It’s fall in California and with it comes changing weather and winds. For millions of Californians, it also heralds a stark new reality: no electrical power to go with seasonal fires. This is the reality of California in 2019 and, also, what I have called the “failed social justice state.”
We all know California is called the Golden State. For decades upon decades, to many around the world, it was a land of great beauty and opportunity. "Go West" meant reaching its beautiful shores or pursuing a fortune from its bountiful resources and people.
Now the streets of its major cities feature the homeless, litter and used drug needles to go along with high taxes and uncertain water supplies.
Millions of people have left California for opportunity in other states along with countless businesses. Meanwhile, California and its cities arrogantly pass laws refusing to do business with other states that fail to live up to the liberal social justice ideals of California politicians.
All of which brings us to PG&E - the financially and legally bankrupt gas and electric provider for most of California. Founded in 1905, PG&E rose to unprecedented heights for a utility providing service to over 16 million people - or over three million more than the total population of Pennsylvania let alone the 45 other states smaller than Pennsylvania.
Friday, for the second time in a month, PG&E preemptively turned off the power to customers around the state causing economic damage in the untold billions. The first time PG&E did this, earlier this month, Morgan Hill, an affluent San Francisco suburb, had a curfew that was imposed to deter crimes during the power outage.
All in all, PG&E’s drastic measures have resulted in billions lost – just in October alone.
If you don’t live in California you may think this is all irrelevant – but you’d be wrong.
As a monopoly, PG&E has no real incentive to please customers. Tens of millions of people have no choice but to get their electricity from PG&E and the regulators guarantee PG&E a rate of return. Absent market forces, PG&E is predictably poorly run.
Two decades ago, PG&E changed its business model and brought in a banker to run its business, change its operations and now, we know, its fortunes.
Shareholder return was emphasized and routine maintenance was deemphasized. Rather than diligence, a “Just in Time” maintenance regime was put in place resulting in deferred maintenance.
So much was deferred that PG&E recently had to hire an outside firm to conduct an audit of power lines and facilities to determine the true state of its affairs – a clear admission of its failed policies and lack of confidence in its electrical grid.
Second, for decades environmentalist groups have successfully fought the thinning of forests and other wooded areas in the name of saving animal species. The result has been to create tinderboxes around the state.
Third, always remember that the state of California gets almost no rain from April to November – year after year. By itself, these conditions create a “fire season” each fall at the same time that Mother Nature picks up her winds.
The final piece in this puzzle is that California is one of only two states in the country (Montana is the other) with something called inverse condemnation for utility companies. That law, “exposes California utilities to liabilities from wildfires regardless of their negligence, as long as their equipment is involved.”
All of those factors combined have resulted in recent fires that have saddled PG&E with over $30 billion dollars in potential liabilities. At this writing, a new fire, potentially started by the negligence of PG&E, could make that figure jump up again. In plain truth, there is simply no way for its ratepayers to make up those losses.
The worst wildfire caused by this bad forest management was the Camp Fire in Northern California in November 2018, which claimed 85 lives – making it the deadliest wildfire in California history and deadliest in the U.S. since 1918.
The Camp Fire destroyed almost 14,000 homes, more than 500 businesses and nearly 4,300 other buildings as it raged for over two weeks.
So, who is at fault for this deadly mess?
Well, following the Camp Fire, California legislators saw the deadly error of their ways and eased forest management rules to allow for the necessary thinning of forests.
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