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Is California's PG&E The First Climate Change Bankruptcy? (marketscreener.com)
"California's largest power company intends to file for bankruptcy as it faces tens of billions of dollars in potential liability following massive wildfires that devastated parts of the state over the last two years," reports the Washington Post.
Calling it "a climate change casualty," one Forbes contributor notes that PG&E's stock has now lost 90% of its mid-October value after a giant November wildfire, adding that "Future investors will look back on these three months as a turning point, and wonder why the effects of climate change on the economic underpinnings to our society were not more widely recognized at the time." Climate scientists may equivocate about the degree to which Global Warming is contributing to these fires until more detailed research is complete, but for an investor who is used to making decisions based on incomplete or ambiguous information, the warning signs are flashing red... there is no doubt in my mind that Global Warming's thumb rests on the scale of PG&E's decision to declare bankruptcy.
And the Wall Street Journal is already describing it as "the first climate-change bankruptcy, probably not the last," noting that it was a prolonged drought that "dried out much of the state and decimated forests, dramatically increasing the risk of fire." "This is a fairly new development," said Bruce Usher, a professor at Columbia University's business school who teaches a course on climate and finance. "If you are not already considering extreme weather and other climatic events as one of many risk factors affecting business today, you are not doing your job"...
In less than a decade, PG&E, which serves 16 million customers, saw the risk of catastrophic wildfires multiply greatly in its vast service area, which stretches from the Oregon border south to Bakersfield. Weather patterns that had been typical for Southern California -- such as the hot, dry Santa Ana winds that sweep across the region in autumn, stoking fires -- were now appearing hundreds of miles to the north. "The Santa Ana fire condition is now a Northern California fire reality, " said Ken Pimlott, who retired last month as director of the California Department of Forestry and Fire Protection, or Cal Fire. "In a perfect world, we would like to see all [of PG&E's] equipment upgraded, all of the vegetation removed from their lines. But I don't know anybody overnight who is going to catch up." PG&E scrambled to reduce fire risks by shoring up power lines and trimming millions of trees. But the company's equipment kept setting fires -- about 1,550 between mid-2014 through 2017, or more than one a day, according to data it filed with the state.
The global business community is recognizing the risks it faces from climate change. This week, a World Economic Forum survey of global business and thought leaders found extreme weather and other climate-related issues as top risks both by likelihood and impact.
Other factors besides climate change may also have pushed PG&E towards bankruptcy, according to the article. They're required by California state regulations to provide electrical service to the thousands of people moving into the state's forested areas, yet "an unusual California state law, known as 'inverse condemnation,' made PG&E liable if its equipment started a fire, regardless of whether it was negligent."
In declaring bankruptcy, PG&E cited an estimated $30 billion in liabilities -- plus 750 lawsuits from wildfires potentially caused by its power lines.
Calling it "a climate change casualty," one Forbes contributor notes that PG&E's stock has now lost 90% of its mid-October value after a giant November wildfire, adding that "Future investors will look back on these three months as a turning point, and wonder why the effects of climate change on the economic underpinnings to our society were not more widely recognized at the time." Climate scientists may equivocate about the degree to which Global Warming is contributing to these fires until more detailed research is complete, but for an investor who is used to making decisions based on incomplete or ambiguous information, the warning signs are flashing red... there is no doubt in my mind that Global Warming's thumb rests on the scale of PG&E's decision to declare bankruptcy.
And the Wall Street Journal is already describing it as "the first climate-change bankruptcy, probably not the last," noting that it was a prolonged drought that "dried out much of the state and decimated forests, dramatically increasing the risk of fire." "This is a fairly new development," said Bruce Usher, a professor at Columbia University's business school who teaches a course on climate and finance. "If you are not already considering extreme weather and other climatic events as one of many risk factors affecting business today, you are not doing your job"...
In less than a decade, PG&E, which serves 16 million customers, saw the risk of catastrophic wildfires multiply greatly in its vast service area, which stretches from the Oregon border south to Bakersfield. Weather patterns that had been typical for Southern California -- such as the hot, dry Santa Ana winds that sweep across the region in autumn, stoking fires -- were now appearing hundreds of miles to the north. "The Santa Ana fire condition is now a Northern California fire reality, " said Ken Pimlott, who retired last month as director of the California Department of Forestry and Fire Protection, or Cal Fire. "In a perfect world, we would like to see all [of PG&E's] equipment upgraded, all of the vegetation removed from their lines. But I don't know anybody overnight who is going to catch up." PG&E scrambled to reduce fire risks by shoring up power lines and trimming millions of trees. But the company's equipment kept setting fires -- about 1,550 between mid-2014 through 2017, or more than one a day, according to data it filed with the state.
The global business community is recognizing the risks it faces from climate change. This week, a World Economic Forum survey of global business and thought leaders found extreme weather and other climate-related issues as top risks both by likelihood and impact.
Other factors besides climate change may also have pushed PG&E towards bankruptcy, according to the article. They're required by California state regulations to provide electrical service to the thousands of people moving into the state's forested areas, yet "an unusual California state law, known as 'inverse condemnation,' made PG&E liable if its equipment started a fire, regardless of whether it was negligent."
In declaring bankruptcy, PG&E cited an estimated $30 billion in liabilities -- plus 750 lawsuits from wildfires potentially caused by its power lines.
Paradise CA hired a fire expert back in the 1980s. He went on a tour of the townsite along with a reporter from the local paper. After seeing the amount of undergrowth surrounding the town, the fire expert concluded the town was a death trap. He then quickly resigned so that when the town burned down, he wouldn't be held responsible.
I know it's fashionable for conservatives to pick at the Leftist policies of the United States' most prosperous state but you're just making things up here. PG&E was doing great prior to the two big waves of fires that came through California https://www.macrotrends.net/st... and they would have zero liabilities in the case of these fires if they had maintained things the way they knew they were obligated to.
"Meanwhile, state and federal regulations basically conspire against them."
So we're convoluting state and federal policy now as a means of damning California? Most of our big open territory in this state is Federal.
"And they're made liable for any fires in the area of their equipment, whether it was actually their equipment or not..."
Citation needed.
"Meanwhile, California's idiot density is going up year over year as people with an actual functional brain flee the state."
Right, Californian's are idiots. What state are you from? Wait, it doesn't matter because it's not as prosperous as California.
"It's just the intellectually retarded leading the intellectually retarded out there."
Shit, I'll take our imperfect system over a Red state's any day of the week. At least we're able to generate meaningful wealth without the maximum exploitation of all of our public land as Texas does. We could certainly learn a thing or two from other blue states but I'm guessing that's not where you're at.
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Thanks for the link! It says exactly what I was saying, PG&E is responsible for the fires... like this sentence from your link:
A PG&E transmission tower in a burned-out forest in Butte County. PG&Eâ(TM)s lack of properly insulated power conductors â" and the threat of trees or limbs falling on distribution lines â" played a role in causing some of the disastrous and lethal wildfires of 2017 and 2018,
I'll save that one to point out to others, thanks man!
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Of California's fucked-in-the-head regulatory environment. This has NOTHING to do with climate change.
They're basically required to service areas that will never be profitable, below their costs of delivery, can't spin off unprofitable business segments, they're not allowed to charge more to cover their costs, etc.
Uh, no. Most states have regulations requiring universal access to power, and most states have cheaper power than California, yet only a few states seem to burn down twice a year because of poorly maintained equipment. PG&E turned a $1.65 Billion profit in 2017. How did they do it? By making public safety an externality and hoping for the best. Don't blame this on government regulation. The real flaw was letting any for-profit corporation provide power service in the first place. Government regulation just failed to completely mitigate the damage caused by using entirely the wrong business structure.
They reaped what they sowed. Period.
Meanwhile, state and federal regulations basically conspire against them. Changes in land management dramatically increase the chances of fire in any given area. And they're made liable for any fires in the area of their equipment, whether it was actually their equipment or not...
But in practice, it is approximately always their fault, thanks to grossly inadequate maintenance of trees near power lines and grossly inadequate equipment maintenance, which makes that whole argument completely moot.
Meanwhile, California's idiot density is going up year over year as people with an actual functional brain flee the state. They've had wildfires in California for HOW LONG? Yet, every year we've got idiots starting fires and moving into areas that abut to the aforementioned badly managed forested land and building WOOD HOUSES, while ignoring sensible rules for building in fire-prone areas.
It's worth noting that California has made a bunch of big changes to their building code over the past couple of decades, like requiring fire sprinklers in the attics of all new residential construction, bans on untreated shake roofs, etc., and as a result, in most of the burned areas, newer construction was often left untouched while older structures nearby burned to the ground. The problem is not people moving in. The problem is that a huge number of older buildings built before the newer, tougher building codes kicked in have not been brought up to code, and there are neither laws requiring that to happen nor funds available to help with the cost of doing so.
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The Pacific Gas and Electric Company is an American investor-owned utility with publicly traded stock that is headquartered in the Pacific Gas & Electric Building in San Francisco.
It's time to consider to bury the power lines. Something they do here in Sweden more and more.
You don't seem to grasp the size of North America and why this isn't a cost effective solution. To put simply, the difference in size between California and Sweden is about 20k sqkm. In North America, you can restring an entire street(say 300m long) including poles, transformers and so on for around $30k-40k, if you trench it you're looking upwards of $500k-1.5m depending on whether or not you also have to deal with other utilities. Relaying lines like that sometimes happens when a street is having new water lines, sewage and so on put in at the same time. Higher priorities are placed for areas that have high disaster issues like freezing rain - central-east US, eastern US along the I75 corridor, and up into Canada and, Ontario through the 401 into Quebec and along the St. Lawrence Seaway. In California's case, you can bet your ass that there's been a long humming and hawwing over "is above ground electrical better in an earthquake zone" then below ground.
Sometimes it's not even worth the effort in high flood zones from hurricanes because companies have discovered no matter how *good* of a conduit is being used, how well water proofed it is, how resistant to salt it is. Somehow you get water or salt or end up with a vapor filled tube of salt water which when it fails, is nothing short of spectacular.
The big problem California has is the lack of proper forestry management. 40 years ago, burns were common. If you were buying a house and there was 1" of pine needles on the ground it would be automatically condemned until it was cleaned up. Now you have people who protest burns, protest cleaning up areas with highly flammable ground clutter. Give you a tip though, the entire eastern pine stands ranging from the northern US to Southern Western Canada are ripe to go up. They're effectively dead, tens of thousands of sqkm of dead trees from pine beetles and no burn policies.
Om, nomnomnom...
PG&E is exactly what an economist would tell you will happen when government sets a price ceiling and supply isn't allowed to be reduced to compensate.
That, sir, is a load of hot cockery.
So just to be clear, even after paying millions of dollars to executives who weren't doing their jobs, PGE was able to turn a profit of $1.65 billion up 18% from the prior year even though their revenues had fallen! How do you think they managed that? As long as they are failing to maintain infrastructure as they are legally obligated to do, every single dollar of that profit represents an effective theft from The People, let alone their customers.
In exchange for their various right-of-way monopolies, maintenance vehicle access and the like, they are obligated to maintain the infrastructure in safe condition, and do business in a fair manner. They are doing neither. PGE is a criminal conspiracy to defraud the people who reside or even simply have financial interests in the area which they "serve". And beyond that: it has killed in the past, it has killed recently, and it will kill again. And those responsible will almost certainly not only face no punishment, but get to retain the majority of their ill-gotten gains.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
WTF are you smoking? Too low? Installed per regulations. It's OK to have them lower than the tips of the trees, provided the trees are far enough away. Or do you know more than the Bureau of Reclamation as far as power line installation goes? Or that the PG&E towers weren't built to CPUC code?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!