Have you ever read an article and just cringed. Well, recently there was an article which began with the statement that: “If there’s one thing the government is good at, it’s fixing massive crises.”
Prevention or repair?
Let me ask you this. Do you want to have your house rebuilt after the flood? Or, would you rather have the flood averted? What would they say in New Orleans? Good government prevents the crisis. It is good politics to give you a low-interest loan to rebuild after the crisis. There’s a difference between looking good and actually being good.
The Governor of California, Gavin Newsom is a Democrat. He has made a threat to take over energy company PG&E. It sounds absurd, it is bad policy, it is probably legally and constitutionally challenged. But it is great politics. It is the Democrat way. Talk tough and be sure to do the most popular but wrong thing. It is a great way to set up a future crisis; a terrible way to prevent one.
PG&E may or may not have culpability in the California wildfires. They are bankrupt. That means they have no money. So, can they handle the issues that have sparked massive wildfires in California? Clearly they cannot. With that said, Newsome has a bright idea. The government of California can step in and solve the problem.
Problem-solving or grandstanding
Newsom wants the state to get involved in PG&E’s bankruptcy case. You know, to speed up the resolution of the bankruptcy. The state adding its participation is not adding dollars to the company’s coffers. That is the issue in bankruptcy. The creditors did not get paid.
The debtor’s income stream was insufficient to remain a going concern. There was no appetite for the issuance of additional debt. Short of adding money to the bankruptcy proceedings; the state should stay out of the electricity business. It has no expertise in power generation and distribution. Democrat leadership? Do you know the difference between looking good and being good?
Part of the problem with PG&E is that it has to contend with the regulatory environment in California. The state, California, is part of the problem not part of the solution. California has one of the worst budget deficits in the nation. It has one of the largest unfunded pension liabilities in the nation. Arguably it has no financial expertise to bring to the table. It has contributed to the bankruptcy already. It damaged PG&E through its regulatory excess in rate control, work rules, and wage and benefits tampering. But it does have Democrat politicians sounding off. They are “Lookin’ good, man.”
A news outlet reports Newsom wants the state government to take part in the company’s restructuring. How does this make sense for the company, the state or taxpayers? Newsom said in an official statement:
“It is my hope that the stakeholders in PG&E will put parochial interests aside and reach a negotiated resolution so that we can create this new company and forever put the old PG&E behind us… If the parties fail to reach an agreement quickly to begin this process of transformation, the state will not hesitate to step in and restructure the utility.”
Newsom said, “The major wildfire safety bill that I signed into law earlier this year – AB 1054 – requires PG&E to make these fundamental changes. It forces PG&E to make massive investments in safety, ties executive compensation to the utility’s safety record and demands that every year the utility earn a safety certification from the state… And earlier this week, a newly energized California Public Utilities Commission took strong action by opening a major investigation into PG&E’s use of Public Safety Power Shutoffs (PSPS), and vowing a total reform of the rules and regulations governing power shutoffs.”
He also said California “is developing the blueprint for a transformed utility. Consistent with AB 1054, PG&E must incorporate that blueprint into its bankruptcy plan.”
Okay, here’s the deal. Yes, PG&E’s is responsible for Californians losing their power due to blackouts. Yes, the blackouts are purposefully implemented by the company. The state wants fewer fires and the only way to accomplish a reduction is to de-energize problematic circuits. The blackouts were necessary to prevent its equipment from causing more fires. That is annoying and inconvenient. It does not mean the Government can or will fix anything. Here’s why.
When the government’s approach is to write a law to make something illegal or to require a utility company to do or acquire something the approach is unhelpful. The new law simply does not put the fire out. What it does do is cost every person who uses electricity more money. It does not prevent future fires. Democrat Leadership? Are you grandstanding or problem-solving?
It does not add money to the treasury of a bankrupt company. Bankrupt companies cannot buy things to upgrade their equipment. They cannot do that because they have no money and no one will lend them money. That is why they are bankrupt. The governor is grandstanding not problem-solving.
This large multi-state power generation and distribution company is in federal bankruptcy court. The state, regardless of their puffery will not bully the federal court. The bankruptcy system is designed to provide as much protection as it can to the parties concerned. There is a difference between political posturing for personal gain and actually doing something useful. Democrat leadership do you know the difference between looking good and being good?