A CRISIS OF UNDER-REGULATION:

As California finally takes control of the fires that have been burning for weeks, PG&E is--and will continue to be--in the hot seat. It seems likely that transmission equipment from the utility, which supplies power for roughly 40 percent of Californians, sparked the recent Kincade fire, a blaze that pushed over 180,000 people from their homes in and near Sonoma County, destroyed 374 structures, and burned almost 78,000 acres. As many as 16 fires burned across the state over the past several weeks, and at the same time PG&E was intermittently cutting power to millions of people--a practice the company's CEO predicts will continue for another decade. Gov. Gavin Newsom declared a state of emergency and hasn't been shy about calling out the company for it's mismanagement and incompetence. 

This has put PG&E, which filed for bankruptcy in January over its role in other recent wildfires, in the crosshairs of just about everyone--customers and legislators, as well as the governor--and state officials are looking desperately for a savior to rescue the crumbling grid and the flailing utility.

But right now, it's really difficult to foresee what the future holds for PG&E--and more broadly for energy across California. Newsom has hinted the government, if it's not satisfied with the pace of bankruptcy proceedings, could step in and try to take control of PG&E, but he also recently called on Warren Buffet's Berkshire Hathaway to make a bid for the company. (Berkshire Hathaway's energy subsidiary is deeply invested in utility companies and renewables in California and several other states.) The governor has also been open to the idea of municipalities taking over their own power management, which some of the cities themselves have echoed. At the same time, in ongoing bankruptcy proceedings, PG&E's shareholders are fighting its bondholders, who've formed an alliance with fire victims, for control.   [...]

Whoever ends up in charge of PG&E, it's important to remember that the utility giant didn't hit rock bottom on its own--and, accordingly, a better future system will almost certainly need more than new ownership. People have long criticized PG&E's uncomfortably close ties with former Gov. Jerry Brown's administration and the revolving door between the California Public Utilities Commission and the utilities it regulates. PG&E has spent over $31 million on lobbying in California since 2001, over $8 million of which was spent in 2018. "The regulatory model holds a fair amount of blame" for the current situation, Geesman says. But, "I don't think this is a problem where you can rationalize, 'Well, I'll just appoint better people.' You really need to focus more on changing that system rather than the individuals responsible for administering it."

"It's pretty easy to hypothesize from your office on Wall Street that you could just hire better managers and potentially slice and dice that $20 billion revenue stream. Wolves have an innate ability to sense protein."

Regulators have failed to hold PG&E accountable in many instances. For example, utilities can use funds from the PUC for certain needs like maintaining equipment, but once they have the money, "very rarely does the commission actually attach strings to that money," Wall Street Journal energy reporter Rebecca Smith explained on KALW's "Your Call." "I think this has allowed the company to do whatever it wanted." Neglecting to adequately spend on maintenance and equipment over time is one of the biggest criticisms leveled against PG&E. It's unclear if that kind of (or lack of) oversight would push another company to behave better. 

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