PG&E is not making one penny in sacrifice to upgrade its aging system it wantonly ran into the ground to maximize profits over the years so brazenly that they admitted to killing 120 people and destroying 27,000 homes and other buildings.
The news that PG&E’s partner in crime — the California Public Utilities Commission — last week granted the killer corporation an 8 percent rate hike starting March 1 generated little outrage. That’s because the raging debate about how the COVID-19 pandemic response is going down has conveniently given cover to those in Sacramento aiding and abetting PG&E.
The increase to help PG&E reduce its potential to kill off customers and destroy their homes as part of their state guaranteed business model profit of almost 11 percent on every $1 they collect will cost the average PG&E mark $13.38 a month or $161.28 year. If you invested between $10,000 and $20,000 in solar panels you will not escape the charge. That’s because it is not on the electricity they sell but the general charges all customers pay regardless.
It is true the CPUC made it clear that they will not allow a cent of the 8 percent hike to go toward fattening PG&E executive team salaries or to be diverted to pay for $25.5 billion in lawsuit settlements stemming from the death and destruction PG&E copped to in 2017 and 2018.
But it did nothing that stops PG&E’s profits from increasing $126 million annually on the additional $1.5 billion they will start collecting each year from their 16 million captive customers.
PG&E and other private sector utilities benefit from a CPUC process called “decoupling”. It basically guarantees utilities a profit of almost 11 percent regardless of how much electricity they sell.
It is why in past 30 years PG&E has been the darling of Wall Street hedge funds and continues to be so despite their second bankruptcy and $25.5 billion legal settlement. Per capita use of electricity has almost doubled across the nation during the past three decades while remaining flat in California. As an added bonus for being stingy with energy we get to enjoy PG&E’s rates that are sky high compared to most of the rest of the nation.
Meanwhile PG&E’s profits kept soaring beyond inflation as well as beyond growth. How could that happen? It was easy given the CPUC either because of gross incompetence, due to its cozy relationship with utilities they govern whose ex-officers have been appointed to the CPUC governing board or what could be framed as almost criminal neglect of duty to protect the interests of ratepayers that one must assume includes their lives and property helped make it all possible.
The only way PG&E could increase profits over the years beyond 11 percent was by not doing what they were granted rate increases for by the CPUC. Those rate increases included replacing aging power poles and other equipment. It has been documented by outside organizations — and ultimately confirmed by the CPUC itself — that PG&E was so bold as to ask for follow up increases to replace power poles and such they promised to replace in previous rate increases.
In other years, much of the death and destruction brought down on PG&E customers was courtesy of money the customers faithfully paid for decades for specific system investments that PG&E for all practical purposes skimmed to cover everything from fatter executive bonuses and corporate jets to bigger margins for hedge funds.
PG&E in the third quarter that ended Oct. 31 posted a $56 million profit. The have projected their profits for this year will reach $454 million.
Three years from now PG&E has told its investors that they will hit a record $2.4 billion in profits as opposed to the previous high mark of $1.7 billion in 2017 before their past sins caught up with them.
Yet the CPUC granted PG&E a $1.15 billion rate increase to do work that the for-profit utility failed to do over the years that led to 120 deaths and 27,000 homes being destroyed so they could fatten executive pay checks and bonuses by finding ways to increase profits beyond the 11 percent return guaranteed by their friends in Sacramento.
At the very least the CPUC should have had the decency not to allow PG&E to profit a second time from their greed raiding the pocketbooks of captive ratepayers and suspend the guaranteed 11 percent return from the $1.5 billion annual rate hike they just approved for PG&E to update their system. That way 11 percent more safety work can be done each year.
What they should have done, however, is required PG&E to use their profits to upgrade their system just like other corporations need to do to stay in business in California that aren’t protected by Sacramento.
It is clear PG&E and their for-profit utility cohorts have a unique profit guarantee that investors understand.
PG&E — with a record $2.4 billion annual profit just three years away — could easily have borrowed against future income like every other business does to expand or replace aging infrastructure. But that would compromise the PG&E way.
Sacramento needs to reform the CPUC that clearly favors investor utilities over ratepayers. They could start by banning all political contributions by PG&E to politicians, ballot initiatives, and even groups that push political agenda not related to energy. That will help end the cozy relationship PG&E can always fall back on when it is a bad actor.If this is an affront to anyone, keep in mind PG&E is a privileged quasi-public for-profit institution that is guaranteed profits by the State of California regardless of what they do. And when they abuse that special treatment and plunge into bankruptcy as they have now done two different times, the state ignores rules established that should have forced PG&E to lose its franchise due to bad credit issues.
The correct solution — and one Sacramento lacks the will to do as it would require backbone to standup to all the people and hedge funds that own massive shares of PG&E stock that profit handsomely from the misery the CPUC has allowed to rain down on 16 million Californians who contribute money to political campaigns — is to force the public takeover of PG&E if not all electrical companies in the state.
The last 20 years have proven the “PG&E way” can’t be trusted.
How many times have we heard PG&E executives say “we’ll do better” and then are given platinum parachutes when they bail after they’ve given us rolling brownouts, two bankruptcies, blown up customers and neighborhoods or burned to death ratepayers while torching their homes, businesses, and community assets such as schools and hospitals and poisoned their water from dumping chemicals or the reside of toxic wildfires?
If PG&E does any better we’re all going to be dead, lose our homes to fires or gas explosions, or be sent to the edge of poverty by rate increases designed to address their criminal negligence.
The opinions are of Editor Dennis Wyatt and not necessarily The Bulletin or 209 Multimedia.