Transmission and distribution costs: i.e. the grid.
California is a massive state, has very rugged terrain, and there's a ton of deferred maintenance on transmission lines that are more than 50 years old, that are at huge risk of causing massive wildfires that destroy entire towns.
This has been terribly mismanaged, because like most places with regulated monopoly utilities, the regulatory body is opaque and not very responsive to the needs of the public.
The utility doesn't make money on electricity generation costs, but it does get to take a fixed rate of profit from grid infrastructure costs. So the obvious game for a for-profit regulated monopoly utility is to jack up the grid costs as high as possible, try to snow the regulators to possible cheaper alternatives, and rake in more money.
I remember one case where PG&E got approval to charge for grid maintenance, spent hundreds of millions, had ~$100M leftover, then declared "oh we did it cheaper than we expected, executive bonuses all around the C-suite with the extra!" And then we had multi-billion dollar wildfires the following year.
Utilities are not normal businesses, they make more money by increasing their input costs. (See also the US healthcare system where incentives are similarly perverse... Insurance company profits are capped at a fixe percentage of health care expenditures, so the route to more profit is to increase health care expenditures.)
Of my decades in California, there's been a single gubernatorial candidate with deep knowledge of the grid and how to fix the regulatory structure, and it's the governor who actually appoints people to the regulatory board of the utilities, so the governor and their appointees have the power to fix this. That gubernatorial candidate was Tom Steyer, and he had/has fantastic plans, but I fear he just lost the primary:
Solar is a contributing factor in the grid costs though. You cant say solar generation makes wholesale prices cheaper then completely exclude how an oversupply of solar and tons of curtailment drives grid costs up.
No it really isn't much of a contributor to the current grid costs, which are nearly all maintenance and mismanagent.
Especially residential solar, which greatly lessens the need for distribution and transmission max capacity, therefore T&D costs, yet this is an area where the utility has been able to present very biased analyses that snow the regulators, because anything that lessens T&D need means that the utility makes less money and must be stopped.
There is not tons of curtailment of solar, it's a solved problem. Storage is now super super cheap. Grid maintenant is super expensive.
We have all the accounting right in front of us, and the answers are clear.
> I remember one case where PG&E got approval to charge for grid maintenance, spent hundreds of millions, had ~$100M leftover, then declared "oh we did it cheaper than we expected, executive bonuses all around the C-suite with the extra!" And then we had multi-billion dollar wildfires the following year.
... Is PG&E also expected to do the forestry management? Or what other maintenance could they have done with the money?
California is a massive state, has very rugged terrain, and there's a ton of deferred maintenance on transmission lines that are more than 50 years old, that are at huge risk of causing massive wildfires that destroy entire towns.
This has been terribly mismanaged, because like most places with regulated monopoly utilities, the regulatory body is opaque and not very responsive to the needs of the public.
The utility doesn't make money on electricity generation costs, but it does get to take a fixed rate of profit from grid infrastructure costs. So the obvious game for a for-profit regulated monopoly utility is to jack up the grid costs as high as possible, try to snow the regulators to possible cheaper alternatives, and rake in more money.
I remember one case where PG&E got approval to charge for grid maintenance, spent hundreds of millions, had ~$100M leftover, then declared "oh we did it cheaper than we expected, executive bonuses all around the C-suite with the extra!" And then we had multi-billion dollar wildfires the following year.
Utilities are not normal businesses, they make more money by increasing their input costs. (See also the US healthcare system where incentives are similarly perverse... Insurance company profits are capped at a fixe percentage of health care expenditures, so the route to more profit is to increase health care expenditures.)
Of my decades in California, there's been a single gubernatorial candidate with deep knowledge of the grid and how to fix the regulatory structure, and it's the governor who actually appoints people to the regulatory board of the utilities, so the governor and their appointees have the power to fix this. That gubernatorial candidate was Tom Steyer, and he had/has fantastic plans, but I fear he just lost the primary:
https://www.volts.wtf/p/tom-steyer-wants-to-be-californias