Bakersfield Californian (Aug. 6, 2018)

JUSTIN SALTERS: PG&E’s plea for a taxpayer bailout is cronyism at its peak

Property owners should not be required to bear that burden of insuring against damages caused by utility equipment for which they have no duty or ability to maintain.

PG&E carries $800 million in liability insurance, but claims from 2017’s disastrous fire season are nearly $10 billion.

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PG&E is spending millions trying to  convince the legislature that without a massive overhaul of state law, the company could be unable to raise the funds needed to settle claims and, possibly, face bankruptcy.

I’m not buying it.

PG&E hasn’t reported a risk of bankruptcy to its investors on earnings calls, or to the SEC in any regulatory filings. Even more, market analysts haven’t given any indication that the wildfire liability has put the company at risk for bankruptcy.

What it does put at risk is the ability of PG&E to maintain its profitability and deliver anticipated shareholder returns.

But investing is risky.

And investors should be aware that when they choose to put their dollars in California utility companies, they are taking on the liability of inverse condemnation. If investors aren’t willing to bear the risk, then they don’t deserve the reward.

 

Taxpayers, homeowners and ratepayers shouldn’t be on the hook for protecting the earnings of a monopolistic industry with known and well-established operating and financial risks.
— Justin Salters for the Bakersfield Californian