The New Republic
Northern California’s investor-owned electric utility PG&E pleaded guilty to 84 counts of involuntary manslaughter in June over its role in 2018’s deadly Camp Fire. Its billions of dollars worth of liability from that fire also landed the company in bankruptcy court. It emerged from a 17-month process at the end of June with a restructuring agreement, allowing it to access a $21 million pool of public funds. That agreement, in turn, was contingent on PG&E helping to compensate some 70,000 wildfire victims for $13.5 billion in losses. Half of that, it was agreed, PG&E could pay by offering these victims—people that lost homes and in some cases loved ones thanks (legally) to PG&E’s negligence—non-voting PG&E stock, the value of which has dropped more than 80 percent since the Camp Fire happened.
This is a summer of utility company scandals. As the PG&E settlement draws ire, wildfires are again raging across southern California, with widespread energy shutoffs ahead further north as part of PG&E’s plan to reduce spark risk during the dry season. Ohio utility company FirstEnergy has been ensnared in a $61 million bribery scandal to prop up the state’s emissions-heavy coal industry. And while investor-owned utilities in Democrat-controlled states have frequently enjoyed better press, having shifted to cleaner fuel as a result of state law, environmental justice campaigners in New York and California this summer say companies’ failure to reckon with climate change and indifference to customer needs in a pandemic-induced recession is putting lives at risk, with Democratic governors offering little help. It’s all raising a question: Who gets to make life or death decisions when it comes to essential services being sold for a profit?
Mari Rose Taruc, coordinator for the Bay Area-based group Reclaim Our Power campaign, tracked the PG&E bankruptcy proceedings closely. Reclaim Our Power, like other climate and environmental justice and ratepayer advocacy groups in PG&E’s service territory, opposed the deal that eventually passed. Governor Gavin Newsom “totally caved to PG&E,” Taruc told me. “He just did not have the willpower. He bowed to PG&E and Wall Street [PG&E’s creditors], and the result was a bad deal for thousands of survivors.” Should another wildfire sparked by PG&E burn down homes or should PG&E fail to meet safety requirements, the agreement allows for the California Public Utilities Commission to revoke its charter to operate. “Why wait for lives to be lost and damages to be done to actually change PG&E now?” Taruc asked. One of the more novel provisions of the PG&E bankruptcy agreement is that—should it fail to meet the terms of the agreement—its assets could be transferred to a new non-profit and state-created entity called Golden State Energy.
Investor-owned utilities, or IOUs, around the country are regulated by public utility commissions—appointed or elected statewide bodies that define what rates they can charge and how much profit they can make. The structure was part of a Progressive Era grand bargain: In exchange for being granted a monopoly over a defined service area, IOUs—whose ballooning empires were coming under increasing scrutiny—would be tightly regulated. In the more than a century since, utilities can essentially treat buying off regulators and lawmakers as an operating expense. Often, particularly for utilities with big investments in coal, that’s looked like lobbying against clean energy mandates. IOUs’ close ties with regulators and policymakers can also make them less willing to intervene on behalf of ratepayers—also known as their customers.
Like New York, California has instituted a shut-off moratorium in response to the pandemic. But in both places, those who’ve been unable to pay face the prospect of massive debt burdens in the future. “The utility issue looks just like the eviction issue,” said Jessica Tovar of the Local Clean Energy Alliance, “where we don’t know if folks who haven’t been able to keep are going to have to backpay.” Layered on top of this is the ever-present threat of wildfires, which Tovar and other advocates say PG&E has done little to prepare for. And though power can’t be cut off for nonpayment, the utility is still engaging in planned shutdowns to lessen wildfire risk.
Public ownership of electricity providers doesn’t guarantee good behavior, of course. So those looking to switch off of IOUs are exploring a range of more democratically controlled energy systems that aren’t beholden to shareholders and creditors. Tovar and the Local Clean Energy Alliance have been supportive of expanding the model of an already existing program known as Community Choice Aggregation, in which ratepayers in a certain area can effectively bargain collectively for better rates and sourcing, though electrons still flow through lines owned and operated by the area’s monopoly utility. In particular, they hope for the widespread adoption of renewables-powered microgrids, which can stay online even when transmission lines are downed by wildfires or other disruptions.