[lacker]

PG+E isn’t “too big to fail” at all, they just went bankrupt!

The real issue here is that PG+E is responsible for wildfires caused by power lines, and they don’t have many ways to deal with it. They aren’t allowed to raise rates to pay for more anti-fire measures. They can spend their fire prevention budget smarter, but at some point the gains there are maxed out. One of the few things they can do is to shut off power during times of high fire risk.

[inferiorhuman]

They aren’t allowed to raise rates to pay for more anti-fire measures.

They don't need to. They could cut back or eliminate their dividends, cut back executive compensation, stop buying back stock, etc., etc.

They cut back their line crews ages ago (plenty of cost savings there), and if San Bruno is any indication, PG&E hasn't bothered to keep records (additional cost savings) for quite a while.

[roenxi]

Well they could, but:

1) Those options, similar to spending the fire protection budget more smartly, also cap out at some point.

2) One of the reasons things like executive compensation get out of control is because they are a rounding error vs. the overall corporate spending. Cutting that back to the bone is not likely to be materially helpful.

3) "cut back or eliminate their dividends, ... stop buying back stock"

They may as well shut down the company (which is what they are doing on a temporary basis). There is no reason for them to be shouldering increased risk if the reward is reduced compensation. If that is the way the game gets played only idiots would be willing to own and manage a power company. It is more comforting to think that power companies are being managed by intelligent and rational people.

[inferiorhuman]

They may as well shut down the company

As I said PG&E makes a really great case for municipal power.

There is no reason for them to be shouldering increased risk if the reward is reduced compensation.

Fire prevention reduces risk. Conversely, this reduced risk scenario you're talking about has resulted in PG&E going bankrupt twice this century.

As for exec compensation and buybacks, PG&E spends a few hundred million dollars annually buying back stock. The fire prevention budget doesn't need to be infinite, but $200-300 million would go a long way. KTVU identified three SVPs who make around $500,000 annually. Yes, that's not a ton of money compared to PG&E's income, but a couple extra million could easily pay for brush/fuel removal.

https://ycharts.com/companies/PCG/stock_buyback

http://www.ktvu.com/news/despite-bankruptcy-pg-e-executive-g...

Edit: Per the KTVU article, that half a mill per SVP is the base salary, so bonuses and non-cash compensation aren't included.

[PeterStuer]

Actually having a vital utility in private hands is a guaranteed recipe for getting service that is optimize for making the most profit rather than providing the best value.

You might be lucky in the honeymoon period where the company is still getting entrenched, but once that is over and getting them out again is not that easy, you will gravitate to minimal service, especially in areas that require investment, and being bled dry and fleeced for wathever they can.

Large risks that would require preventive maintainable or modernization to mitigate will be ignored as the company knows they will be bailed out should it come to that.

And all this because of the neoliberale dogma that the private sector is somehow always 'better' than the public sector.

In reality large. organization of equal size have the same efficiency problems, regardless of them being public or private sector. And before you point to a leaner small private champion in a competitive field you should systemically add the cost of the dozens or even hundreds of competitors they are 'beating'.

The advantage you have when things are not in the hands of the private sector is that you can prioritise ongoing quality and value of service provisioning over maximisation of short term profit extraction.

[Google234]

Cut their income in half and get 1.5 million which is 0.008% of PG&E's income. Then those three SVPs will leave and you will need to hire three more which won't be cheap. How much do you think a SVP in a company making 18 billion a year should be paid? That sounds like a lot of responsibility to me and the people qualified for the job will expect to be compensated accordingly. Anyway, I doubt you would come out in the green at the end of this pointless exercise.

[Dylan16807]

How many SVPs do you need?

And what makes you think you can't find a competent manager for $250k a year?

[ericd]

Because you can get much easier jobs that pay $250k? And because jobs at that level at other big companies frequently pay much more than the current $500k, even? Basically, you're going to get outbid for the people you want.

[bfung]

It’s also one of few levers to hold executives accountable for their decisions and actions. The other being jail time.

[Google234]

So the salaries of the VPs of Human Resources or Finance should be cut? Anyway, most their salary is probably in stock options so it's already happened.

[bfung]

VPs are technically not executives. In a corporate structure, the Board of Directors and the their reports (CEO, Presidents, etc) are the ones actually making decisions and managing the company overall.

For example, the CEO of PG&E before 2019 was https://en.wikipedia.org/wiki/Geisha_Williams .

Here are the PG&E filings to the SEC: http://investor.pgecorp.com/financials/annual-reports-and-pr...

2017: http://s1.q4cdn.com/880135780/files/doc_financials/2017/annu...

2018: http://s1.q4cdn.com/880135780/files/doc_financials/2017/annu...

2019: http://s1.q4cdn.com/880135780/files/doc_financials/2019/05/2...

Ultimately, if something in a company goes wrong, the buck needs to stop at the CEO and if not CEO, the board of directors. In the end I guess only we shareholders are to blame.

For lower performance between 2016 and 2018, the CEO got a raises each year (snippet from 2019 page 81):

Name and Principal Position: Geisha J. Williams(a) Chief Executive Officer and President, PG&E Corporation

    year salary    bonus stock award                                    total
    2018 1,079,167 0     6,400,078    1,600,003 0       40,341  170,253 9,289,842
    2017 991,667   0     6,500,168    0         0       996,810 108,575 8,597,220
    2016 695,833   0     2,250,072    0         610,594 519,983 87,748  4,164,230

Check PG&E's stock performance between those years - the compensation does not match reality. I'm saying that these listed officers shouldn't be getting the compensation they are getting as it's not reflective of the health of the business they're running.

[inferiorhuman]

So the salaries of the VPs of Human Resources or Finance should be cut? Anyway, most their salary is probably in stock options so it's already happened.

I just quoted the base salary (a.k.a. cash) of three SVPs.

[roenxi]

> As I said PG&E makes a really great case for municipal power.

So if a power pole is owned by the government it suddenly becomes non-flammable? That isn't based on the laws of physics.

There is a strategy that makes countries fantastically wealthy: only do things that are profitable. Running the energy grid for no profits is not a path to broad-based success, it only results in taxpayers paying for things that have no marginal value. If it makes sense with electricity then there is no logical reason not to try the same strategy with gasoline, food and shelter. At some point the damage goes critical and Venezuela happens.

Also, buybacks aren't primarily a form of executive compensation; I'm no expert but they look like a work-around for double-tax issues in the American income tax law. A buyback is a method of transferring money -> stock holders and in this context is basically just a dividend.

I've no idea what is going on in California, obviously, but strategies like 'nationalise it!', 'stop the capitalists raising prices!' and 'Stop people profiting from their investments!' are just classic arguments that hurt everyone in the long term. Literally caused societies to collapse in extreme cases.

[anoncake]

> If it makes sense with electricity then there is no logical reason not to try the same strategy with gasoline, food and shelter.

Those aren't natural monopolies.

[inferiorhuman]

They can spend their fire prevention budget smarter, but at some point the gains there are maxed out.

For those following along at home, after blowing up a San Bruno neighborhood PG&E diverted $100 million of money earmarked for safety. Where'd that money go? Executive bonuses and dividends. They have plenty of money for improvements and there is zero need for rate increases.

https://www.sfgate.com/bayarea/article/PG-E-diverted-safety-...

[Animats]

PG+E isn’t “too big to fail” at all, they just went bankrupt!

Twice, since deregulation. Zero times, in the century before deregulation.