Back-up power

[Pat Conlon]

In Calif we have 2 different types of utility companies, Investor Owned Utilities and Public Utilities.

There are 4 Investor Owned Utilities in Calif. 1) Pacific Gas & Electric (PG&E) 2) San Diego Gas & Electric (SDG&E) 3) Southern California Edison (SCE) and 4) Southern California Gas Company (SCG).

All the other utilities in Calif. are considered "public utilities" which by their charter are non-profit and owned by the public. The rates they set are only supposed to break even, with allowances for maintaining reserves. The Board of Directors of these companies are publicly elected.

Investor Owned Utilities have common stock that is traded daily on Wall St. and as such, they are owned by stock holders and they must make a profit to keep those stock holders happy.  The more profit they make, the value of the stock shares increase. Happy Happy.
The electrical rates from PG&E and SCE are the highest in the nation. They are a monopoly. There is no competition (other than solar and wind) They own the land and equipment for the transmission and distribution systems, all the Right of Way, easements and in many cases they also own the generation facilities.
These Investor Owned Utilities play dirty pool. They will do anything they can to get more money from the customers.

Their mission is simple...to make as much money as possible and dodge whatever liability they can.

If it means deferring maintenance, so be it.
If it means finding a way to unreasonably discount the value of excess PV power sent into their grid, so they can turn around and sell it to the next door neighbor at their market rates, so be it. Happy Happy.

PG&E and SCE are on the hook for some very serious cash with recent liability for forest fires. Do you think the stock investors are going to take a hit? No, stock holders are quirky and they will sell off the stock when the stock value drops. When enough panicked stock holders sell, the company folds. So, to settle these lawsuits, where will the cash come from? Take a guess.
SCE has 2 nuclear reactors in San Onofre they have shut down. For over 40 years (since 1968) they've made very cheap electricity at less than $.01 per kWh and sold it to their customers at $0.13-$0.32 kWh. Decades they made an obscene profit but now it comes time to de-commission the nuclear reactors, so who is on the hook for those costs? Hint: It's not the stock holders. From the 1st day of the reactor commissioning in 1968 SCE has stored every spent fuel rod in a giant pool at San Onofre where they still sit today.
Who is on the hook for those costs? Take a guess.

Other than going off grid, customers are at the mercy of these crooks and just like the banks, they are considered by the politicians as too big to fail. They hold a significant influence over state government.
The oversight of these Investor Owned Utilities comes from a governor appointed board called the California Public Utilities Commission which is ironic because the 4 utilities they oversee are not Public Utilities at all.

[Tuned forks]

Good explanation of California's system Pat.

Joe

[Pat Conlon]

Thanks Joe, I wish I could say that it's getting better....but....

[Motofun]

Well, it is California after all. (you know I'm teasing, right?)
You described a pretty messed up situation, what alternative would you prefer?
By the way, one need only look at SMUD to find a public utility that is seriously flawed too.  Elected officials to run a technical operation?

[Pat Conlon]

You described a pretty messed up situation, what alternative would you prefer?

Goal: Take the excessive profit gouging and corporate greed out of the utility business.
Fair Competition won't work. No one wants a second set of utility lines adjacent to their property.
The only way I can think of is to convert the Investor Owned Utility over to a not for profit Public Utility.
Easier said than done.
That would require the state government to invoke eminent domain and billions of dollars of public money payment to the owners (shareholders) of these companies. The land, facilities and equipment is currently worth a lot of money. When the government takes private property for the public good they are required to pay "fair market value" when it condemns property.
A sneakier way would be to tank the stock value. That's the Achilles heel of these companies. Set up an environment where the stock holders panic. Let the companies go into receivership then buy the assets for pennies on the dollar, then turn them into a Public Utility. Hostile takeovers like this happens all the time on Wall St, but I'm not aware a governmental entity ever doing business this way.

Or....the government can promote a state wide PV program allowing homeowners to bypass the corporate greed all together. Allow the payment of incentives to homeowners to help offset the cost. Allow the property owner certain tax breaks to help pay for the system..... things like that.
Batteries are coming. Available now but more widespread within 1 or 2 years. If the Utilities want to change the rules on how the customer pays for their electricity, set up a governmental program that helps the homeowner offset the cost of the batteries.
Between high energy efficiency appliances, lighting and insulation, coupled with a modest PV system and a 14 or 28kWh battery system, along with some behavior changes, most homes can go totally off grid....ok, just to be safe, add a small natural gas generator or fuel cell in the mix as a safety back up....then the homeowner can finally tell Wall St. to go get fucked.

Where will the money for these programs ^^ come from? From shareholders.
Require the Investor Owned Utilities to set aside a small fraction of the profit they make to fund these programs. Make their annual stock dividend checks to their shareholders fractionally smaller.

As you may discern, I am not a fan (or shareholder) of SCE or PG&E.

[giantkiller]

Or at the very least. Stop them from screwing over the ones that are making the investment in solar. Or any other renewable energy.

[Motofun]

So, use tax dollars to cut your electric bill?  I'm sure there are some Public Utilities that are well run...I know of many that are not.  The profit motive coupled with appropriate regulations (I can't believe I just said that) is a strong incentive for a well run organization.  For my part I have given up on government run organizations doing anything efficiently.  Recognize the the flip side of the profit coin is the risk.  This doesn't exist for government organizations....they have no risk of loss.  When the high speed train to no where "comes off the track" what does government do?  Time and time again spend even more!  A profit/risk is strong incentive for good decision making.  Less government not more...at least for me.

[Pat Conlon]

Recognize the the flip side of the profit coin is the risk.....

That's just it.....I don't know of any risk the Investor Owned Utility faces.
They already have a monopoly, a captive market without competition and as such, a guaranteed source of revenue.
They already transfer any and all liabilities to their customers, never to their shareholders (God forbid)

In general, I favor private industry efficiencies over a government run program, with exceptions.
When there is fair competition to hold the free market accountable, I'm good to go, when there is not, I have a problem.
Let's talk perscription drug prices in the USA for example.
A $7 vial of insulin costing your insurance company $700.

There are times when it is entirely appropriate, even prudent for government to regulate business.
Business monopolies driven by profit and the bottom line, will go bonkers if left alone.
Not their fault, it's just their nature.

[Motofun]

Didn't PG&E file for bankruptcy?  I doubt the shareholders are profiting from that.  Sure they probably own a lot of  land and equipment but it doesn't cover the damages as I am told.  What happens next?  Sell everything off with the shareholders last in line for anything left?  Reorganize and try to recover...note this is the bankruptcy law controlled by an elected judge.  If it were a Public Utility how would things be any different except there would be no one at fault and the taxpayers (ie the default owners) left holding the bag.  Someone always owns the risk.

[Bill_Rockoff]

Utilities are not a good use case for free-market capitalism. A water department can be a lot more profitable if they cut back on maintenance and water treatment, but does that mean that the guy who changed water sources in Flint MI did the exact right thing since it cut his costs in the short term? Socialism sucks at some things that free-market capitalism does really well - but there are some things that socialism just works better at, where free-market capitalism would be the exact wrong tool for that job. Nobody

I promise you, you do NOT want to give me a crack at making a for-profit fire department. I mean, *I* am starting to like this idea, as I get a little more start-up capital appearing on the horizon. There's definitely enough for me to buy out a municipal fire department, re-hire the recently-laid-off firemen, advertise for some subscribers, and pay an arson fine or two. But I don't think the residents in my subscription area are gonna like it much once the low, low introductory subscription rate expires.

Jack, you aren't seriously going to argue that your nuclear plant would have worked better without NRC and OSHA oversight, are you? I mean, as a fan of unfettered business operations like the rest of the owner class, I myself would have appreciated the stronger financial performance your plant could have had if they hadn't bothered buying dosimeters, reading dosimeters, having you fill out Form 4s, managing you and your colleagues to limit all of you to 5 R each year, etc. And maybe you yourself would have appreciated the overtime you could have gotten if we didn't bother monitoring radiation exposure.

But as an FJ rally attendee, I kind of like the fact that you didn't die of leukemia ten years ago, even if it means you're paying $0.13/kWh rather than having Nancy pay $0.11/kWh.

[Pat Conlon]

Didn't PG&E file for bankruptcy?  I doubt the shareholders are profiting from that....

Yes, they did file Chapter 11 reorganization, protection from creditors.
Nothing new, they did this before back in 2001 and as of today, 18 years later, the customers are still paying off the bond costs on their electrical bill (see on bill: DWR Bond Charge)
Will the customer's power bill increase?  Yes, just like the last time (2001)
Will the stockholders lose their dividend checks? Maybe, remains to be seen, it's up to the courts.
Will the stockholders be wiped out? No, not if they sell (which they are) ....PG&E stock dropped from $70 a share in 2017 to $10.24 per share today. This is even before the fire liability settlements are financed (bond sales).

Here's a new law SB901 passed a year ago in California the passes the fire liability costs on to the ratepayers (see #14 and Sec.451) This should help the stock stabilize.
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB901

$14B and someone's gonna pay, someone's on the hook, the rats have already left the ship, care to guess who is left? https://finance.yahoo.com/news/pg-e-seeks-more-14-090101500.html

[Pat Conlon]

I promise you, you do NOT want to give me a crack at making a for-profit fire department. I mean, *I* am starting to like this idea.........But I don't think the residents in my subscription area are gonna like it much once the low, low introductory subscription rate expires.

Funny thing is Bill, that's how the whole assessment district concept started.
Ben Franklin's idea for funding fire protection in Philadelphia.
Something about the threat of fire loosens the purse strings of even the stingiest.

[Troyskie]

he he he