Doing Away With Private Utilities Is a Matter of Life and Death

By Ryan Smith

The toll of this year’s wildfires is the second in as many years to break entirely too many state records, increasing the call to hold private utility companies like Pacific Gas & Electric to the flames of their own making. When the last embers cooled there was no question that the Camp Fire that ravaged Butte County, along with the devastating fires that tore through Malibu and Ventura, were among the most destructive in California history inflicting an estimated $10 billion in property damage. This was only topped, in dollar value, by last year’s devastation where the state suffered an unprecedented $12 billion in direct property damage. From a purely economic standpoint these figures don’t consider the secondary impacts such as loss of tourism, rebuilding and the opportunity cost of once thriving communities no longer capable of any sort of economic activity.

The Camp Fire destroyed businesses and tourism income, leaving the area in economic distress. Photo courtesy of CBS Sacramento

These numbers, already adding up to a truly staggering cost, don’t even touch on the immeasurable human cost. 2017 set a grim toll of 43 confirmed dead, a total that was already greater than all loss of life from the previous decade of California wildfires combined. This past season is on track to double that with a confirmed 89 dead so far. One can only imagine how many more will join them in the coming months and years thanks to the long-term damage from noxious fumes released by this year’s fires. The sheer quantity of toxic particulates in the air during the height of the blaze made Butte County’s air the most hazardous on the planet.

There is little doubt who is responsible for this blaze. The most recent investigations have all but concluded the cause of the fires was due to improperly maintained wiring, property of PG&E, setting a deadly inferno ablaze. In the face of an estimated $30 billion in liability for the Camp Fire, PG&E, earlier this week, filed bankruptcy. They are not alone in such negligence, with SoCal Edison suspected of similarly irresponsible practices in Southern California. Such a failure to perform such basic, fundamental tasks – maintenance of consistent power flow and safety of California’s communities – is astonishing all by itself. Unfortunately this is far from the first time PG&E has screwed up this badly.

In the wake of the 2017 wildfires investigators concluded the most likely cause of an already horrific disaster was PG&E’s inability to do their jobs. Gerald Singleton, an attorney specializing in wildfire cases, argued PG&E’s history shows this was no surprise as the privately-owned utility company has a history of disregarding basic maintenance necessary both for community safety and delivering power. In 2010 PG&E’s lax management piled up until one of their natural gas pipelines exploded, snuffing out the lives of eight San Bruno residents. Their cost-cutting is so extreme that, only two years after the San Bruno disaster, PG&E found they didn’t have enough staff to properly mark all of their gas lines so the company hid the mistake by filing false claims stating they had. This reckless culture even extends to data management as shown by reports from earlier this year where PG&E managed to lose 30,000 people’s personal information in a single data breach.

In this Sept. 9, 2010 file photo, a massive fire roars through a mostly residential neighborhood in San Bruno, Calif. California regulatory judges issued a $1.4 billion penalty on Tuesday, Sept. 2, 2014 against the state’s largest utility for a lethal 2010 gas pipeline explosion that engulfed a suburban San Francisco neighborhood in flames, killing eight people and prompting national alerts about the oversight of aging pipelines. (AP Photo/Paul Sakuma, File)

This begs the question of what will state officials do about such consistent, destructive carelessness. Unfortunately outgoing Gov. Jerry Brown and the state legislature opted to give PG&E the exact same white glove treatment that Wall Street got in 2008. Just this past November they pushed through a bill allowing PG&E to hike up their rates in the name of compensating for their liability costs, passing on the cost of current wildfire liability from 2017 and future liabilities beginning in 2019 to the people of California. While the law specifically excludes the costs of 2018’s fires this is only insult to the already enormous injury suffered by countless people. PG&E was already lobbying for a $1.1 billion rate hike to cover for their arrogant disregard for safety prior to the bankruptcy filing. Making matters worse, on the legislative front, was the November declaration by California Public Utilities Commission Chair Michael Picker that he did not want PG&E to go bankrupt and supported Brown’s bailout legislation.

This leaves all of us with one question: what should really be done? PG&E has already shown they cannot be trusted with changing a light bulb. Too many of our elected representatives have opted to follow through with the destructive pattern of protecting private profits by socializing the costs. They’ve made it clear, in spite of the fines levied almost a decade after the San Bruno disaster, corporate recklessness will not be punished or restrained in any way and people’s lives are less important than protecting bottom lines.

The Bay Area and all of California needs a better solution. The private owners of PG&E and SoCal Edison have made it clear that their priority is protecting investors, even if that means putting tens of thousands, possibly even millions, of lives in jeopardy by criminal reckless neglect. Thankfully some state leaders have stepped up to the plate with State Senator Scott Wiener saying PG&E’s bankruptcy provides the ideal opportunity to create a publicly-owned utility to replace PG&E. Since Picker’s November statement, members of the PUC have reconsidered taking PG&E under public ownership, with Senator Jerry Hill voicing his support for this move. Unfortunately, these voices are the exception from a much louder chorus of leaders, including Gov. Gavin Newsom and Mayor London Breed, who have their full confidence that PG&E will be able to keep the power on during the bankruptcy proceedings.

Photo illustration courtesy of ABC 7 News

This kind of thinking is very short-sighted especially considering the track record of publicly-owned utilities providing safe, reliable electricity generation. On the reliability and efficiency front, publicly-owned utilities soundly beat investor-owned providers like PG&E, SoCal Edison and Sempra. According to a report by the American Public Power Association, this is thanks to the greater transparency, public scrutiny and direct accountability publicly-owned utilities operate under. The fact that publicly-owned utilities are not required to maximize profits means there are no incentives to cut corners, like PG&E does all too often, and greater accountability means sloppy actions are taken to task. One truly notorious example proving the public-to-private shift carries greater risk is British Petroleum, infamous for the Deepwater Horizon disaster, which was publicly owned before privatization in the 1980s. Since shifting from serving the interests of the British public to the needs of private shareholders, BP went from having a solid safety record to being known as a company that regularly blows things up.

Safety is not the only way that publicly-owned utilities are a superior option to throwing more taxpayer funds at PG&E, letting them squeeze the very customers they’ve put in harm’s way, applying some political duct tape and hoping for the best. A recent study by the World Bank, no friend of public ownership, shows publicly-owned power worldwide is on average 8 percent cheaper for end users than investor-owned electricity.  The American Public Power Association found in the U.S. that, on average, publicly-owned utilities cost approximately 11.5 cents per kilowatt hour in contrast to the 13.2 cents per kilowatt hour. While this doesn’t sound like much of a difference when you consider the average yearly electricity consumption for a California household comes in at around 6,600 kilowatt hours, that difference of 2 cents adds up to just over a hundred dollars a year, per home. Another major benefit of publicly-owned utilities is, unlike private utilities, public power can be mandated to pursue objectives like maximizing renewable energy sources, overhauling transmission efficiency and other goals that serve the public interest over private profit.

The choice before Bay Area residents and all of California is clear. PG&E’s reckless pursuit of profit has destroyed lives, homes and communities. They’ve poisoned our air, put everyone in their service area in harm’s way and left nothing but scorched earth to show for their efforts. The bankruptcy proceedings show that even from a business perspective their dubious decision-making has been incredibly costly. There is also no doubt, based on available data, that public power is safer, cheaper and offers the people of the Golden State a true say in our future. The best possible solution to PG&E’s destructive history is bringing their assets under public ownership and putting all electricity generation under the direct say of the communities who use it. Only that way can we secure our safety in the present and guarantee control over our future.

Gov. Jerry Brown and incoming Gov. Gavin Newsom show Donald Trump the damage caused by the Camp Fire. Photo courtesy of Associated Press/Evan Vucci

Ryan Smith contributes to Broke-Ass Stuart as a post-grad economic and social history researcher.