Gov. Newsom Floated The Idea Of A State Takeover Of PG&E. How Would That Look And How Would It Impact Customers?

November 2019



Faculty Director, Severin Borenstein discusses the difficult trade-offs facing PG&E and the state.

“I think that it’s important to know that when we get to these situations, where the utility is making the call on a power shut off, they have pretty tilted incentives. The way the law works in California, a privately owned utility is bearing all the liability if their equipment does start a fire, even if they’re not negligent. Whereas, they don’t bare any of the costs if they have a power shutoff; those costs are born by the customers. From a utility’s point of view, even if they are well meaning, they are going to be pushed pretty strongly towards calling a lot of power shut offs, which has led to a lot of controversy when we’ve had them recently. But on the other hand, we have a real problem right now: we do need to consider the longer issue for what we should do with PG&E, but we also have to get through the next two or three months of significant fire risk. That is almost certainly going to require these very difficult trade-offs.”