PG&E is not a business.
It is a government protected monopoly guaranteed an 11.35 percent return of its investment on the back of its remaining customers who have not been killed off in a natural gas pipeline explosion.
If you doubt this, look at the latest rate increase proposal. PG&E wants ratepayers to pick up almost 90 percent of the $2.2 billion cost of replacing questionable pipeline and upgrading values.
Here's a novel idea: Why doesn't PG&E simply do what a real business has to do when faced with the need to upgrade infrastructure it owns so they can remain profitable and not open themsleves to future litigation? That would mean they'd pay 100 percent of the cost themsleves even if it meant borrowing to do so.
In a day and age when people are losing their jobs, pay raises are either non-existent or they've been replaced by pay reductions, and businesses are struggling on thin margins, it is incredible to believe that PG&E continues their entitlement attitude when it comes to shaking down ratepayers.
No big deal, we're told. It'll only cost the average homeowner $2 a month to pay for the new and improved PG&E so the for-profit utility doesn't have to cut into its 11.35 percent profit margin for frivolous things such as safe pipelines.
PG&E apologists like to wax eloquently about how it is a private business just like a mom and pop store. They lash out at public agencies such as Sacramento Municipal Utility District that attempt to take over PG&E territory by using - horror of horrors - eminent domain.
There are three little problems with the argument PG&E is a business that's as American as a family owned hardware store. First, PG&E uses eminent domain all the time to place power lines and gas lines. They say they use it to keep energy cheap to customers. It's the same season why SMUD would use it in dealing with PG&E - to keep energy costs down for future customers.
Second, unlike a mom and pop store PG&E is guaranteed an 11.35 percent no matter what while holding a large number of customers hostage. True, if you're big enough and have enough bucks you can cut a deal to get power a cheaper from another source using PG&E lines. Most of the folks at PG&E's mercy aren't in the league of Donald Trump or a Fortune 500 company.
Third, taxpayers - and not PG&E - historically pick up the bulk of the cost of litigation settlements that PG&E incurs. Every three years they ask for a rate adjustment that covers litigation losses. And if they don't use all of the rate increase put in place for the purpose of paying out lawsuits over a given period, they get to keep the loose change.
In the case of San Bruno their exposure is so big ratepayers won't be on the hook for the entire bill but they will pay for part of it.
It gets better.
Once the $2.2 billion of improvements are in place, it becomes part of PG&E's "rate base" or the overall value of the utility's physical assets. That is used by the California Public Utilities Commission to set PG&E rates.
So $2.2 billion in improvements paid almost exclusively by ratepayers would allow PG&E to ask for $250 million more annually in rate hikes. After all, state rules for protected monopolies such as PG&E allows them a guaranteed 11.35 percent return on their investment.
Only PG&E - claiming they want to restore the faith of ratepayers - would have the audacity to make ratepayers pick up virtually the entire bill to cover the fact they never set aside money from profits to upgrade existing infrastructure needed to generate revenue as a normal business would. Then, to add salt to the wound, PG&E wants to use that forced extraction of money from customers to pay for upgrades as part of their base for even higher rates.
No wonder some folks feel that PG&E stands for Profit Gouging & Exploitation.
It is a government protected monopoly guaranteed an 11.35 percent return of its investment on the back of its remaining customers who have not been killed off in a natural gas pipeline explosion.
If you doubt this, look at the latest rate increase proposal. PG&E wants ratepayers to pick up almost 90 percent of the $2.2 billion cost of replacing questionable pipeline and upgrading values.
Here's a novel idea: Why doesn't PG&E simply do what a real business has to do when faced with the need to upgrade infrastructure it owns so they can remain profitable and not open themsleves to future litigation? That would mean they'd pay 100 percent of the cost themsleves even if it meant borrowing to do so.
In a day and age when people are losing their jobs, pay raises are either non-existent or they've been replaced by pay reductions, and businesses are struggling on thin margins, it is incredible to believe that PG&E continues their entitlement attitude when it comes to shaking down ratepayers.
No big deal, we're told. It'll only cost the average homeowner $2 a month to pay for the new and improved PG&E so the for-profit utility doesn't have to cut into its 11.35 percent profit margin for frivolous things such as safe pipelines.
PG&E apologists like to wax eloquently about how it is a private business just like a mom and pop store. They lash out at public agencies such as Sacramento Municipal Utility District that attempt to take over PG&E territory by using - horror of horrors - eminent domain.
There are three little problems with the argument PG&E is a business that's as American as a family owned hardware store. First, PG&E uses eminent domain all the time to place power lines and gas lines. They say they use it to keep energy cheap to customers. It's the same season why SMUD would use it in dealing with PG&E - to keep energy costs down for future customers.
Second, unlike a mom and pop store PG&E is guaranteed an 11.35 percent no matter what while holding a large number of customers hostage. True, if you're big enough and have enough bucks you can cut a deal to get power a cheaper from another source using PG&E lines. Most of the folks at PG&E's mercy aren't in the league of Donald Trump or a Fortune 500 company.
Third, taxpayers - and not PG&E - historically pick up the bulk of the cost of litigation settlements that PG&E incurs. Every three years they ask for a rate adjustment that covers litigation losses. And if they don't use all of the rate increase put in place for the purpose of paying out lawsuits over a given period, they get to keep the loose change.
In the case of San Bruno their exposure is so big ratepayers won't be on the hook for the entire bill but they will pay for part of it.
It gets better.
Once the $2.2 billion of improvements are in place, it becomes part of PG&E's "rate base" or the overall value of the utility's physical assets. That is used by the California Public Utilities Commission to set PG&E rates.
So $2.2 billion in improvements paid almost exclusively by ratepayers would allow PG&E to ask for $250 million more annually in rate hikes. After all, state rules for protected monopolies such as PG&E allows them a guaranteed 11.35 percent return on their investment.
Only PG&E - claiming they want to restore the faith of ratepayers - would have the audacity to make ratepayers pick up virtually the entire bill to cover the fact they never set aside money from profits to upgrade existing infrastructure needed to generate revenue as a normal business would. Then, to add salt to the wound, PG&E wants to use that forced extraction of money from customers to pay for upgrades as part of their base for even higher rates.
No wonder some folks feel that PG&E stands for Profit Gouging & Exploitation.
