PG&E: Don’t Break it Up. Take it Over
The potential bankruptcy of the California utility whose negligence likely plays a role in California’s wildfires is an opportunity for the public to gain control of the state’s energy destiny
There is strong evidence that the wildfires raging through California right now—killing at least 80 people, with at least an additional 1,000 missing as of November 18—have been sparked at least in part by the large investor-owned monopoly utility, PG&E.
Further, PG&E’s apparent negligence and its consequences aren’t new. Cal Fire found that three separate wildfires across the state in 2017 were caused by PG&E, and the utility could be liable for up to $12 billion in damages from more than 800 civil lawsuits.
With that backdrop, PG&E teeters on the brink of bankruptcy, and the California Public Utility Commission is now thinking of breaking up the utility. But the commission shouldn’t stop at breaking up PG&E. The public should take it over.
That, in fact, is what should be happening with investor-owned utilities across the country: move them out of the hands of corporate power and into democratic, local control.
PG&E is notorious for taking the money it receives from ratepayers and not putting adequate amounts of that money into its energy infrastructure. But it does pay its CEO, Geisha Williams, handsomely: $8.56 million in 2017, as devastating fires hit PG&E’s service area and as the utility was found negligent for a 2010 gas explosion that killed 8 people.
As an Oakland attorney of a group suing PG&E tells it, “Rather than spend the money it obtains from customers for infrastructure maintenance and safety, PG&E funnels this funding to boost its own corporate profits and compensation.”
PG&Es consistent failures have prompted the CPUC to announce that it will consider breaking up the large utility, which holds monopoly control over most of central and northern California. CPUC President Michael Picker has publicly asked, “Is anyone accountable for failing to provide safety at PG&E[?]”
Meanwhile, PG&E’s stock has recently plummeted as the Camp Fire raged, and on November 14th the utility drew down its credit lines and filed with the Securities and Exchange Commission, usually a precursor to filing for bankruptcy.
Bankruptcy would be an opportunity for California to make a dramatic change that would be better for California consumers and better for the planet. Instead, the CPUC may bail out PG&E and allow the utility to shoulder ratepayers with the cost of wildfire litigation and damages. The CPUC should tack course, and fast.
Investor-owned utilities, with their primary focus on shareholder returns and constant growth, are simply not suited for the shift California’s leadership has said it wants to make—and the nation must make as well—from a fossil-fuel-based, extractive economy to an environmentally sustainable energy model that puts the needs and interests of communities first and equitably distributes wealth.
Publicly-owned utilities in the United States have ample precedent. The state of Nebraska has operated on public power since it kicked investor-owned utilities out of the state in the 1930s. California already has a Community Choice Aggregation (CCA) program that allows local governments to pool electricity customers from their jurisdiction and take over the procurement of energy generation for their communities. Nineteen CCA’s operate within the state, with more slated to come online with a projected 2.5 million customers served. Advocates for CCAs argue that they allow their communities to transition to 100 percent renewable energy faster, enable more community control, and charge lower rates.
Due in major part to a diverse, large-scale grassroots organizing movement led to a great extent by the Local Clean Energy Alliance, the East Bay Community Energy CCA serves as a model for how public ownership in California could radically reorient the benefits of renewable energy to the community it serves, not shareholders. Specifically, any earnings that East Bay Community Energy makes will be reinvested back into Alameda County, creating new clean power projects, local green jobs, and local efficiency programs. They also adopted a Local Development Business Plan that provides a roadmap to promote local projects and jobs, and have made significant strides in centering the CCA’s mission on climate justice in its service area. The CCA board is run by local representatives from its member cities, and has a Community Advisory Committee responsible for ensuring the board hears a strong community voice.
The CCAs, however, don’t own and operate the wires that conduct the electricity; those remain under PG&E’s neglectful stewardship. Plus, PG&E and other investor-owned utilities have retaliated as more of their customer base has opted for public ownership and have successfully lobbied to impose an increased exit fee for local governments leaving the utility.
Full public ownership of the utilities does exist in a few places in California. For instance, such large-city utilities as the Los Angeles Department of Water and Power (LADWP) and Sacramento Municipal Utility District (SMUD). In Los Angeles, that meant that the mayor and city council could in 2016 request a roadmap to 100 percent renewable energy by 2030, two years ahead of the state leadership. To chart that course, the publicly owned utility set up a local Renewable Energy Advisory Group, with a diverse coalition from Food and Water Watch to local neighborhood assemblies providing input.
In a re-imagined, fully California-owned and operated electricity system, regional Grid Operators could operate alongside local government CCAs. Publicly-owned regional Grid Operators could manage energy delivery throughout different regions of the state while also keeping the grid safe, investing in modernization, and enabling electrification of new sectors of our economy (like transportation). Local government CCAs could take on the tasks of building or procuring energy generation and reducing energy consumption (particularly for those with the highest energy burdens), much as East Bay Community Energy does.
A publicly-owned system can enable effective institutions for community participation. Through community-based renewable energy projects, investments in local workforces, and a focus on equitable outcomes, the electricity system can be a core tool for building vibrant local economies across the state. California’s takeover could serve as a model for other states fed up with the predatory practices of investor-owned utilities and jumpstart a wider shift across the country toward democratically controlled renewable energy.
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