California is on fire again. A combination of strong winds and low relative humidity—driven by climate change—has allowed rapidly growing blazes to burn more than 94,000 acres and counting.
But many Californians are just as worried about PG&E, the nation’s largest for-profit electric utility, which has intentionally cut off power for hundreds of thousands of customers in an attempt to avoid sparking more wildfires.
In this guest post, adapted from an op-ed published by the Sacramento Bee, economic sociologist Charlie Eaton looks at the latest social science research to argue that the public should own PG&E, not Wall Street.
PG&E should belong to Californians. Not to its Wall Street shareholders.
By Charlie Eaton, for the The Sacramento Bee
The first big lesson from recent research is about who should not be allowed to own PG&E—namely Wall Street. Gov. Gavin Newsom and other policy players should take every step necessary to block a consortium of 24 private equity and hedge funds that are currently attempting a hostile takeover of PG&E.
Why? The interests and track record of the investors trying to take over PG&E speak for themselves. These types of funds explicitly seek to extract windfall profits from the companies they acquire, with little concern for the long-term economic viability or social importance of the company.
If Wall Street ownership is out, what are the alternatives?
Sociologists and economists have noted that consumers often rely on nonprofit enterprises in sectors where competition is limited and it is hard to evaluate the quality of what is being sold.
Nonprofit ownership does not guarantee that a company will well serve the causes of consumers or climate justice. Nevertheless, it does obviate some of the Wall Street investor pressures and claims on resources that can work against public interests.
A third alternative is public ownership by municipalities, the state or other public agencies.
Like nonprofit ownership, public ownership involves fewer pressures to extract profits for private interests. Public ownership can also involve representative democracy in organizational governance. This may help to hold utilities accountable to key stakeholders including consumers, climate change-impacted communities, taxpayers and workers.
Advocates for public and nonprofit alternatives have their work cut out for them if they are to overcome the hostile takeover bid by PG&E’s bond investors. It can be easier for elected officials and even residents to opt for the devil they know when they are unsure how a new alternative will work.
To ease these fears, we need clear policy designs for how existing institutions could assume nonprofit or public ownership of the power grid and enhance energy and environmental equity across northern California’s disparate regions.
Otherwise, PG&E will just be handed over to a new set of Wall Street bosses who are, as the saying goes, the same as the old bosses.
Read Eaton’s op-ed here.