PG&E-friendly wildfire bill being prepared by lawmakers in wake of lethal fires
mercurynews.com
mercurynews.com
In the end, PG+E is regulated so heavily that any costs they pay will basically just be passed on to consumers. The solution to the increased fire risk is not “blame PG+E”.
http://home.cerge-ei.cz/ortmann/UpcesCourse/Coase%20-%20The%...
Basically Coase says that it's not necessarily the most economically efficient to blame the railroad that created the sparks, and that it depends on other factors (in the super-simple formulation that people sometimes attribute to Coase, this could include who could most cheaply act to mitigate the fires).
I think Coase would agree with you that we can't automatically assume that blaming PG&E and making PG&E pay for all the damages will lead to the most efficient outcomes for California as a whole in the future.
Other general liability insurance is now priced for damages that cannot be assigned or recovered. But "no fault fire insurance" would shift cost from the government-backed-utility-rate-pool to private insurers.
It's hard to imagine that such a shift would be more efficient, in part because PG&E is in the best position to assess its own risk -- and buy its own insurance and reinsurance.
Surely, somewhere in the utility, someone bought a SwissRe or Loyds policy against freak catastrophic loss.
It's hard to imagine that such a shift would
be more efficient
If the intervention you want to incentivise is replacing wooden roofs and removing fuel near the house, raising insurance bills for people who don't do that could be one way of doing it.
Of course, there's also a case for incentivising not starting the fire in the first place.
The solution to this fire is absolutely to blame pg and e and its custoners (yes this includes me). This is the logical conclusion. The only thing preventing us from doing this is a refusal to count ourselves complicit in this fire.
The solution furthermore is to legislate to remove the barriers to competition that California has set up. Even though I try to do the right thing by buying my electricity from something other than pg and e, I am -- by government sanctioned monopoly -- forced to pay of and e for 'distribution'. I put this in quotes because I am not charged this fee if I buy direct from pg and e. The state allows this non competitive monopoly. When I confronted my congressman, his response to why the state allows this is that the ' pg and e lobby is strong'
If the state cannot preserve a competitive market for energy, then the state needs to seize energy production. Monopoly is not capitalism and it is not the free market and it is not freedom. A state run solution is very non ideal (I say this as a libertarian), but it is the best among all others.
As it is right now, people in England are able to buy shares in my utility and are more incentivized to cut costs and increase profit even to the point of causing harm that will never affect them.
While I think you’re generally on point, this misses the mark a bit. We don’t want more transmission lines running in CA, right? We don’t want lots of little companies increasing the risk of fire by managing lines independently and the one that’s losing then doesn’t have the means to maintain those lines.
We might want competition at the generation point, but the transmission lines should be a monopoly. What needs to be fixed on the transmission is that there should not be a profit in maintaining them, bc the profit comes from lack of maintenance. The last three disasters caused by PG&E, can basically be boiled down to a maintenance problem, or lack of.
All the transmission lines and maintenance should be transferred to the state, and the profit motive, by not maintaining the infrastructure properly, be removed.
Again, competition in power generation (and storage) is good, competition in transmission is bad.
What your describing sounds fantastic and is politically expeditious because there is less risk in backing the prevailing methodology, but it is not improvement.
Competition in transmission is good, because alternatives like alternative energy would completely displace these systems and technology advancements would be available and legal - unlike the current insanity.
You know how you can’t put in an oversized solar system and sell power back to the grid, even if you can afford to? Did you notice that the grid is super inefficient because it’s got a limited number of highly centralized generation sources? No? Well that’s the consequence of ownership of the transmission lines. If you own the last mile you own the network. And if you also own the politicians who can protect your last mile interests, why would you invest in change?
I agree that there are advancements in transmission needed. All of your points are correct, but I disagree that the risks of the free market are the way to get there.
I just drove from SF to LA to let my kids have some some fresh air (ironic, right?). It took us 4 hours, all the way to the grapevine (just past Bakersfield) to not see the smoke, to have more than a few miles of visibility. The cost of the risks from an improperly maintained grid would be horrendous.
I’m not an electrical engineer, and my knowledge of how the grid operates is limited, I’ll admit, I’m just incapable of seeing a free market solution here, where failure can result in a catastrophe like we’re experiencing here now. As I understand the interconnected nature of the grid, it needs centralized management to control the transmission system. I luckily have the means to get my family to safety (we came back yesterday as the air is finally starting to clear), but that’s not an option for many people. I don’t believe the free market you speak of could ever exist, and I don’t think it’s worth watching things deteriorate to find out.
A perfectly reasonable argument.
If a certain market needs to be a monopoly, then it ought to be state controlled, like the FCC's monopoly on air waves. That is the only way to ensure free-market capitalism.
The purpose of the market is to create an efficient society. Indeed, it is the best vehicle to do so. However, a market means that there is choice.
In the absence of a market, the next best alternative is democratic control, best exercised via government.
> We don’t want more transmission lines running in CA, right?
Not in the air. Luckily, you can put them under ground.
> The last three disasters caused by PG&E,
This is willful ignorance. I'd be happy to look over companies that simply had maintenance issues. However, PG&E has proven to not only be negligent, but malicious. They've poisoned people knowingly, without disclosure. They've covered up negligence over the explosions of city blocks.
I am not anti-business. Despite its many issues, Southern California edison is a much better company.
PG&E though is -- quite obviously -- quite a bit more nefarious than most utilities.
> competition in transmission is bad.
No it's not. Competition would always be good. Your argument was that competition in transmission was not possible.
Wildfires can destroy large swaths of land, and they are certain to occur every year, but not at every susceptible house. My mother has lived in a house in a high fire risk area of Northern California since the early 1980s, but her particular neighborhood hasn't burnt. Neither has the houses of my father-in-law, grandma-in-law, and two brothers, which are all in similarly high risk areas of Nor-Cal. Likewise, in March, nobody would have predicted that Paradise, CA would all but be destroyed, nor would they have predicted the damage in Santa Rosa the previous March. But we could still have concluded that those areas are at risk.
An insurance company can assign a value to your property (in fact, they probably already have), can estimate the probability of loss due to forrest fire, compute the expected value of payouts, add overhead, add profit, and sell you a policy. Damages are correlated on a local level, but not on a statewide level - that there was a fire in Paradise, CA doesn't increase the odds that Quincy or Fort Bragg will experience a fire too this year.
With fire damages in the tens billions per year but maybe only millions of insured to spread around the cost, people might not like the resulting premiums, but they can choose to lower their risks (and hence insurance premiums) or roll the dice.
[1]: And in managing the large pile of money you need to have on hand in case you end up with more unlucky customers than expected.
All insurers have to do is to pool risk and diversify across geography. No way only California has homes near forests? There’s also reinsurers to pool even more risk.
How is it better to pool risks to the group rather than the individual paying a for that risk? The US already has a huge problem with coastal real estate and federal insurance of coastal developments. Why would we introduce that at scale?
Why should the collective pay for individual choices? It’s not like the society got together and made people move into fire prone areas.
I am not trying to draw parallels to health insurance which has many ethical questions that drive deep consideration, but I don’t understand why asking for the group to insure individual risk that is fundamentally founded in individual choice is in any way necessarily better?
How is it better to pool risks to the group rather
than the individual paying a for that risk?
(1) If the state pays for wildfire damage, the 10000 people will pay $100 each whether they're in a fire-prone area or not.
(2) With home insurance including wildfire insurance, insurers set individual premiums based on their best risk models, and the 1000 people in fire-prone areas will pay $1000 each, whether their home burns down or not.
(3). If there is neither (1) nor (2), the 10 people whose houses were destroyed will pay $100,000 each.
Some people would say that (2) is the morally correct level of cost distribution, as (1) unfairly subsidises risky behaviour, while (3) bankrupts disaster victims at random.
Home insurance includes wildfires, but let's limit ourselves to wildfire-specific insurance, which was the issue at hand.
Not all insurers are nation-wide.
How do the insurance companies afford to insure places like in Florida and the lower East Coast, which seem to keep getting hammered with hurricanes year after year, getting worse year after year? And... can they keep up this pace? Apparently in 2017, fires "only" cost insurance companies ~$14B, out of ~$132B paid out. The majority was caused by Hurricanes Harvey, Irma, and Maria. 2017 was the 2nd costliest year on record in terms of natural disasters (have to wait for '18 numbers released in Jan). So why is fire insurance untenable while hurricane ins. isn't?
https://www.reuters.com/article/us-global-insurance-aon/2017...
And, as I said above, wildfire is covered in home insurance policies. However, the argument was about wildfire specific insurance. That is untenable since it would cause large insurance runs every year.
Of course some customers might not like having to pay market rates for fire insurance.
That's why for catastrophe risks like wildfires you have reinsurers talking that risk - e.g. catastrophe reinsurance market in Bermuda.
Funding was cut last year and boom we have back to back years of fires.
The fires in California are not caused due to bad budget cuts over the past few years, but rather the mistaken environmentalist policy of not allowing controlled burns for the last 100 years and extinguishing natural fires out of needless heroics to save species that are now in ever more need of saving: https://www.theatlantic.com/science/archive/2018/11/californ...
It's property owners who are opposed to prescribed burns, because there is a risk of prescribed burns getting out of control. From wikipedia: "In 1978, the Forest Service abandoned the 10:00 am policy in favor of a new policy that encouraged the use of wildland fire by prescription.[1][13]
Three events between 1978 and 1988 precipitated a major fire use policy review in 1989: the Ouzel fire in Rocky Mountain National Park, the Yellowstone fires of 1988 in and around Yellowstone National Park, and the Canyon Creek fire in the Bob Marshall Wilderness on the Lewis and Clark National Forest. In all three cases, monitored fires burned until they threatened developed areas."
those events caused a backlash against controlled burns, because obviously it's hard to sell the public that some destruction of property now is better than more of it later.
In another case construction crews finding were found liable for a nearby mink farm's lost of income when the sounds freaked out the animals and they ruined their coats, because blowing stuff up, even done legally, is considered a high liability task.
At least those are my recollections of the decisions, it has been a while and I didn't study them myself.
With the mink case, the issue wasn't that blowing stuff up is a high-liability task. The issue was that it was a nuisance. Nuisance activities can be legal, and even first-in-time (like say, cow farms predating housing developments). Very nutshell version, but basically the issue with nuisance law is that the activity's effects transcend the boundaries of one's property and so the doer can be held liable for those effects.
I saw a picture of Paradise after it burned. It was remarkable, the houses were completely gone but the trees were still standing all around. There's something wrong with how we build and maintain our structures in fire prone areas.
Wildfires are already covered by property re/insurance. The problem is that risk is badly priced, as modeling for wildfires is currently very underdeveloped compared to hurricanes or earthquakes. There has been no wildfire event of a similar magnitude of property losses in recent history.
Shameless plug: At tensorflight we are actually starting some prototyping of wildfire risk models for the insurance industry based on satellite imagery.
As far as who is at fault: a fire needs a fuel, oxygen and a spark. It can be argued that a spark is going to happen somewhere, and mitigating it is more about not having the fuel so that it can chain and spread.
PG&E is insured.
That assumes they survive. Their market cap is $12b and some cost estimates are nearing that, but their own insurance will cover a lot of the costs... for now.
Endlessly increasing rates works when consumers have no alternatives. But this is in California, solar just gets more and more viable.
That's a chick-little, strawman and blame-the-victim argument. The issues are:
1. PGE likely started the fire. They should be held responsible for this specific incident, not passing the buck to ratepayers or anyone else.
2. PGE is corrupting and coopting liability when it needs to pay the penalties for its actions, not pass the buck. This is separate from 1. because it indicates a greater decay of liability and they're insulating themselves to gradually become an untouchable mafia.
3. In order to get 2., removing SIG, PAC and large private monies, and all those who benefit from them, from politics is imperative.
4. Paradise is a tiny town that doesn't do a very good job with code enforcement. My mom had to mobilize the neighbors to get an abandoned propery's owner to mow their 7 ft tall, dried weeds and remove fire other hazards like an abandoned house with a tree crashed through it, but then the institutionalized owner later allowed a random tree-trimmer to dump dozens of piles of pine sawdust and logs on that property. SMH.
5. "Regulations" aren't an uniform obelisk to scapegoat that you implied. One regulation maybe advantageous or harmful uniquely to each and every affected group, depending. So don't even start spreading the tired, libertarian, utopian refrains like "If only there were no regulations, markets solve everything," which is utter horseshit. Regulations can and do work but only if the governed demand it and refuse to allow the rich and their corporations to have their way.
It's the POLR for most former/current homeowners to move to where professional town managers exist rather than deal with small-town incompetence like the bumblers in Paradise or Butte's Sheriff Kory's flimsy excuse for not activating the EAS, which likely caused the needless deaths of hundreds of disabled and elderly people.
_But_, doesn't the liability also, in part, apply to the state and/or the federal government? How far did the fire unnecessarily spread? Was the land in the area being properly maintained, with good fire breaks, routine controlled burns etc, or are they skimping like they have been all over the country?
What are the positives ... chasing and potentially realizing your creative (music/film) or tech dreams there? That can be done in other cities like Nashville or possibly close to here in a few years with Amazon building in Crystal City, VA (other big tech companies may follow). Well love to hear the positives of living in California!
This is just sample bias. California is the size of NY all the way down to Florida.
If something bad happens on the west coast it has a 60% chance of being in CA but if it happens on the east coast it could be in VA, MD, DC, FL, GA, SC, NC, WV, DE
Instead, I wish them the best of luck repairing their homes and send my condolences (occasionally monetary aid).
Maybe you've always grown up in nicer areas than I have and don't realize how bad it can be. Sure, rent in Michigan is cheap, near Detroit - which is appealing all the way up till there's police tape in your backyard from a shooting. You pay less taxes and you feel it every morning when you drive to work, because the roads are less maintained than the flavor of the week JavaScript frameworks from 2012, which BY THE WAY you almost certainly will need to drive to work in Michigan, since the jobs tend to be far away and public transport would be great if it were supposed to be the punchline to a joke. The restaurant scene in NorCal is not the best in the world or country, but unless you want Mediterranean food it's nearly unilaterally better than anywhere I've been in Michigan. Michigan does not have the harshest winters by far, but I'd almost rather choke to death in smoke than deal with another Michigan winter, sliding around on the ice trying not to crash my car while freezing my ass off. Speaking of which, How about Michigan car insurance? It's pretty hard to put into words how godawful the car insurance situation is, but I paid more than double for worse insurance in Michigan and that's reason enough to hate it.
Wildfires are terrible. Homelessness is bad. But the rent prices, well, they're high for a reason; it's a great place to live despite all of the setbacks. And maybe there's a better set of trade-offs elsewhere in the U.S., but I get the opportunity to work with some of the best engineers I've ever met and that's pretty hard to find anywhere else.
So yes. It is a bummer when the rent comes out of my paycheck each month, it is upsetting when I hear the death tolls and see the wildfire smoke. But, I also remember where I came from and frankly I'm choosing to stay for now.
If you list all the disasters in a big area, your list gets big fast, but no individual place actually has all those things, unless perhaps if Moses shows up to intimidate a Pharaoh.
Of course there's plenty I miss, but just depending on what you value the DMV is not that much better than California.
The media and Hollywood create a pretty weird perception of California, the climate, geography and economy is very varied.
it just doesn't sound very appealing
I've only been there for vacations, competing on a reality tv show and an unpleasant meeting with Google re: buying one of my apps.
In Australia a big part of a Firey's job is running controlled burns in the (relatively) low fire risk season to keep the amount of flammable material around cities and property to a minimum.
It is a continuation, in a way, of a much more ancient indiginous practice of regularly burning large swathes of bush. It is very much a part of the natural ecosystem here.
Yes, prescribed burns are common in the off season for all fire districts. However, CalFire has some unique challenges [1] that most of the other states do not have to deal with when it comes to air quality and sufficient water conditions during their shrinking off season. https://www.kqed.org/science/1927354/controlled-burns-can-he...
[1] https://www.nifc.gov/nicc/sitreprt.pdf (page 6) [2] https://www.nifc.gov/nicc/
Because controlled burns experienced increasing friction, policy evolved to a "let-burn" policy for naturally-started fires (brush gets cleared without anyone having to take responsibility). Problem is, if an area is unnaturally overgrown, fire can have disproportionate severity and become impossible to constrain.
https://www.seattletimes.com/nation-world/california-will-se...
https://www.kqed.org/science/1927354/controlled-burns-can-he...
Basically all of the northern areas in the Northern Territory are burnt once every two years or so.
One thing to consider is that Indigenous Australians have been doing regular burns for tens of thousands of years. It's pretty well understood how the land burns, how often it needs to be burnt and what good/safe conditions look like.
And they’ve been happening more and more anyway.
Wildfire is a natural part of the ecosystem in CA as well. Forests need it to stay healthy and clear the underbrush. But humans decided fire is bad because we like to live in fire areas.
The flora is quite different, too — a coastal live oak takes way longer to grow back than a eucalyptus (and is also less ridiculously flammable when established). So burning huge swaths here would generally not be a great thing.
Because we know how to effectively employ "scapegoating" to hide our own misdeeds.
Look at aerial views above the Oakland Hills before and after the 1991 fire. Roads choked with illegally parked cars, badly overgrown brush, etc. Almost 3,300 home's destroyed.
Look at the same streets now on a typical Fall day: the exact same risk factors in similar proportions. A similar fire now would kill twice as many.
https://freebeacon.com/issues/california-gov-browns-veto-wil...
It doesn't even take effect (legally) until 2019.
I feel like your statement is misleading. Regulators have come out and said they don't want PG&E to go bankrupt. PG&E and the regulators are probably both supportive of extending the existing legislation to cover 2018.
However I am not aware of PG&E or regulators having acted illegally. Publicly stating an opinion before taking action is not illegal.
Plus the bailouts are generally being used to fund PG&E's rebuild on fires where they weren't at fault (from a common sense perspective) but were found liable under California law (see my earlier statement).
People are angry and want someone to blame even tho this was a natural disaster. With current laws, PG&E is being painted as the bad guy and are stuck between a rock and a hard place.