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Comment by danielfoster | Hacker News Reader

A major part of the issue here is that although PQ&E is a private company, they're heavily regulated by the state. Price controls plus a political mandate to invest in green industry has left it with few resources for maintaining existing infrastructure.

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> Price controls plus a political mandate to invest in green industry has left it with few resources for maintaining existing infrastructure.

But, until their long failure to invest in required maintenance started manifesting in massive liabilities for fires in 2017, plenty of money to return $billions to shareholders in dividends; clearly, in your understanding, those funds weren't a fungible resource that could have instead been invested in maintenance.

(An understanding not shared by the federal judge overseeing their criminal probation for their felony conviction in the 2010 San Bruno gas explosion, who—in finding their actions leading to the 2017 and 2018 fires to be a violation of that probation—placed the blame for the fires squarely on PG&E’s decision to, for years, prioritize dividends over required maintenance.)

Those dividends are necessary to raise the private capital necessary to run PG&E. It's not a charity, and it's certainly not a "market." It's a state-sponsored monopoly. The only other ways to fund it are increased energy prices or tax dollars.

> Those dividends are necessary to raise the private capital necessary to run PG&E.

Private capital is only required to have someone to return dividends to.

> It's not a charity

Yes, exactly, because it's a for profit institution, it is structurally incentivized to return profits to investors.

> It's a state-sponsored monopoly.

Which makes it being a private, profit-making enterprise nonsensical, exactly.

You mention profit a lot, but do you know how a utility earns money? Rate payer might be the obvious answer, but there is another.

Capital projects, investments into itself that make the company tick. New plants, improve infrastructure (down to the application server). See: https://blog.aee.net/how-do-electric-utilities-make-money

Now, that doesn't excuse them because its entirely possible they did not invest wisely. But simply blaming "profit" is hand wavy anti-corporate speak, which doesn't necessarily explain what is happening.

> You mention profit a lot, but do you know how a utility earns money? Rate payer might be the obvious answer, but there is another.

No, there isn't.

> Capital projects, investments into itself that make the company tick.

That doesn't make money, it reduces operating expenses and increases operating margins at the same rates. The money still comes from ratepayers. And public entities reduce operating expenses the same way, the benefits (after paying for any debt financing) just go to taxpayers, rather than private investors.

I said earn money. But I phrased it poorly, so i'll explain further with what I know. I also assume we're still talking about regulated utilities.

Capital project costs (along with other fixed costs) generally get passed through to rate payers + an approved ROR by the public utility board. Operating expenses cut into this. Capital project costs do not necessarily reduce operation expenses directly.

Everything about the utility, including the rate of return to the investors, is approved by the public utility commission. If you cut off that rate of return, you have no more private investors.

If they don't have any money to spend on infrastructure, then what have they been using to pay dividends to investors?

>If they don't have any money to spend on infrastructure, then what have they been using to pay dividends to investors?

The money they should have spent on infrastructure?

I'm starting to suspect that!

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