While I think you’re generally on point, this misses the mark a bit. We don’t want more transmission lines running in CA, right? We don’t want lots of little companies increasing the risk of fire by managing lines independently and the one that’s losing then doesn’t have the means to maintain those lines.
We might want competition at the generation point, but the transmission lines should be a monopoly. What needs to be fixed on the transmission is that there should not be a profit in maintaining them, bc the profit comes from lack of maintenance. The last three disasters caused by PG&E, can basically be boiled down to a maintenance problem, or lack of.
All the transmission lines and maintenance should be transferred to the state, and the profit motive, by not maintaining the infrastructure properly, be removed.
Again, competition in power generation (and storage) is good, competition in transmission is bad.
What your describing sounds fantastic and is politically expeditious because there is less risk in backing the prevailing methodology, but it is not improvement.
Competition in transmission is good, because alternatives like alternative energy would completely displace these systems and technology advancements would be available and legal - unlike the current insanity.
You know how you can’t put in an oversized solar system and sell power back to the grid, even if you can afford to? Did you notice that the grid is super inefficient because it’s got a limited number of highly centralized generation sources? No? Well that’s the consequence of ownership of the transmission lines. If you own the last mile you own the network. And if you also own the politicians who can protect your last mile interests, why would you invest in change?
I agree that there are advancements in transmission needed. All of your points are correct, but I disagree that the risks of the free market are the way to get there.
I just drove from SF to LA to let my kids have some some fresh air (ironic, right?). It took us 4 hours, all the way to the grapevine (just past Bakersfield) to not see the smoke, to have more than a few miles of visibility. The cost of the risks from an improperly maintained grid would be horrendous.
I’m not an electrical engineer, and my knowledge of how the grid operates is limited, I’ll admit, I’m just incapable of seeing a free market solution here, where failure can result in a catastrophe like we’re experiencing here now. As I understand the interconnected nature of the grid, it needs centralized management to control the transmission system. I luckily have the means to get my family to safety (we came back yesterday as the air is finally starting to clear), but that’s not an option for many people. I don’t believe the free market you speak of could ever exist, and I don’t think it’s worth watching things deteriorate to find out.
A perfectly reasonable argument.
If a certain market needs to be a monopoly, then it ought to be state controlled, like the FCC's monopoly on air waves. That is the only way to ensure free-market capitalism.
The purpose of the market is to create an efficient society. Indeed, it is the best vehicle to do so. However, a market means that there is choice.
In the absence of a market, the next best alternative is democratic control, best exercised via government.
> We don’t want more transmission lines running in CA, right?
Not in the air. Luckily, you can put them under ground.
> The last three disasters caused by PG&E,
This is willful ignorance. I'd be happy to look over companies that simply had maintenance issues. However, PG&E has proven to not only be negligent, but malicious. They've poisoned people knowingly, without disclosure. They've covered up negligence over the explosions of city blocks.
I am not anti-business. Despite its many issues, Southern California edison is a much better company.
PG&E though is -- quite obviously -- quite a bit more nefarious than most utilities.
> competition in transmission is bad.
No it's not. Competition would always be good. Your argument was that competition in transmission was not possible.
Wildfires can destroy large swaths of land, and they are certain to occur every year, but not at every susceptible house. My mother has lived in a house in a high fire risk area of Northern California since the early 1980s, but her particular neighborhood hasn't burnt. Neither has the houses of my father-in-law, grandma-in-law, and two brothers, which are all in similarly high risk areas of Nor-Cal. Likewise, in March, nobody would have predicted that Paradise, CA would all but be destroyed, nor would they have predicted the damage in Santa Rosa the previous March. But we could still have concluded that those areas are at risk.
An insurance company can assign a value to your property (in fact, they probably already have), can estimate the probability of loss due to forrest fire, compute the expected value of payouts, add overhead, add profit, and sell you a policy. Damages are correlated on a local level, but not on a statewide level - that there was a fire in Paradise, CA doesn't increase the odds that Quincy or Fort Bragg will experience a fire too this year.
With fire damages in the tens billions per year but maybe only millions of insured to spread around the cost, people might not like the resulting premiums, but they can choose to lower their risks (and hence insurance premiums) or roll the dice.
[1]: And in managing the large pile of money you need to have on hand in case you end up with more unlucky customers than expected.
All insurers have to do is to pool risk and diversify across geography. No way only California has homes near forests? There’s also reinsurers to pool even more risk.
How is it better to pool risks to the group rather than the individual paying a for that risk? The US already has a huge problem with coastal real estate and federal insurance of coastal developments. Why would we introduce that at scale?
Why should the collective pay for individual choices? It’s not like the society got together and made people move into fire prone areas.
I am not trying to draw parallels to health insurance which has many ethical questions that drive deep consideration, but I don’t understand why asking for the group to insure individual risk that is fundamentally founded in individual choice is in any way necessarily better?
How is it better to pool risks to the group rather
than the individual paying a for that risk?
(1) If the state pays for wildfire damage, the 10000 people will pay $100 each whether they're in a fire-prone area or not.
(2) With home insurance including wildfire insurance, insurers set individual premiums based on their best risk models, and the 1000 people in fire-prone areas will pay $1000 each, whether their home burns down or not.
(3). If there is neither (1) nor (2), the 10 people whose houses were destroyed will pay $100,000 each.
Some people would say that (2) is the morally correct level of cost distribution, as (1) unfairly subsidises risky behaviour, while (3) bankrupts disaster victims at random.
Home insurance includes wildfires, but let's limit ourselves to wildfire-specific insurance, which was the issue at hand.
Not all insurers are nation-wide.
How do the insurance companies afford to insure places like in Florida and the lower East Coast, which seem to keep getting hammered with hurricanes year after year, getting worse year after year? And... can they keep up this pace? Apparently in 2017, fires "only" cost insurance companies ~$14B, out of ~$132B paid out. The majority was caused by Hurricanes Harvey, Irma, and Maria. 2017 was the 2nd costliest year on record in terms of natural disasters (have to wait for '18 numbers released in Jan). So why is fire insurance untenable while hurricane ins. isn't?
https://www.reuters.com/article/us-global-insurance-aon/2017...
And, as I said above, wildfire is covered in home insurance policies. However, the argument was about wildfire specific insurance. That is untenable since it would cause large insurance runs every year.
Of course some customers might not like having to pay market rates for fire insurance.
That's why for catastrophe risks like wildfires you have reinsurers talking that risk - e.g. catastrophe reinsurance market in Bermuda.
Funding was cut last year and boom we have back to back years of fires.
The fires in California are not caused due to bad budget cuts over the past few years, but rather the mistaken environmentalist policy of not allowing controlled burns for the last 100 years and extinguishing natural fires out of needless heroics to save species that are now in ever more need of saving: https://www.theatlantic.com/science/archive/2018/11/californ...
It's property owners who are opposed to prescribed burns, because there is a risk of prescribed burns getting out of control. From wikipedia: "In 1978, the Forest Service abandoned the 10:00 am policy in favor of a new policy that encouraged the use of wildland fire by prescription.[1][13]
Three events between 1978 and 1988 precipitated a major fire use policy review in 1989: the Ouzel fire in Rocky Mountain National Park, the Yellowstone fires of 1988 in and around Yellowstone National Park, and the Canyon Creek fire in the Bob Marshall Wilderness on the Lewis and Clark National Forest. In all three cases, monitored fires burned until they threatened developed areas."
those events caused a backlash against controlled burns, because obviously it's hard to sell the public that some destruction of property now is better than more of it later.
The solution to this fire is absolutely to blame pg and e and its custoners (yes this includes me). This is the logical conclusion. The only thing preventing us from doing this is a refusal to count ourselves complicit in this fire.
The solution furthermore is to legislate to remove the barriers to competition that California has set up. Even though I try to do the right thing by buying my electricity from something other than pg and e, I am -- by government sanctioned monopoly -- forced to pay of and e for 'distribution'. I put this in quotes because I am not charged this fee if I buy direct from pg and e. The state allows this non competitive monopoly. When I confronted my congressman, his response to why the state allows this is that the ' pg and e lobby is strong'
If the state cannot preserve a competitive market for energy, then the state needs to seize energy production. Monopoly is not capitalism and it is not the free market and it is not freedom. A state run solution is very non ideal (I say this as a libertarian), but it is the best among all others.
As it is right now, people in England are able to buy shares in my utility and are more incentivized to cut costs and increase profit even to the point of causing harm that will never affect them.