Please ensure Javascript is enabled for purposes of website accessibility
A Better Way: Let’s Give PG&E's Customers the Reins
gvw_calmatters
By CalMatters
Published 5 years ago on
November 22, 2019

Share

“I think it’s wrong that only one company makes the game ‘Monopoly.’ ”— Steven Wright
The light at the end of the utilities’ tunnel has been shut off for the hundreds of thousands of California residents who have recently lost their power, been evacuated from their homes, or worse.
The current dystopia of alternating wildfires and blackouts follows a decade in which Pacific Gas & Electric distributed $7 billion to shareholders but chronically underinvested in maintenance and safety.


Sam Liccardo
Special to CALmatters

Opinion
It follows a year in which the company’s executives proposed $11 million in bonuses for themselves, while in bankruptcy, with tens of billions of debts to wildfire victims.
In bankruptcy court, two hedge funds cast lots over the company’s carcass, with one set of investors proposing to issue junk bonds to pay debts, and the other pledging to pay off wildfire victims with—wait for it—PG&E’s worthless stock.
If history is any guide, we’ll see PG&E emerge from bankruptcy burdened with multi-billion dollar obligations for infrastructure upgrades, and an ownership group seeking to deliver short-term “shareholder value” at the expense of long-term investment. State taxpayers, inevitably, will be left with the tab.
There is a better way.

We Do Not Advocate for Government Ownership of PG&E

Mayors and other local leaders throughout California have banded together to publicly urge exploration of an alternative model: a customer-owned utility.
To be clear, we do not advocate for government ownership of PG&E, which would require a buyout costing taxpayers tens of billions of dollars for poorly maintained infrastructure, before a single dollar would be spent improving it.
Rather than having the government manage this multi-billion dollar enterprise, the company should be run like other customer-owned businesses—such as credit unions, or mutual insurance corporations—with management responsive to markets, and responsible to customers.
It’s hardly a novel concept. More than 900 utility “cooperatives”—including a couple with billions in revenues—currently serve 19 million customers in the U.S..

Two reasons motivate our efforts: 

  • First, we need a PG&E that aligns its financial interest with the public interest.  A corporate board representing customers—rather than New York hedge funds or global institutional shareholders—will best focus the company’s resources on providing safe and reliable service to California ratepayers. Restoring the public trust in PG&E requires bringing customers into the boardroom.
  • Second, regardless of who or what owns PG&E when it emerges from bankruptcy, a tall financial mountain remains. All of the solutions to what ails our electricity distribution system— such as building microgrids, upgrading transmission and distribution lines, and improving vegetation maintenance—will require tens of billions of dollars of investment. We need a utility company with ready access to capital markets to make these big bets.

A customer-owned cooperative would encounter sharply lower capital costs than PG&E does today, because it would not need to pay dividends to shareholders, or federal taxes to Uncle Sam. By saving billions in interest payments, a customer-owned company would devote more of its resources to improving the company’s infrastructure and service.

The Public Utilities Commission Must Embrace Its Role as Guardian

As local leaders representing five million residents served by PG&E, we’re urging the California Public Utilities Commission—which has the authority to approve or reject whatever entity emerges from the U.S. Bankruptcy Court—to broaden the scope of its review.

No one should pretend that the path ahead is an easy one.  A newly-branded customer-owned utility won’t save us from wildfires or power-shut offs next month, or even next year.  Microgrids will take billions to build many years to install.  
Rather than simply rubber-stamping the outcome of the bankruptcy court proceedings, the Public Utilities Commission must embrace its role as guardian of the public interest.  It must consider whether a customer-owned model can better deliver results and restore public trust than can a hedge fund looking to rationalize its purchase of stock at four times its current market value.
When asked about our proposal, a PG&E spokesperson remarkably told the Wall Street Journal that the company is “not for sale.”  Of course, PG&E is for sale. That’s the irritating little thing about bankruptcy. The question isn’t whether the company gets reorganized, but how, and whether we’ll use this crisis or waste it.
No one should pretend that the path ahead is an easy one.  A newly-branded customer-owned utility won’t save us from wildfires or power-shut offs next month, or even next year.  Microgrids will take billions to build many years to install.
Century-old transmission poles will take time to replace. Public trust may take longer to restore.  A new model of ownership will better ensure a single-minded focus on improving service, safety, and reliability—and that’s a future worth investing in.
About the Author 
Sam Liccardo is mayor of San Jose, America’s 10th largest city, mayoremail@sanjoseca.gov. He wrote this commentary for CalMatters, a public interest journalism venture committed to explaining how California’s Capitol works and why it matters.
[activecampaign form=31]

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

DON'T MISS

Fresno City Council Finally Passes a Tough Smoke Shop Ordinance

DON'T MISS

Fresno Unified Trustee Wittrup Says District Had Stronger Candidates Than Misty Her

DON'T MISS

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

DON'T MISS

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

DON'T MISS

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

DON'T MISS

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

DON'T MISS

Candi Is the Dandy to Add a Little Sweetness to Your Life

DON'T MISS

How Trump Tariffs Could Upend California Farms, Wine Businesses, and Ports

DON'T MISS

Tulare Man Sentenced to State Prison for DUI Crash That Injured Two Women

UP NEXT

Fresno City Council Finally Passes a Tough Smoke Shop Ordinance

UP NEXT

Fresno Unified Trustee Wittrup Says District Had Stronger Candidates Than Misty Her

UP NEXT

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

UP NEXT

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

UP NEXT

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

UP NEXT

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

UP NEXT

Candi Is the Dandy to Add a Little Sweetness to Your Life

UP NEXT

How Trump Tariffs Could Upend California Farms, Wine Businesses, and Ports

UP NEXT

Tulare Man Sentenced to State Prison for DUI Crash That Injured Two Women

UP NEXT

Judge Partly Blocks Trump Order Seeking to Overhaul US Elections

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

10 hours ago

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

10 hours ago

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

10 hours ago

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

11 hours ago

Candi Is the Dandy to Add a Little Sweetness to Your Life

11 hours ago

How Trump Tariffs Could Upend California Farms, Wine Businesses, and Ports

11 hours ago

Tulare Man Sentenced to State Prison for DUI Crash That Injured Two Women

12 hours ago

Judge Partly Blocks Trump Order Seeking to Overhaul US Elections

13 hours ago

Two From Search Group That Uncovered Mexico’s ‘Ranch of Horror’ Killed

13 hours ago

US Warns States They Could Lose Transportation Funding Over Immigration, DEI Policies

13 hours ago

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

SAN FRANCISCO — Mike Yastrzemski and Matt Chapman homered as the San Francisco Giants rallied to beat the Milwaukee Brewers 6-5 on Thursday ...

7 hours ago

7 hours ago

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

8 hours ago

Fresno City Council Finally Passes a Tough Smoke Shop Ordinance

9 hours ago

Fresno Unified Trustee Wittrup Says District Had Stronger Candidates Than Misty Her

President Donald Trump delivers remarks during an 'Unleashing American Energy' event at the Department of Energy in Washington, U.S., June 29, 2017. (REUTERS File)
10 hours ago

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

10 hours ago

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

Chickens sit at a poultry farm. March 12, 2025. (REUTERS/Diego Vara/File Photo)
10 hours ago

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

11 hours ago

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

Candi, GV Wire's Adoptable Cat of the Week
11 hours ago

Candi Is the Dandy to Add a Little Sweetness to Your Life

Help continue the work that gets you the news that matters most.

Search

Send this to a friend