Pacific Gas & Electric (PG&E) is a billion-dollar, privately-owned, publicly-regulated utility whose main function is to make enormous profits for its shareholders at great cost to ratepayers. I know this to be true; I'm one of the ratepayers. The California Public Utilities Commission (PUC) permits PG&E to charge rates that are 30 percent higher than the national average.
PG&E's shareholders enjoy a guaranteed 11.35 percent yearly return on equity. That's slightly higher than the 11 percent that Bernard Madoff pretended to offer his investment victims. After Madoff was exposed, his victims were chided for not having realized that no one pulls down an 11 percent return year after year on the stock market. But PG&E investors take in more than that every year. Unlike Madoff, the company's earnings are for real, guaranteed at a fixed return, devoid of risk.
PG&E enjoys a captive consumer market of 15 million customers in northern and central California. The utility is a monument to state-supported monopoly capitalism. If costs rise, then so do customer rates—in order to guarantee the 11.35 percent return. PG&E carries a $17 million insurance premium and additional millions in insurance deductibles; these expenses are picked up by its rate-payers.
Along with all the other expenses they bear, PG&E's ratepayers usually pay for the enormous costs of utility accidents. This may still prove to be the case with the disaster recently in San Bruno. On September 9, 2010, a PG&E pipeline blew apart. Gas explosions and flames ripped through the San Bruno community, taking the lives of at least 8, injuring over 50 others (some very seriously), and completely destroying or damaging upwards of 100 homes. An official from the National Transportation Safety Board described it: "My immediate assessment was the amazing destruction, the charred trees, the melted and charred cars, the houses disappeared."
One wonders how many other California communities are at risk from aging and deficient pipelines. So much for the superior performance of a giant private-profit corporation.
Left out of the picture is how corporate malfeasance and corporate-generated disasters are a reflection of the capitalist system. If a gas pipeline had exploded in communist Cuba, killing people and destroying homes, the incident would immediately have been treated by U.S. commentators as evidence of the deficiencies of the broader economic system, as proof that socialism cannot do it right.
But disasters in our society are seen simply as immediate mishaps, at worst, instances of negligence and mismanagement by a particular company, never as the outcome of a broader capitalist system that steadfastly puts profits before people, with immense costs passed along to the public.
The same is true of mining accidents, train wrecks, plane crashes, unsafe auto vehicles, unsafe consumer products and foods, toxic spills, offshore-drilling calamities, and a host of other noxious things that corporate America foists on us. Private industries are not in the safety business. All of them are in the business of creating the largest possible profits for their shareholders and their executives.
I'm one of the lucky ones who don't get their gas and electric from PG&E. Our electric company (TDPUD) is pretty generally on the ball and our gas lines (SWG) are only a few years old.
And how are the utilities in your neck of the woods doing? Anything rusting its way to catastrophe in your back yard?