The real cause of the CA blackouts

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Wall Street Journal Editorial, 10-25-19

After again shutting power to hundreds of thousands this week, California’s utility PG&E disclosed Thursday that it had discovered a broken jumper cable by the ignition site of a wildfire blazing across Sonoma County. The company has warned of more blackouts this weekend and perhaps for the next decade as it refurbishes its aging grid.

Gov. Gavin Newsom is trying to deflect political blame. “It’s about dog-eat-dog capitalism meeting climate change. It’s about corporate greed meeting climate change. It’s about decades of mismanagement,” Mr. Newsom declared. But Democrats for years have treated PG&E as their de facto political subsidiary. The wildfires and blackouts are the direct result of their mismanagement.

The state Public Utilities Commission is in charge of enforcing state safety laws and regulations, which can carry penalties of up to $50,000 per violation per day. Yet PG&E received no safety fines related to its power-grid management over the last several years. The commission has instead focused on enforcing the Legislature’s climate mandates.

State law mandates that utilities obtain 33% of electric generation from renewables such as wind and solar by 2020 and 60% by 2030. Utilities must spend hundreds of millions of dollars each year to reduce the cost of green energy for low-income households. PG&E has prioritized political obeisance over safety.

In 2018 PG&E spent $509 million on electric discounts for low-income customers in addition to $125 million for no-cost weatherization and efficiency upgrades for disadvantaged communities. Utilities also receive allowances from the state’s cap-and-trade program—$7.5 billion since 2012—to pay for other “ratepayer benefits” that reduce emissions.

For instance, the Legislature in 2015 mandated that utilities spend $100 million annually on solar systems in low-income communities. This is on top of the $2.2 billion in customer rebates for rooftop solar installations, which utilities charged to ratepayers between 2007 and 2016. Under the state’s net-metering program, solar customers also get a break on their bills.

Last year PG&E invested more than $150 million in battery storage and “sustainable” technologies, which was paid for by a special charge on ratepayers. PG&E is also spending $130 million over three years to install 7,500 electric-car charging stations and offers drivers a $800 “clean fuel” rebate.

All of this has been part of a Democratic political strategy to use PG&E to advance their climate agenda without raising taxes. But Californians have instead paid through higher electric rates—PG&E rates are twice as high as in Oregon and Washington—while utilities have had to redirect capital and ratepayer revenue away from fortifying the grid and tree-trimming.

Is it any wonder that electric equipment is malfunctioning? PG&E filed for bankruptcy in January amid tens of billions in liabilities for dozens of wildfires linked to its equipment. The utility says it doesn’t know if the failed jumper cable caused the Sonoma fire and that it had done repairs and inspections on the site.

But PG&E customers are rightly furious. They’ve suffered inconvenience and financial losses due to power outages that start with little warning and may go on for days. Who can run a business or household this way? Sorry, kids, you’re going to have to do your homework by candlelight.

Gov. Newsom is demanding that PG&E pay rebates to customers affected by the blackouts. The utility has declined, citing its bankruptcy debts, though it may have to follow the Governor’s orders if investors want to avoid getting wiped out. San Francisco has proposed buying some utility assets, and San Jose wants to turn it into a customer-owned cooperative.

Democrats are accusing PG&E of putting profits over safety, but the utilities commission approves its return on equity based on what’s needed to attract private investment. Utility shareholders are typically older folks who rely on dividends for a reliable stream of income—not billionaire hedge funds.

PG&E has prioritized serving its political overlords above all else. California’s return to the dark ages is a direct result of the Democratic political monopoly in Sacramento.