Reject PG&E Rate Hikes:

Let’s Dig Deep, Think Differently, and Invest in an Energy Revolution

Like many Californians, I draw a deep breath as I confront the shock of my soaring energy bills.

It’s a game of PG&E Tetris, trying to reorganize our life within their rules to reduce our energy bills. I think could switching energy plans, optimizing laundry schedules, or even washing dishes be the solution? We need energy to work, to live, to thrive.

What are we to do when rates go up? Something else will have to go. There are only so many light bulbs you can replace or things you can optimize. Consumers have limited choices when it comes to electricity. But can we change PG&E? Perhaps we can. ( Matrix -” there is no spoon” - reference )

Now, here comes PG&E, and they are asking for yet another rate increase, and a 22% increase at that, on top of the nearly annual or biannual rate increases in the last decade. This isn’t the first double-digit rate hike in recent years, and it won’t be the last unless we demand change.

Electric Rates are out of control!

CA before this hike will have the 2nd highest in the nation!

I remember when I moved to SF, I was single and had a $20 monthly electric bill. Now, with a family, PHEV, and rising rates, I’m lucky if we can keep our monthly bill under $350 a month. We try to do the right stuff, we try to live a sustainable life, an eco life, but it’s demoralizing when doing the right thing doesn’t feel good or reduce your expenses.

I know California has had its share of challenges, many of which are climate-change-related, but can we really keep asking Californians to pay more for their energy? Will they ditch their gas cars if electric rates outpace inflation?

“We can’t solve problems by using the same kind of thinking we used to create them.” ( often attributed to Einstein)

“Think Differently” is practically the California Mantra, a modern Apple version of Einstein’s words. So why do we keep doing the same thing accepting rate hikes and forcing customers to pay for obvious failures to think strategically?

We have been penny-wise and “fire” foolish.

It’s no surprise that PG&E would ask for a rate hike. It’s CEO 101 to make more money for the company and shareholders. It’s even worse because not only do we let them and have approved rate increases regularly, but we let PG&E operate as a government-regulated monopoly. We gave PG&E this monopoly. We did it to save a buck ages ago with the expectation that PG&E would leverage economies of scale, and cost-effectively maintain the lines, and pass the savings on to us. They aren’t!

Instead, what we got was a colossal failure. PG&E pursued profits over risk, and when California returned to drought conditions, the burdened infrastructure was prone to cause fires. PG&E knew this risk but didn’t prepare for it, and that’s why they lost numerous liability cases. Leaving the company to file for bankruptcy because it couldn’t afford the $30 Billion in damages.

Monopolies may have offered us cost savings in the past when risks were either underestimated or overlooked, and utility companies could boost profits by simply selling more electricity. However, today’s landscape is markedly different, requiring us to grapple with far-reaching consequences such as climate change and associated risks. Additionally, we find ourselves constrained in terms of energy supply, urging consumers to maximize efficiency and do more with fewer resources. Addressing these complexities necessitates a shift towards more strategic, long-term thinking and planning.

Now, what’s done is done, and we need to fix it.

PG&E’s solution is to keep asking for rate increases to rebuild billions of dollars of infrastructure. Still, that solution hasn’t worked, and if it does, it just costs the residents billions and will just reward shareholders unfairly.

We need a more equitable solution. If residents are going to invest in the solution, then residents should have some ownership of that solution. There are a lot of solutions where California or Californians could reclaim ownership of their electric grid.

But there is more at stake than just electricity costs.

Increasing electricity rates might actually increase our fire and environmental risk.

Electricity and the smart grid are our best chance at collecting clean, renewable energy and getting it where it’s needed most. It’s imperative to reduce CO2 and other greenhouse gasses. The causes are well studied, and we have a plan, but that plan depends on people switching to electric everything.

We envision future homes equipped with electric cars, water heaters, stoves — a complete electric lifestyle. We don’t just want to preserve our current grid, but we need to drastically expand and improve it if we need to switch all other energy sources over to electricity. We don’t want just our homes to be electric, we want our industrial and commercial processes to be as well.

The cheaper electricity becomes, the faster people and companies will switch to clean electrical energy. If electricity is cheaper than other energy sources we don’t need to make a moral argument to switch; cheaper electric rates will inspire innovative penny pinchers to drive everything they can to electrification.

The moral argument falls flat when people can’t afford to live. (We can’t eat our cake, and have it too. )

If California wants to mitigate climate change, climate risk, and fire risk, we want to inspire a race to zero for electric rates. Cheep energy is green energy.

Kill the kilowatt price tag.

California is set as an example for better or worse. California’s GDP ranks its economic power in the top 10 of the world, and according to Newsom, it’s poised to be the 4th largest economy in the world. We are not just a state; we are a global leader. And for better or worse, California establishes trends. If we succeed, others will follow, and other states and countries will follow our lead.

When electric prices rise faster than inflation, that creates a trend. A trend that will scare people, companies, and industries from switching away from their carbon-producing fuel sources. We need all hands on deck to drive down electric rates, and PG&E can’t be trusted alone to drive down electric rates. Lower rates are not in their corporate interests. They are responsible to their shareholders to increase revenue and profit margins. Any other goals are secondary.

We, as California, need to take action and drive down energy prices, and we must act now.

We need to Dig Deep, Think Differently, and Invest in an Energy Revolution.

Fire risk is electrical risk. California has had several catastrophic fires, some of the worst were started by high-voltage electrical lines. Even recently, in Hawaii, electrical lines were identified as the reason for the disastrous fires wiping out Lahaina, Maui. The risk is exacerbated by aging infrastructure, infrastructure that was planned and built in a different era, built on different assumptions. We now face a changing climate that makes dry weather life-threatening and can’t continue with assumptions made from the 1950s, 60s, and 70s. We need next-century, next-level thinking.

To immediately limit electrical wildfires, California and PG&E have rolled out a significant program to shut off power lines during high winds or dry conditions. This prevents sparks from causing fires, but it also makes the grid unreliable for large populations. In the last few years, it wasn’t uncommon to hear of businesses shutting down when the power went out or investing privately into their own batteries or solar power. However, not everyone can make these accommodations, and unfortunately, some have died when medical equipment or air conditioning couldn’t keep people safe in their homes.

We can’t both expect people to switch to electrical power and create an unreliable grid. Something more has to be done.

PG&E has proposed burying thousands of miles of power lines. In a reasonable faith effort, they have already started, putting hundreds of miles under the earth, where high winds or tree branches can’t cause sparks, shorts, or start fires from the raw heat. It’s an expensive project.

( And as someone originally from Chicago, I don’t think we should only bury the high-risk lines. IMO, Bury all power lines! Chicago is steeped in history and stories of the Great Chicago Fire, and previously, California has always seemed blasé about fire prevention and building codes. But I digress. )

It’s the right thing to do. Putting the lines underground eliminates a majority of the fire risk from electrical lines, but some look at the rate hikes and are suggesting that PG&E should only insulate the lines and keep them elevated in harm’s way of trees, winds, and heat damage. Sure, it mitigates some of the risks, but it really seems like it throws pennies at a problem as a token gesture vs. actually solving the core problem.

If money wasn’t a question, and safety was our chief priority, I am sure we would bury 90% of the lines, even those in SF. As a computer and electrical engineer, one who interned for a “box and pole” company like Cooper Power Systems designing high voltage switching systems, I can tell you that SF has a lot of fire risk in an earthquake or a ‘high wind’ situation if some of our uninsulated wires fall over or if tree branches fall on them. I have several uninsulated power lines right outside of my window, and I have several more where the insulation is peeling off because PG&E can not keep up with the infrastructure. Just imagine if SF gets hit with a hurricane. Something we know now is possible since it happened earlier in 2023.

Let’s admit Infrastructure as a Monopoly is a failure

• We know we need to replace thousands of miles of high-voltage lines.
• We acknowledge that PG&E has started the work, and the work must continue expeditiously without interruption.
• Lives are at risk.

To borrow a metaphor, we must construct this vehicle even as it races down the freeway at 50 mph.

We need a solution that doesn’t involve stopping and starting over, but if we are going to replace so much infrastructure in the next decade, that’s essentially what we are doing. We are building a brand new electric grid to support more homes, more cars, more stoves, and to power all of our commercial and industrial enterprises for the next century. We need to think big about this.

My electric bill breaks down the cost of electricity into 3 pieces, or 2 to get simplistic: infrastructure costs and electric generation costs. The third is taxes. (A tangential issue is that PG&E is trying to add a 4th cost, a base customer cost, and a $10-$20 baseline cost for every customer account, but this is not in the scope of this discussion ).

Infrastructure costs that require long-term thinking are monolithic, and investments in infrastructure are about risk mitigation.

Energy generation costs exist within a limited commodity network, and buying power from multiple sources is possible in 2023. I buy my power from SF Clean Power. Both SF Clean Power and PG&E can buy power from out of state given the right circumstances.

Given the proper infrastructure, we could have multiple power companies/organizations compete. PG&E, among other power companies, tries to claim their monopoly right and privilege so they can make enough money on power generation to fund infrastructure development. However, if we remove infrastructure from their equation, their costs are localized to their power plants. Then, each power generation company’s expenses are localized to their own power plants. Segmenting the Power Generation companies from the public grid infrastructure makes it easier to build a competitive power supply market. From large billion-dollar power companies to more boutique start-up power companies that could supply directly to the grid.

Suppose PG&E only had to focus on its power plants and power generation. In that case, it’s likely they would align not only with shareholders and consumers, but I suspect California would inspire a race to produce cheaper electricity. If done correctly, power generation companies like PG&E could sell power outside of California, too.

That leaves California with the Infrastructure problem. PG&E knows a little bit about how to solve this problem. They are doing it now, but what if we broke up the company into two parts? The power generation component could stay independent and 100% as a for-profit public company, while the infrastructure part could be sold to the State of California.

California could then organize “The Grid” as a separate org that is community-owned. If done well, communities are responsible for their own risk like they are for so many other things, and then PG&E or other power companies could pay ‘tolls’ to those communities to sell power through. Maybe those communities pay for the grids through taxes, and consumers are only responsible for the kilowatts they use.

(Side Note: AMD was a struggling company ten years ago. It both manufactured and designed its own chips, but the foundry/ manufacturing business kept burdening the design portion of the company with debt and production delays. The two halves of the company were supposed to work together, but their different needs actually made it harder for each half to work efficiently. When Lisa Su took over, she separated and sold the foundry business and transitioned AMD to using Samsung and TSMC to manufacture their chips. Since then, AMD stock and products have been on a tremendous growth cycle. AMD Stock has grown 40–50x since she took over as CEO. Sometimes, a company can’t have two core businesses or ‘two masters.’ )

Paying for Infrastructure per kilowatt-hour is Regressive

The current thinking isn’t driving the behavior we want. It’s putting the most significant burden on those with the least fiscal flexibility. We could think differently and raise money for infrastructure through many avenues that are not being considered.

• PG&E Asset Sales
• PG&E Share Sales ( create new shares and sell them )
• State of California buying an Equity Stake.
• PG&E Selling Assets and Services to CA
• Selling Green Bonds that are tax-deductible
• Etc.…

( after coming up with a few of these, I asked Chat GPT, and it came up with like 30–40 more, and there might even be others, too )

If we can separate the concerns of power generation and infrastructure, we can better align the needs of each task with the people who should be responsible for it. We can revolutionize the power industry, deregulate it, take down a monopoly, and incentivize competition to bring down power generation rates. Meanwhile, communities can address the long-term needs by building a Power Grid 2.0. A truly smart grid for the next century, setting a global example for achieving a green, lean, and clean future!