Electric Oligarchy

In yet another age of deregulation and utility "competition," PG&E is asking for a one billion dollar rate increase.

The electricity DISTRIBUTION monopoly that controls the state legislature - and the public utilities commission that "regulates" the oligarchy?wants half a billion bucks to replace gas pipes and poles. Here's the scam: They want us to pay twice for these items.

Long ago the consumers paid off the fixed capital costs of the energy distribution network. Along the way, PG&E has taken depreciation on these same items, i.e. it has reduced it's taxes over time by the amount of the projected replacement costs for its fixed assets. Depreciation is based on the logical assumption that, one way or another, a business sets aside the cash for replacing its used-up means of production and distribution. Utility rates already factor in replacement costs!

Capital punishment

Other amazing elements of the rate request include paying more for ongoing operations and maintenance, taxes, administration expenses, tree trimming, hiring more customer service reps. In other words, the customers are supposed to subsidize PG&E for failing to stick to its budgets. Consumers fund the RISK for expansion; and the investors - who risk NOTHING - take all the profit as rates inexorably increase.

The definition of investment is that the investor RISKS his/her money. A well-run company uses its investor's capital wisely and makes a profit for its investors. A badly managed company returns nothing to its investors. By its own admission, privately-owned PG&E is an extraordinarily badly managed company: yet, its investors are guaranteed a profitable rate of return by the state no matter how badly the company performs. Along the way, PG&E just assumes that ordinary people are too stupid to figure out how depreciation works!

This is not free market capitalism. This is governance by financial oligarchy.

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