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PG&E Refuses to Get Burned: Under the utility’s incentive structure, blackouts make sense.
Wall Street Journal ^ | November 25, 2019 | Edward P. Lazear

Posted on 11/26/2019 6:09:22 AM PST by karpov

...

PG&E is in a difficult spot. The last thing the company wants is to ignite a fire that causes loss of life and property. Yet it is also aware that people rely on it for power, which is no mere convenience. With temperatures near or below freezing in some locations, failing to provide power for heat puts Californians at risk—particularly the elderly, the infirm and children. Businesses close, food spoils and drugs become unusable.

What incentive would induce the company to choose correctly between bad alternatives and to invest in risk-reducing strategies like burying the power lines? A simple principle, described a century ago by the economist Arthur Pigou, states that when a company or person takes an action that has adverse consequences, that actor should bear the costs of that action.

The solution is simple: Charge the company for any damage it causes, including those power outages. The current settlement, in which PG&E is liable for fire damage but not the cost of lost electricity, motivates it to cut power aggressively. Being penalized for the consequences of those outages would encourage the company to invest in technology, capital and personnel that reduce fire risk, rather than merely circumvent risk through blackouts.

Recent court rulings and regulations counteract these incentives. The California Public Utilities Commission and the state Supreme Court have held repeatedly that PG&E must cover damages associated with any fires it causes, but haven't extended that liability to the costs of cutting power to households and businesses.

...

The Public Utilities Commission has worsened the safety problem by requiring PG&E to invest in renewable power to accommodate environmental concerns, reducing the funds available for preventive measures.

(Excerpt) Read more at wsj.com ...


TOPICS: Business/Economy; US: California
KEYWORDS: blackouts; cablackouts; california; pge
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To: Haiku Guy

The Enviros have reached the zenith of their actions.

They stopped all grazing which removed the ‘ladder fuels’.

They shut down logging over the spotted owl.

The bark beetles have destroyed as much as 40% or more of the National forests there. When they attack trees, the trees die & fall & provide more food for more beetles.

When fires have happened, salvage logging can be beneficial, but it has to happen within just over 2 years to have worthwhile lumber from the effort. California stopped all the salvage logging.

I have ridden horseback many miles in forested land. We tried to tell the ‘little green beanies employees’ about the infestations of bark beetles, but they refused to listen.

IF there should be a target for the lawsuits, people truly need to consider the Forest Service (an oxymoron) as a primary target. They refused to listen to any of us.


21 posted on 11/26/2019 9:00:53 AM PST by ridesthemiles
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To: karpov

California wouldn’t cut back trees that threatened power lines. California wouldn’t let people clear dead trees and brush near most power lines. They created the inferno waiting to happen ... and sue power companies for rogue sparks while ignoring illegal aliens and environmentalists causing fires.


22 posted on 11/26/2019 9:32:33 AM PST by tbw2
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To: karpov

Kommifornia prevents brush clearing on the power line right of way, so the fault lies with kommiefornia.
They also will prevent burying the lines as that would disturb the warted assed prairie goblins, no prairie goblins have ever been seen in the cable areas, but conditions are such that warted assed prairie goblins “could” live there..


23 posted on 11/26/2019 9:58:41 AM PST by Darksheare (Those who support liberal "Republicans" summarily support every action by same.)
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To: EnglishOnly

Give NY time, they’re working on catching up.


24 posted on 11/26/2019 10:01:54 AM PST by Darksheare (Those who support liberal "Republicans" summarily support every action by same.)
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To: Haiku Guy

You can bury 60kV - 500kv. Transmission lines.

Especially in mountains. No chance. Impossible


25 posted on 11/26/2019 10:42:32 AM PST by Truthoverpower (The guvmint you get is the Trump winning express !)
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