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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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1 posted on 11/26/2019 6:09:22 AM PST by karpov
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To: karpov

Kalifornia helped put them in the bind - makes sense for them to take “all precautions”...


2 posted on 11/26/2019 6:17:09 AM PST by trebb (Don't howl about illegal leeches, or Trump in general, while not donating to FR - it's hypocritical.)
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To: karpov

Dear PG&E,

CLOSE all your Power Plants in California Immediately, the people have voted and that is their decision, STOP Fighting the inevitable, Close up Shop and Cash out now while you still can, and make damn sure all of your facilities are razed.


3 posted on 11/26/2019 6:18:42 AM PST by eyeamok
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To: karpov

Liberal Democratic rule has its consequences .Just wish the power outages would affect Democratic areas. So far they seem to be affecting Republican areas.


4 posted on 11/26/2019 6:19:22 AM PST by allendale (.)
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To: karpov

What happens when Kookifornia’s laws get to the point where it makes the most sense to just shut down the whole system and walk away?


5 posted on 11/26/2019 6:19:55 AM PST by KarlInOhio (Who's the leader of the club that feeds on dead babies? M-O-L... O-C-H... M-O-U-S-E.)
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To: eyeamok

You said it before me. Also pull down the wires and sell them to scrap dealers out of state.


6 posted on 11/26/2019 6:21:38 AM PST by KarlInOhio (Who's the leader of the club that feeds on dead babies? M-O-L... O-C-H... M-O-U-S-E.)
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To: trebb

California needs this....Southeast United States the forest are privately owned...

https://www.youtube.com/watch?v=zk6aGg7iZ8M&feature=share


7 posted on 11/26/2019 6:27:26 AM PST by Hojczyk
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To: karpov

This is what happens in a state that elects politicians both hostile toward and ignorant of business.


8 posted on 11/26/2019 6:30:32 AM PST by gogeo (The left prides themselves on being tolerant, but they can't even be civil.)
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To: gogeo; All
This is what happens in a state that elects politicians both hostile toward and ignorant of business.

Not just business.

The politicians are hostile toward, and ignorant of, reality.

9 posted on 11/26/2019 6:32:31 AM PST by marktwain (President Trump and his supporters are the Resistance. His opponents are the Reactionaries.)
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To: karpov

I’m so glad that I don’t live in this incredibly stupid, pointless, dying place.

But The Rot spreads.


10 posted on 11/26/2019 6:37:30 AM PST by chris37 (Where's Hunter?)
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To: trebb

You are looking at 100,000 per pole to underground. Just not going to happen.


11 posted on 11/26/2019 6:40:34 AM PST by Oldexpat (Jobs Not Mobs)
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To: karpov

PG&E knows it will be sued for any fire that occurs in an area where they are supplying power. They are the designated “deep pockets” for any wildfire loss in the State of California.

Fires are going to start, whether PG&E is supplying power or not. The only way they can avoid liability is to make sure their power is turned off during conditions where fires are likely to start, for any reason.

The only way to prevent this rational decision-making is to provide civil protection to the utility, to ensure that they will not suffer crushing losses whenever a fire breaks out. If these lawsuits were prevented, PG&E would be happy to turn on the power.


12 posted on 11/26/2019 6:40:43 AM PST by Haiku Guy (If you have a right / To the service I provide / I must be your slave)
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To: karpov

Amazing that Cali is the only state that has this problem.

Hmmm....Why is that?


13 posted on 11/26/2019 6:41:45 AM PST by EnglishOnly (eWFight all out to win OR get out now. .)
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To: Oldexpat

It would cost $250 Billion to bury the lines.


14 posted on 11/26/2019 6:44:32 AM PST by Haiku Guy (If you have a right / To the service I provide / I must be your slave)
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To: karpov

If you think things are bad now, just wait when the State of CA owns and operates the electiric grid.


15 posted on 11/26/2019 6:50:47 AM PST by outpostinmass2
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To: Haiku Guy
"PG&E knows it will be sued for any fire that occurs in an area where they are supplying power. They are the designated “deep pockets” for any wildfire loss in the State of California."

"Fires are going to start, whether PG&E is supplying power or not. The only way they can avoid liability is to make sure their power is turned off during conditions where fires are likely to start, for any reason."

I have been posting this reality when PG&E first turned off the power in October!

The reality: "PG&E will not be sued for causing fires if there is no electricity in its power lines to cause fires!"

16 posted on 11/26/2019 6:56:18 AM PST by Grampa Dave (Nanzi Pelosi Thinks/Says Americans Are Too STUPID To Elect Their President! Time for #DCEXIT!)
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To: Haiku Guy

Exactly.


17 posted on 11/26/2019 7:06:59 AM PST by libertylover (Democrats hated Lincoln too.)
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To: karpov

i got a better idea.. trim and cut trees, brush and deadfall within 100 feet of a power line.... simple, but illegal in california


18 posted on 11/26/2019 7:15:18 AM PST by joe fonebone (Communists Need To Be Eliminated)
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To: Haiku Guy
It would cost $250 Billion to bury the lines.

I was wondering about that. Underground lines are far more expensive than typical unsheathed high tension lines.

19 posted on 11/26/2019 8:26:19 AM PST by Jeff Chandler (BLACK LIVES MAGA)
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To: eyeamok
Cash out now while you still can, and make damn sure all of your facilities are razed.

You sure it's a good idea to bulldoze the house just prior to sale?

20 posted on 11/26/2019 8:56:29 AM PST by Windflier (Torches and pitchforks ripen on the vine. Left too long, they become black rifles.)
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