In the last few years, PG&E has been under scrutiny for the damages it has cost Northern California residents and the environment due to pipeline explosions and forest fires. Due to the lawsuits following the wildfires in 2017 and 2018, PG&E has filed for Chapter 11 bankruptcy.
When the wildfires began, PG&E’s annual revenue was $17.135 billion with a 3.01% decrease before the wildfires. The next year, their annual revenue decreased by 2.9%, coming out with $16,759 billion.
During the time, many residents were angered that their electricity was cut to prevent wildfires and some estimated that it would cost California’s economy $2 billion due to commercial and industrial losses. These estimates are derived from the hours of electricity consumers use in kilowatts and the economic value that was lost due to the shortage.
However, since government regulators determine the prices of electricity and PG&E is the only company with the infrastructure to supply electricity for their region, PG&E has the incentive to improve the efficiency of their production to make electricity cheaper for consumers since regulators will set the price to cover costs, no matter what those costs are. In addition, the government has imposed this monopoly that makes it illegal for other companies to try to get PG&E’s consumers.
Overall, PG&E faces $30 billion in liability costs, and the court will decide what will happen since they are unable to pay even with insurance and assets combined. PG&E will now have by June 30, 2020, to accomplish its plan of emerging from its bankruptcy.
As of Monday, PG&E has pled guilty to involuntary manslaughter for more than 80 lives lost in Camp Fire.
Sources:
As of Monday, PG&E has pled guilty to involuntary manslaughter for more than 80 lives lost in Camp Fire.
Sources:
This post was very interesting and it will be interesting to see how the monopoly that PG&E holds will play out in the future. I think that they may exit the scene but I don't know they will be able to fill the void they left behind. With the state of California protecting PG&Es monopoly, I doubt they would want it to become an oligopoly or a let other elements of competition come into the field. I imagine that one new company will assume the role of PG&E, and just copy all of the elements to not force the entire state to learn a new way to pay for electricity and get it.
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