California’s wildfire threat keeps growing.
Droughts aren’t going away.
More wildfire scars impede the ability of ground to retain water.
Green movement imposed power outages are on the horizon.
Utility customers of PG&E and Southern California Edison are susceptible to higher and higher bills due to fire damage settlements.
The UC Berkeley Information Technology Research in the Interest of Society Policy Lab placed the overall state and national negative impact of the 2018 California wildfire season alone at $148.5 billion.
The State of California spent $2.2 billion in 2020 fighting wildfires.
PG&E provides power to 16 million people or about 1 out of every 3 Californians.
In PG&E’s service territory is the nation’s greatest concentration of technology firm and the world’s most productive farmland that needs electricity to pump water and process crops.
Wildfire seasons fueled by utility equipment failure consistently wipeout — or negate a large chunk of — air quality and carbon-based greenhouse.
You can put in all the solar panels and wind turbines you want but a distribution system is still needed to deliver most of the power to where it is needed
The state is projecting a budget surplus of $97.8 billion.
Record budget surpluses are expected to go away thanks to the economic downturn on the horizon but more because the biggest source of surplus money is from capital gains taxes is expected to evaporate as it usually does.
If you haven’t figured it out, surpluses fueled by capital gain taxes are the equivalent of crack for Sacramento politicians that go through it on a spending binge that rivals the most intense partying of crackheads.
Given all of that, wouldn’t it make long-term financial sense for the State of California as well as be in the best interests of public safety and greenhouse gas emissions for the state to invest $25 billion of the current surplus into a low-rate loan to not only help PG&E to harden its system in fire prone areas but to also be able to tackle all 25,000 miles of suspect lines instead of the current target of 10,000 miles.
The benefits to the state and Californians would include:
*Reducing the annual loss of homes and economic damages from wildfires.
*Avoiding power outages needed to prevent fire conditions from escalating into actual fires and then infernos. Such outages cripple the economy.
*Slowing down the amount of wildfires devastating California.
*Reducing the potential to repeat massive loss of lives such as in the Paradise fire caused by PG&E equipment.
*Making sure the state’s economic engine has the power it needs to keep humming.
PG&E and other for-profit utilities clearly aren’t in the position to do everything that needs to be done nor can they get lower rates to borrow money to do the work.
Gov. Gavin Newsom himself opened the door to such state intervention when he mulled over a possible public takeover of the PG&E system that was for the second time in less than two decades on the cusp of bankruptcy after the devastating Butte County fire that PG&E copped to the felony manslaughter of 85 people and destroying more than 15,000 homes.
Assuming he wasn’t just posturing or mimicking words typed by speech writers, Newsom can make a wise investment of the state surplus to lay the ground work for a safer California and one where government coffers aren’t slammed harder and harder by battling wildfires and dealing with the long-term aftermath of fires that run the gamut from economic loss and rebuilding to restoring watersheds and wildlands.
Better yet Newson, who is said to harbor presidential ambitions, could take a play out of the federal government’s playbook from the economic crisis triggered by the liar loan/housing market meltdown.
Instead of loaning PG&E the money, the state can take stock in equal value to the money they send to the utility for system hardening. Then, just like with General Motors, there can be an agreed upon price where PG&E buys the stock back.
GM came back from a crisis that way and so could PG&E.
The advantages to such an approach will have big impacts.
*It would free PG&E customers from the cost of PG&E borrowing.
*It can also reduce the amount it costs ratepayers based on rebuilding stock value.
*PG&E doesn’t have to worry about principal and interest repayment per se on a monthly basis.
*They don’t have to go into the markets to borrow money at rates that reflect the company’s bonding status that is closer to junk bond territory than “A” territory.
*State taxpayers would be paid back handsomely for investing part of the budget surplus.
What makes this viable is PG&E’s own projection several years ago that analysts agreed with — by 2025 despite being almost bankrupt after the 2018 wildfires PG&E will earn record profits.
The stock- for-funding option as opposed to PG&E borrowing money from private markets or the state means ratepay3ers — who ultimately will be footing the bill in one form or another — wouldn’t be lining the pockets of Wall Street hedge funds.
Instead, the state, just like the federal government did with General Motors stock, will receive a nice tidy profit from its “stock investment” that would benefit all Californians including those with the unfortunate luck to be PG&E customers.
Then there is the added bonus of being able to demand a seat on the PG&E board until the stock reaches a trigger point to allow the for-profit utility to buy the state out.
It would be the exact opposite of the fox-in-the-henhouse scenario. Instead, it would be the equivalent of an armed guard keeping watch on the foxes in their own den.
The bottom line would be:
*PG&E and Wall Street investors won’t profit off of ratepayer’s misery caused by PG&Es hideous track record of letting equipment be poorly maintained and become antiquated.
*The pressing safety and reliability issues of energy for 16 million Californians would be addressed.
*The government would not have to take over the PG&E system at some point down the road if more wildfires obliterate the company before they can get upgrades in place.
This column is the opinion of editor, Dennis Wyatt, and does not necessarily represent the opinions of The Bulletin or 209 Multimedia. He can be reached at email@example.com