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Nationalize California’s Pacific Gas & Electric

California’s massive, deadly wildfires aren’t just a consequence of climate change — they’re a result of the profit model in utilities. We need to nationalize PG&E and the entire national power grid.

Firefighters battle a blaze at the Salvation Army Camp on November 10, 2018 in Malibu, California. Sandy Huffaker / Getty Images

As of this writing, the “Camp Fire” in Northern California has claimed seventy-seven lives, destroyed over ten thousand structures, and burned over 150,000 acres, making it the deadliest and most destructive fire in state history. Almost a thousand people are still listed as missing, and the fire is only 65 percent contained. In Southern California, the Woolsey Fire has burned almost a hundred thousand acres and is almost 90 percent contained. Earlier this summer, the Carr Fire in Redding burned almost three hundred thousand acres, destroyed over a thousand structures, and caused thirty-eight thousand evacuations. Last summer, a cluster of firestorms in Santa Rosa killed forty-three, burned over two hundred thousand acres, and destroyed ten thousand homes, including the one I grew up in.

This new normal has prompted renewed discussion of climate change, and rightfully so: California’s last several summers have been among the hottest, driest, and longest in its recorded history. Firefighters describe conditions unlike any they’ve seen before, with sustained hurricane-speed winds circling firestorms so powerful that they create their own weather. Images of skeletonized cars and ashy ruins have become standard iconography of climate horror in America.

Locally, Californians have identified another pattern behind the deadly blazes: unsafe cost-cutting practices from the state’s largest for-profit utility company, Pacific Gas and Electric (PG&E).

In the last two years alone, the California Department of Forestry and Fire Protection (Cal Fire) has found PG&E at fault in sixteen deadly fires. Last week, PG&E announced that they experienced an “electrical incident” on the eve of the Camp Fire, and dozens of lawsuits have already been filed to hold PG&E liable for damages. Most criticism has focused on PG&E’s failure to maintain older equipment, failure to trim surrounding trees in accordance with state law, and their diversion of funds earmarked for infrastructure upgrades into more lucrative projects. Others have called out PG&E’s poor decision-making in not invoking their new 2018 power-down safety policies. On the hot, windy eve of California’s deadliest and most destructive blaze ever, customers in Paradise filed reports of sparking wires; PG&E still opted to keep power flowing.

Considered individually, these incidents highlight key failings in PG&E’s operating procedure. Each, however, shares a structural link to profit-driven decisions.

By all accounts, PG&E is now in bad financial shape. Lawsuits are piling up. And in spite of new rules signed into law by the California legislature and governor Jerry Brown in September that allows PG&E to pass their legal fees on to ratepayers, the company is free-falling into debt — again. Their shares bottomed out trading for half of what they were earlier this month ($48 to $17), and for less than a quarter of what they were in summer 2017 ($70+).

PG&E’s outlook hasn’t been this bleak since 2001, when they declared bankruptcy after their entanglement with Enron created a statewide energy crisis, resulting in rolling blackouts and costing billions in public money. Speculation about another bankruptcy looms, and hedge funds are circling with hopes of capitalizing on another government bailout. Recent statements from the California Public Utilities Commission have reinforced investor optimism that a windfall of taxpayer cash is imminent.

Now, we will see policy wonks presenting convoluted explanations for PG&E’s failures. We will hear about performance-regulating legislation we must pass to root out bureaucratic negligence. We will hear calls to reform their “safety culture”, a phrase that implicates workers in executives’ decisions and echoes statements made in response to the PG&E gas pipeline explosion in 2010 that killed eight people and created a thousand-foot-high wall of flame in a suburban neighborhood.

We will hear about how we can rebuild a better, leaner, and more responsible PG&E, just like we heard after the energy crisis in 2001. PG&E has become too corrupt, too lazy, or too big, they will tell us. Or maybe PG&E just needs some good market competition, they will tell us.

The truth is both simpler and more damning: costly upgrades, maintenance, and safely protocols are in direct conflict with PG&E’s primary mission, which is to deliver profits to their shareholders.

As long as our utility companies are privatized and the conflict between profit and reinvestment exists, they will continue to choose upkeep and safety options that are “good enough.” We will continue to see executive bonuses and profit goals exerting pressure on the valuation of our lives, our communities, and our climate.

When catastrophic failures occur again, they’ll make us pay for the damage and for the cost to their business done by their own lack of foresight — again. In PG&E’s words from October, before the latest fires, “Overcoming the negative financial impact of any significant damages that might ultimately be attributed to PG&E will require an ongoing commitment of capital from investors.” Anyone who is familiar with the federal bank bailouts in 2008 will recognize another phrase that will be used here: too big to fail.

Dismantling PG&E into smaller pieces, one option floated by California state senator Jerry Hill, is a tantalizing material threat if our goal is to pressure PG&E to shape up and act right. But it doesn’t go far enough. If legislators do not nationalize the power grid itself, they will not fix the fundamental problem; they will just roll back the clock.

PG&E’s earliest mergers and acquisitions occurred in San Francisco in the nineteenth century, when the company was still called San Francisco Gas Light, and throughout the twentieth century, they continued their aggressive growth, swallowing up ever-larger competitors on their path to becoming the largest private utility on the planet (recently surpassed by Duke Energy after their merger with Progress Energy). Perhaps they will be the acquired instead of the acquirer this time. But the end result for Californians will be the same.

The only way we can adequately address the new climate reality in California is to take utilities out of the hands of corporate interests.

The benefits go far beyond disaster prevention. Publicly owned, democratically managed utility companies have a reputation for being safer, cheaper, and greener than their privatized counterparts. Many have faster response times after extreme weather events, and disaster recovery is often cheaper due to proactive infrastructure improvements. Their boards are elected and their decisions are transparent. If they find themselves operating with a budget surplus, the surplus is directly reinvested in infrastructure or even returned to the general fund, not paid out as profit for capitalist investors.

Public utilities are also a cornerstone of democratic energy-management practices — a crucial component in combating climate catastrophe. Publicly owned power provides collective decision-making and leverage in energy markets, which creates new preconditions for expansion of green energy and infrastructure.

A future in which these effects can be achieved at state or national scale is worth fighting for. We must bring PG&E and other utilities under democratic control. We have to nationalize the power grid, and we have to do it now.