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.