PG&E reports profit of more than $2B for 2024 | Hacker News Reader

PG&E reports profit of more than $2B for 2024

mercurynews.com

30 pointsssuds27 comments

their profits should be $0

Can you please help me understand your stance? Why do you think a company should have a $0 profit?

Because they killed dozens of people and destroyed a town though lack of re-investment and monitoring their infrastructure.

One angle is they’ve been responsible for a number of major wildfires in California, so they should be reinvesting any profits in upgrades/maintenance/technology to prevent that in the future.

> One angle is they’ve been responsible for a number of major wildfires in California

Why bother ? Those are renewables. In 50 years those trees will be back. /s

I'm not nielsbot so I obviously can't say for sure but I think I share a similar view that in an ideal world, they should only be charging what they need to survive (i.e. breakeven) in order to provide the greatest utility (pun intended) to the people.

However, it's not an ideal world, and things like disasters, grid upgrades, paradigm shifts all happen occasionally and tend to require mass amounts of capital to get through. So maybe not $0, but also probably not $2B :)

Electricity is not a luxury good. People need it to survive. We should not allow companies to have control over these basic necessities, since companies invariably care about profit over human wellbeing (and is mandated as such if publicly traded)

If PG&E sold hand crafted watches, sure let them do what they want. Earn the big bucks.

If PG&E puts profit above all else, what happens? Equipment that should be upgraded a long time ago fails, more power outages, dystopian stuff.

Conversely, help me understand why a for-profit company has any right to operate services for the public good?

Capitalism works in certain places, with strict rules in place. There’s lots of places where it shouldn’t apply, and those places are where we value people over $$&

There are several non-profit organizations that act as public power utilities in California, as well as in other states.

There prices are usually significantly lower than publicly-traded public utilities, although there are exceptions, because they can still be poorly run.

It's a natural monopoly - literally no competition is possible because no other player could overbuild another electricity grid in their service area.

Society should not allow a for-profit entity to operate as a monopoly (because all monopolies want to reduce service and maintenance, and raise prices as much as possible), so such a utility should be required to operate on a non-profit basis.

I was being glib, but exactly this. Electricity utilities should be publicly owned, with a service motive, not a profit motive.

They were granted huge rate increases to work on things like safety and infrastructure for EVs, but wow, $2b just about matches the rate increases.

https://www.independent.com/2024/04/27/heres-the-real-reason...

For comparison average residential electricity rate for a california resident is ~ 35c/kwh

Its not that it should exist as a private company that makes no profit; PG&E--a firm that is basically California's most prolific mass killer with a sideline in diverting ratepayer funds into lobbying against public utility districts--shouldn't exist as a private company at all,

Their 2018 and 2019 losses are $10b each. It would take 10 years of same profit to become net 0 profit.

Good! They had losses because they were negligent in maintaining their infrastructure AND BURNED DOWN LARGE PARTS OF THE STATE.

A power company is a natural monopoly. Every dollar of profit it makes is because the state allowed it to.

The whole damn company should have been nationalized after the fires, it's nuts that we now pay 3x+ the national average for electricity to cover their mistake. It now costs more to charge a Tesla to fill a 12gal gas tank in a "green" state - and gas isn't exactly cheap here either.

The 2018 and 2019 losses were born by the pre-second-bankruptcy PG&E, not the post-bankruptcy company of the same name.

(And, when I say "born by the pre-second-bankruptcy PG&E", I mean, "born largely by its creditors as they were discharged in bankruptcy", those creditors including fire victims, who got a settlement fund with a fixed amount of cash and stock which is wrapping up claims settlement now and will have paid out a little bit over 70 cents on the dollar of actual liabilities.)

their profits should be $0

This may not be what you meant but considering they took the fall for massive amounts of arson, blew up a neighborhood and have aging infrastructure that is also causing fires and gas explosions, shutting off power for entire towns when it gets windy PSPS shutoffs ... it probably should be something close to that. It is not clear to me how they are still profitable unless the state is shielding them from legal challenges and/or bailing them out.

PG&E was one of the many dozens of reasons I left the state. I had to run their power through massive switching and linear power supplies, then again through inverters just to clean up and stabilize it so they would stop destroying my gear.

If you had the power to make the laws however you wanted around universally needed basic services of electricity, gas, water, sewage, how would you do it?

Non-profit? Government run? Capitalism with minimal regulation? Capitalism with strict regulation? Profit caps? “Common carrier” type of deal to allow any player to compete in an energy market, trying to stop behemoth entities from monopolistic?

Very curious to hear from the non-US audience.

Personally, I lean towards gov run services for universal needs, like healthcare, electricity, heating, etc. But I am guessing the outcomes of whatever energy policy/regulations is the average of how the rest of society is doing.

Spanish here. IMO all those services should be state owned. Set them with a tariff-free base monthly consumption and start charging beyond that threshold.

I'm ok with private companies providing the service to the state, if they think they can do it more efficiently and with fair pay to their workers. And, short leases, no more than 3 year contracts. But the current scenario, where most of the services are effectively privatized, is awful, expensive, inefficient and corrupt.

In Japan utilities are separated into pseudo-governmental entities that operate the infrastructure as a monopoly, and for-profit companies that deal directly with customers. This seems to work relatively well in that the customer-facing companies can distinguish themselves in the market (e.g. offering higher prices but better customer service), and the infrastructure is immune to profit incentives but subjected to high levels of regulation.

The closest equivalent I experienced in the states is when I lived in the SF bay area and got internet access as a customer of Sonic, who provided DSL services over copper lines owned by AT&T.

>Capitalism with strict regulation?

This gets regulatory captured/lobbied away over by monied interests.

>Profit caps?

This is simply a subset of "capitalism with strict regulation". Implementing profit caps in a manner without loopholes takes detailed regulations and a judicial branch that strictly enforces them. This too will get regulatory captured/lobbied away over time.

Another issue with this is that ironically a proper implementation of this would receive even more pushback than nationalization. Why? Because you have to cap e.g. shareholder returns, otherwise it introduces awful incentives, as we're seeing with this exact case where there's a "profit margin % cap". You'd also need exec compensation caps.

I do have a relatively straightforward idea for this, though I'm sure there are holes in it that I haven't thought of - market cap growth caps. To give an example, let's say we set the cap at 5% YoY. Then if the market cap instead grows 10% in a given year, the company is forced to issue an additional ~5% of shares (of the total number of outstanding shares), which all directly go to the government. The government will then sell these evenly distributed over the next year, on the market.

Feels like this has far less loopholes than any kind of profit or revenue tax.

> “Common carrier” type of deal to allow any player to compete in an energy market, trying to stop behemoth entities from monopolistic?

See above, another subset of the category.

> Non-profit

Ah, like OpenAI? Or the one U2 has in The Netherlands?

>Capitalism with minimal regulation?

This option isn't even worth discussing.

> Government run?

This too can get lobbied away over time, as we've seen, but it takes the longest to do so, and is therefore the correct answer to the question.

American perspective, but how about running them like the USPS?

I don't know the intricacies, but from what I've gathered, the USPS is operated by the government and intended to teeter right around the line of self-sustainability. They're required to provide service to "hard-to-scale" regions, like the middle-of-nowhere rural towns in Montana, without charging them an arm and a leg. This works, because their primary directive is not to "make stock go up", but rather to "get the job done and the mail delivered".

That's why it's cheaper to charge at a supercharger than at home, during off peak.

This is on a revenue of $24.5 billion, so about 10% profit margin.

don't the incentives seem wrong? they're limited to 10% margin so what's the incentive for them to keep costs down for consumers? they only make more money when the costs go up.

It's called a perverse incentive, and it's really common when politicians think themselves economists.

The one that bugs me the most is that the margin generated by credit and debit card transaction fees is similarly limited in the US, but insuring transactions against fraud is part of the costs. Because of this, US credit card transactions are like a playbook of what not to do in security.

The way it works is that their margin is essentially fixed, so they drive wasteful spending to increase profits. It's worse for all of us because we have to pay for both the waste and the profits.

The trouble with PG&E is that it's trying to serve two incompatible goals.

The shareholders want it to provide electric service for a profit in the locales where doing so is economically sensible (= urban/suburban), slowly grow its value, and throw off a stable stream of dividends. This is the basic value proposition of all for-profit utilities: low growth, low volatility, stable income.

The state government -- and a not insubstantial proportion of the state population -- want PG&E to be a non-profit that provides electricity at cost to everyone in its coverage area, which is to include huge swaths of forest-covered hillsides and dry rural scrubland. Every time it gets mentioned on HN (not exactly a hotbed of communism!) there's a bunch of comments about how it should be illegal for an electric utility to have any profit at all.

PG&E can't have it both ways. It hasn't paid a non-trivial dividend since 2017 and its share price is ~half of what it was 20 years ago, which makes it an astonishingly poor investment -- compare to Southern Company (SO) or Duke Energy (DUK). But at the same time it is legally mandated to absorb the costs of operating high-voltage lines in brushfire territory, and half its customers think it shouldn't be allowed to exist.

Reply on news.ycombinator.com