When Politicians Direct Capital

PG&E rates are already among the highest in the country and have increased by 40% over the last decade compared to 15% nationwide. But the reality is that rates would be far higher if PG&E had spent more on insulating equipment, clearing overgrown vegetation and taking other precautionary measures to reduce wildfire hazards.

The PUC didn’t even issue safety regulations to protect overhead transmission lines in high fire-risk areas until December 2017. Only last year did the legislature require utilities to prepare wildfire mitigation plans. Did regulators let PG&E under-spend on safety to prevent rates from climbing even more amid Sacramento’s anti-carbon spending demands?

Democrats in California are lambasting PG&E for putting profits over safety, but its failures owe in large part to a misallocation of capital directed by politicians. PG&E exemplifies what is becoming the liberal market paradigm: Government determines the prices that businesses can charge and the return investors can receive, which depend on their fulfilling political objectives.

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