California’s fires and blackouts have abated somewhat. But the bad ideas coming out of the Golden State never cease.
On Monday, The Wall Street Journal reported that the state’s Democratic governor, Gavin Newsom, is now considering a government takeover of California’s beleaguered electricity provider, PG&E.
“A push to buy the investor-owned utility and turn it into a giant customer-owned cooperative has gained momentum in recent weeks,” the Journal observed, “with support from the mayors of San Jose, Oakland and Sacramento.” In addition, a recent editorial in the Los Angeles Times embraced the possibility.
This comes as the utility, in an effort to prevent wildfires, has implemented blackouts in various parts of the state that have left more than 2 million residents without power at times. The lights-out approach, it’s worth noting, has the blessing of state regulators. PG&E is already in bankruptcy stemming from $30 billion in potential liability tied to conflagrations in 2017 and 2018 that killed more than 100 people.
No doubt, the situation is a mess. But what planet does Gov. Newsom inhabit where a state-run electricity provider improves efficiencies and provides better service to consumers? The state is already a de facto owner of PG&E through heavy-handed regulatory policies that incentivized the utility to spend billions complying with fashionable green energy directives as it scrimped on upgrading its existing infrastructure or taking other steps to mitigate wildfire threats. If Sacramento is running the show, Californians can expect more of the same — only worse.
A state takeover would leave taxpayers saddled with billions in potential upfront and ongoing costs, the Times acknowledges. The paper argues, however, that they’ll likely pay more anyway under the current arrangement through rate hikes necessary to cover future investments and liabilities. But that depends on the bankruptcy proceedings. At least two potential private options have already emerged: Wall Street hedge funds and Warren Buffet’s Berkshire Hathaway, which now controls NV Energy. The fact that investors believe the company can be salvaged and profitable — even with increased state oversight — is not insignificant.
But the blackout fiasco is quickly becoming an albatross for Gov. Newsom, who has taken to lashing out at PG&E’s “greed” and “mismanagement” while conveniently ignoring the state’s large role in the failures. Advocating a state takeover may help deflect public anger and assuage vocal progressives, but it offers false hope to Californians.
Members of the state’s leftist political class have done a bang-up job with housing policy, the homeless, illegal immigration and transportation infrastructure (See: bullet train). Why not also put them in charge of keeping the lights on? What could possibly go wrong?