintenance & future proofing of their lines they paid out billions of dollars in dividends to private investors. Their executive compensation is some of the highest amongst publicly traded companies. Their new CEO, Patti Poppe, took home a whopping 51.2 million dollars in total compensation in 2021.

In 1905, California Gas and Electric Corporation and Pacific Gas and Electric Company merged to form the Pacific Gas and Electric Company that we know today. The merger was originally driven by a desire to consolidate their resources and expertise and create a more cost-effective utility company.

PG&E continued to expand its operations throughout the 20th century. In the 1920s, the company began to build hydroelectric dams to generate electricity. In 1927, PG&E completed the Pit River Dam, which was the largest hydroelectric dam in the world at the time.

During World War II, PG&E played a vital role in supporting the war effort. The company provided electricity to the many military bases in northern California, and it helped build the Alameda Naval Air Station.

In the 1950s and 1960s, PG&E continued to grow, and it began to explore other forms of energy. The company built its first nuclear power plant in 1957, and it continued to invest in alternative energy sources like wind and solar.

Things started to take a sharp turn after 1996. The California Legislature unanimously approved legislation backed by the utility industry to deregulate electricity. The Legislation promised competition and at least 20% lower electricity rates by 2002.

Instead, one of the immediate effects of deregulation was the soaring prices of electricity, which rose by more than 150% in some areas. The newly formed energy companies took advantage of the new market conditions, and they manipulated the price of electricity to their advantage. Consumers were left to pay exorbitant prices for their energy bills, and many struggled to afford the high costs.

Another impact of energy deregulation was the occurrence of rolling blackouts. Alongside deregulation, the state failed to provide enough incentives for power companies to build new power plants which come with a high initial capital cost.

Maximizing short term profits, power companies became increasingly reliant on electricity imports from neighboring states, which could be unreliable. This caused significant inconvenience to consumers, who were left without power and had to resort to alternative sources of energy.

Due to this instability, PG&E filed for bankruptcy after incurring significant debt in 2001. Since then, the company has always put shareholders first instead of investing in the end consumers of their services.

Immediately after exiting the restructuring, PG & E initiated a one billion dollar stock buyback program. The company then went on to prioritize billions of dollars in stock dividends to private investors over the past twenty years instead of infrastructure improvements. To cap things off the company spends massively on lobbying the state government and building relationships with top officials.

For PG & E, profit is privatized while losses are borne by the public. After the company was found directly liable for the wildfires in 2017 & 2018, they filed for bankruptcy once again in 2020. The debt PG & E took on was prioritized to make the unsecured investors whole, while leaving the victims of wildfires without key resources to rebuild their lives.

In my opinion the best solution forward is nationalization of this important public utility with a strong regulatory agency which is directly elected and responsible to the people. This puts everyday customers in charge of an essential service and ensures that people are put ahead of profits.
Local Journalism.
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Posted by Jennifer, a resident of Danville,
on Mar 22, 2023 at 8:14 pm

Jennifer is a registered user.

Despite a colder winter, our PG&E bill went down. We conserve energy. While others were blasting their heaters, I dressed warmly and used a blanket. If my feet got cold, I put my slippers in the dryer for a few minutes and heated them up. I left the oven door open after I cooked. Opened the shades when the sun was shining to let in the heat.

There's not much we can do about rates, but we can control our usage. We are what we eat and we are what we use.

If your bill was 32% higher, you have nobody to blame but yourself. There was a slight rate increase, but nowhere near 32%. Accountability for your own actions.

Posted by Jake Waters, a resident of Birdland,
on Mar 22, 2023 at 10:47 pm

Jake Waters is a registered user.

Wow, what a lecture from ‘Jennifer.' Reminds me of the lectures we took for not taking the experimental gene therapy (jabs). And to think Newsom wants us to go all in with renewables. I think I know how this will end.

Posted by John, a resident of Birdland,
on Mar 23, 2023 at 7:28 pm

John is a registered user.

Jennifer reminds me of the Jimmy Carter Presidency gas and oil shortage. As Carter said "Quit complaining and put on a sweater or two and quit driving".

Posted by Jennifer, a resident of Danville,
on Mar 23, 2023 at 9:35 pm

Jennifer is a registered user.

You can pay a high PG&E bill or you can conserve energy and save money. The choice is yours. Blaming PG&E for a 32% increase in your bill is like blaming McDonald's for obesity, Budweiser for alcoholism and Marlboro for addiction to tobacco.

PG&E might have one of the highest rates in the country, but California doesn't have colder winters than back East or the Mid-west.

Posted by Sue Bock, a resident of San Ramon,
on Mar 24, 2023 at 7:23 am

Sue Bock is a registered user.

Interesting article with the history of PG & E. As a native Californian, I'd forgotten some of these details. To mitigate rising energy costs, years ago we installed solar panels. Instead of making the capital investment of purchasing the panels we chose to basically, rent our roof to Solar City. It did bring our electric bills down. Then the opportunity to utilize more renewables appeared with the adoption of MCE (Marin Clean Energy) as an electricity supplier in San Ramon. That also has kept our costs down (cost competitive with PG & E). Most recently we replaced our 25 year old HVAC system, with a heat pump. With gas prices high and hydrocarbons contributing to climate change, it made sense to take the rebates available to switch. We will likely get a return on our investment in about 5 years or so. Although putting a sweater and slippers on are helpful, there are alternatives. PG & E being obligated to their shareholders is not one of them.

Posted by D, a resident of Danville,
on Mar 24, 2023 at 8:25 am

D is a registered user.

I absolutely agree with Jennifer. People can not control the price of things, but they can control their response to the price of things. Grocery prices have skyrocketed the last two years, so I buy less expensive cuts of meat and poultry, and more generic items. The price of gas has skyrocketed the last two years, so I drive less, and map out errands ahead of time to be more efficient. The price of energy has skyrocketed the last two years, so I wear more sweatshirts at home, and turn off the heat at night and add an extra blanket.

By the way, Monith, it seems like so many of people in CA your age and younger answer to every challenge is to "nationalize" a business. Lets turn every free market business into the DMV, as it is so efficient and well run. Right! This is still the United States, a capitalist country, of free will, and free enterprise, and not a nation where the government runs and controls every aspect of life.

Posted by Malcolm Hex, a resident of San Ramon,
on Mar 24, 2023 at 9:47 am

Malcolm Hex is a registered user.

At D,

Monith is a socialist. His way of thinking is to have government control everything.

Posted by Karl A, a resident of Another Pleasanton neighborhood,
on Mar 24, 2023 at 1:16 pm

Karl A is a registered user.

I agree with Jennifer and her approach. While I've never been a great fan of President Carter, I now appreciate the life skills he taught me in the late seventies. Same with the constant nagging from my father to save energy (and money).

I would rather have the freedom to make personal choices to modify my lifestyle to reduce my carbon footprint than be forced by the government to follow their rules / mandates.

Our government is leading us into very difficult time by mandating the switch to electric everything without having the infrastructure in place that will support the goals being set.

Take a look at the latest power outage maps to see where the Bay Area is headed - all the outages due to old and inadequate infrastructure.

Switching to a heat pump hot water heater - enjoy those cold showers........

Posted by Ndna Jnz, a resident of Mohr Park,
on Mar 24, 2023 at 2:10 pm

Ndna Jnz is a registered user.

Monith wrote a great article and did a darn good job in researching the history of PG&E. It is unfortunate the Newsom admin did not take over PG&E when they had the chance in 2020, after it was found the energy giant was responsible for the fires that took lives and wiped out an entire town in 2018, and they filed for bankruptcy again. The one thing I would have liked to see Monith mention is how much PG&E spends on TV commercials, telling us how wonderful they are. A TV commercial just isn't going to convince us.

Thanks for the story, Monith. And yes, something must be done about this. My last two PG&E bills were $600, and I am a household of one.

Posted by MichaelB, a resident of Pleasanton Meadows,
on Mar 24, 2023 at 2:43 pm

MichaelB is a registered user.

"I would rather have the freedom to make personal choices to modify my lifestyle to reduce my carbon footprint than be forced by the government to follow their rules / mandates.Our government is leading us into very difficult time by mandating the switch to electric everything without having the infrastructure in place that will support the goals being set."

This is what happens in a one party rule state run by hysterical people who think it's a "climate emergency" and that we have to get of fossil fuels immediately - or the world will come to an end. We won't have enough energy going forward. Instead of an admission of poor planning and then changing course, we'll be lectured/scolded like misbehaving kids to "conserve", "do without", or "flex your power".

Posted by JJ, a resident of Birdland,
on Mar 25, 2023 at 8:56 am

JJ is a registered user.

Freedom is not for the lazy, envious or weak-minded idiot. Have you ever thought of moving to Canada?

Posted by Swagu, a resident of Avila,
on Mar 26, 2023 at 4:03 pm

Swagu is a registered user.

It's not about usage, the cost per wattage is skyrocketing in California.

Old boomers telling ppl just to 'conserve' or work harder when the average rents are thousands per month and a 3bed1bath starter home in San jose is 1 million. Now bills are skyrocketing. Sorry working class, better luck next generation!

Posted by D, a resident of Danville,
on Mar 27, 2023 at 6:34 am

D is a registered user.

"Swagu"-sounds like you are unhappy with the state of affairs in the state of CA. Perhaps it is time to vote the party out of office that has been running this state for decades, wouldn't you agree?

Posted by Jennifer, a resident of Danville,
on Mar 27, 2023 at 9:19 am

Jennifer is a registered user.

If it's not about "usage" than why was our neighbors bill over $500 this winter, while our bill was under $200? Our homes are about the same size, with two adults in each home. It's not like PG&E is billing our neighbor more than twice the rate. We conserve and they don't. Rates have slightly increased, and usage has skyrocketed in some homes because this winter was colder.

Posted by DM, a resident of Birdland,
on Mar 28, 2023 at 12:15 pm

DM is a registered user.

Good post from Monith highlighting the various aspects in the way PGE functions and is managed. When it comes to profits PGE passes it on to the wealthy private investors and CEOs/officers, but when it comes to paying for their mismanagement PGE passes it on to customers.
Monith also highlights how PGE takes advantage of bankruptcy to shield their officers and investors from financial liability (there should be a claw back provision in all bankruptcies to recover bonus, money given to investors via dividends/buybacks) over at least prior 5-10 years if the bankruptcy was due to mismanagement.

I dont have an issue paying fair market price for any service, and also paying a premium if the service is top class. But for PGE to have rates that are one of the highest in the country and 3x the US average for the service it provides is outrageous and needs to be addressed.

As an example I recently called PGE to request for a service upgrade from my age old 125 amp to a 200 amp, and I was given an estimate of ~ 12,000-20,000 $ for PGE to bring a 200 amp line to my house. This is just one example of PGEs service - they have never upgraded any of services in decades and they charge exorbitantly for what should be the norm in todays world.

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