Because people care about doing a good job. Because they want to be popular in the community. Because the employees are afraid the law will go after them personally.
I feel like our society discounts these first two motivations in favor of money and punishment. And those are a very poor substitute a lot of the time.
A good CEO of a company is considered to be one that provides the best return on investment for the companies shareholders (this is often defended as a morally upstanding attitude, especially in a US context).
If someone is a CEO, and they care about society and about doing a good job, this will almost always mean passing up opportunities to maximise company profits. For example, in this case a diligent CEO would ensure that the company is paying for the maintenance of its equipment.
However, this isn't necessary to maintain revenue given the monopoly position that the company is in. And thus a company board looking to maximise its return on investment may choose to replace this CEO with someone who will prioritise profit over things like societal good and doing a good job.
It is these shareholders that our legal/economic system gives power to. And a majority of shareholders are amoral entities like pension funds who are not concerned with ethics, but are simply looking to maximise profit.
People want to do a good job. Including the executives, who usually are pretty removed from the day-to-day operations. To some of them, squeezing every last nickel out of the business is “doing a good job.”
Because managers want to stay out of prison? But I see your point. The problem with infrastructure is that if you're dissatisfied with one supplier you can't just switch to another. And even if I had another provider or lived off the grid that doesn't help me if I'm downwind from a utility-caused fire.
Internal politics at those kinds of organizations can rapidly turn the chain of reporting into a finely tuned irrationality factory. Over time, "minor sins" like making bad events seem as minor as possible and avoiding critique of your political allies will become organizational muscle memory. The people responsible will practice these distortions of reality over and over as they encounter and dispel smaller challenges that arise over the normal course of doing business. When something big happens, it becomes immaterial whether or not a great solution exists, because evaluating solutions and weighing them against the interests of the company is not even remotely near the day-to-day behaviors of the staff.
How is this not fraud? Fraud is a crime. If someone knowingly falsifies documents, does that void the protection given by the corporations offer of limited liability?
Corporate liability protection is what you run into when you go up the management chain. When you go down the management chain, you end up at the "fall guy".
The person who signed the falsified reports is likely in the second-lowest level of employees (the lowest level of management), who was ordered by the guy above him, who was pressured by the guy above him, who was incentivized by the guy above him, who was winked at by the guy above him, who concocted the scheme to please the guy above him, etc. Nobody really wants to see some low level employee's life ruined and his kids starve simply for being the dummy who accepted a promotion to sign the reports.
Yes, I agree, then it should fall on the CEO, who is responsible for signing off on all of this activity, like financials.
You’re right that we don’t want the guys in the trucks getting busted for fraud, but that shouldn’t mean that we allow the upper management to get off.
> You’re right that we don’t want the guys in the trucks getting busted for fraud
If they knowingly participated in it, why not? In the military, where subordination is far stricter, there's still the concept of unlawful orders, and subordinates are expected to refuse to carry out such orders - and if they do not, they can be held accountable for that.
Some militaries explicitly lack the concept of unlawful orders and surprise surprise - they are the least successful ones. Same thing also applies to businesses. If you do not have a complaint procedure, you acknowledge you are incompetent.
As a foreigner who moved to California a few years ago, I’ve always been puzzled by the existence of PG&E.
Why aren’t the infrastructure parts taken over by the state (or managed by an accountable non-profit body), and competition encouraged for the customer facing parts? Or maybe just do that via the state too, if there’s little commercial interest?
The problem is that the government decided that utilities were going to end up as a natural monopoly, and then guaranteed that outcome by granting legal monopolies to utilities.
Whether or not monopolies would have actually developed had the government stayed out of it is something we may never know. At the moment we have the worst of both worlds -- monopolies that gained their position because the government wanted them to, not because they emerged as natural monopolies by beating competitors. It's impossible to threaten their business because you need to get government permission to compete with them and you probably won't get it. They have no reason to care if their customers are happy.
If the government had built the power lines (or allowed private companies to build them in exchange for selling access to others), and then allowed any number of private companies to generate power and deliver it over those lines, competing for customers on price and quality of service, I think we would be better off. If the natural monopoly theory turned out to be true then action could be taken at that time.
I live in one of the few California cities that are allowed to form their own power companies and I'm definitely better off than my friends who have to use PG&E -- I get the same or better service for a lower price.
In America we tend to put emphasis on allowing a free market to thrive with as little state involvement as feasible. It stems from the ideology that the free market picks winners and losers better than a government. Americans often look at our own Government as having a reputation for being much worse than a big company. We tend to ascribe many of the same negative characteristics such as being slow, wasteful, and lacking accountability.
Therefore Americans tend to prefer that private companies are allowed operate a business for profit will produce a more desirable product/service for the market. When they fail a correction in the market should occur and the business should fail. A competitor should be allowed to fill the void.
PG&E is much worse than a private company. It is the weird result of heavy government regulation on the wrong most ant-competitive ways + lots of lobbying. PG&E is not subject to any free markets. Cali for example has 3 of these companies each serving certain regions. When there was completion in the power market you had multiple companies inside cities all providing different kinds of service (AC, DC, varying volts/amps) in crazy ways that would result in most of our modern electronics getting baked. The standards were good. It is however also difficult to have free market power when your cities heavily regulate who can put up utility lines and where so poles don't get too ugly or loaded. There are a lit of reasons what we have is worse than private or completely public.
agreed that's what Americans tend to believe. Heck I mostly believe it. Of course the problem is they grant those businesses monopolies so then there is no competition
Because governments don’t want to be in the business of running electric utilities. Private electric utilities are the norm all over the US, and common in western europe as well. It works fine almost everywhere else. California’s problems are “because California” not because of the corporate structure.
> Why aren’t the infrastructure parts taken over by the state (or managed by an accountable non-profit body), and competition encouraged for the customer facing parts?
Because the political alignment which might ideologically support that is fairly new in California, and there is significant resistance to experimentation in how electricity is managed because the last time that was done (albeit, in a deregulatory direction), it combined with federal regulatory mismanagement to create the worst energy crisis in the State's history.
At what point does this kind of behavior warrant a replacement of 100% of the executive staff? How can we make such a mechanism a reality to incentavise and encourage better behavior?
Utilities are too damn important for the bottom line of humanity to allow things to continue playing out in the same sad, pathetic, greedy fashion. The point of having public utilities is to enable a high standard standard of living so hopefully the really important problems can be solved before it's too late. PG&E seems to think the primary goal is for the utility company to be politically powerful and make cush millions for the execs. Sickening.
I acknowledge your point, but to be fair you should also acknowledge that the status quo was conscious decision by voters (via representatives) to minimize the cost of power for citizens. That may not have been a good choice, but we are a long way from a non-free society.
On the plus side, you can now easily get solar + batteries + inverters as an alternative :). Costs more, though.
PG&E is one of the greatest threats to safety and health of Californians. The state government should do something soon about them, ideally, take them over and turn them into a non-profit. We already bail them out anytime they have a problem, but their incentives are completely out of whack with the public interest.
The problems with PG&E were caused by the government giving it a monopoly. Making it non-profit won't help. The only thing that will help is competition.
Until there is competition people will have no alternative but to pay PG&E for power every month, so PG&E has no incentive to improve. If they get fined they'll just make that money back from their captive customers.
The problems aren't unique to PG&E. Any company for which profit is the primary motive, they will seek to minimize costs. And safety is very expensive. Which is why PG&E has been directly implicated in the deaths of over 120 people and made homeless tens of thousands of people only in the last 2 years. I needn't get into why open markets aren't viable for many industries e.g. roads, utilities, water treatment.
Eliminate the profit motive, and the service will be cheaper, safer, and directly accountable to the people. The utility can operate at cost and not jack up rates to pay shareholders or an $8M CEO salary. If there are any profits, they will be funneled directly back into the utility.
>they will seek to minimize costs. And safety is very expensive
If that were true, we wouldn't have private airlines because planes would be falling out of the sky every day and nobody would fly.
Increase fines for negligence or make sure they can be sued (IIRC California makes it difficult to sue PGE) if you want to fix the problem. Don't do something as stupid as making it government run so it either becomes extremely expensive, extremely unstable, and/or a tax burden for the state.
>Eliminate the profit motive, and the service will be cheaper, safer, and directly accountable to the people.
Eliminate the profit motive and nobody will be incentivized to improve anything. This will likely make it much more expensive in the long term. The military has no profit motive either and they spend money like it grows on trees.
In the UK a lot of infrastructure (e.g. energy, fixed-line telecommunications, railways) is run by for-profit companies that are heavily regulated by the government, but the service to consumers is provided by separate for-proft companies (sometimes owned by the same group who controls the infrastructure) which compete on price and the service they provide.
From a consumer point of view this is good, as you have a choice over which provider you use. On the other hand the actual service you get is going to be the same from either provider, taking internet as an example, if you use the common infrastructure the speed you can get will be the same from all providers, and the only difference is in price and artificial limitations like data usage. Maybe electricity is a better example, as the electrons you receive will be exactly the same no matter which provider you use.
Although the infrastructure is run for-profit, there is only so much than can be done on its own. The government regulations also limit upgrades, as they favour spending on underserved areas. This means even if you live in the most remote part of the UK you can probably get broadband internet (>1mbit), but in major cities you are getting much slower speeds than what other parts of Europe can provide (often no more than 70mbit).
Most of the infrastructure was inherited when it was privatised 20-30 years ago, so all they have really done is run the infrastructure rather than build it out. A good comparison is mobile telephone infrastructure, which in the UK is exclusively owned, built and run by for-profit companies with minimal government oversight.
> In the UK a lot of infrastructure (e.g. energy, fixed-line telecommunications, railways) is run by for-profit companies that are heavily regulated by the government
With the exception of HS1/Channel Tunnel, the vast majority of the UK's fixed rail infrastructure (stations, tracks, land, etc) is publicly owned.
The train operating companies (TOCs) are, with some exceptions, privately owned. But because of the way they are franchised and regulated there is little competition between them, so it's quite different to the electricity or internet markets.
> taking internet as an example, if you use the common infrastructure the speed you can get will be the same from all providers
Not necessarily. Although each provider may share a common "last mile" infrastructure, ie the lines that run to your house, they must each arrange their own equipment and backhaul in the local exchange where that line terminates. Not all backhauls are equal and some providers perform better than others, especially at peak times.
> Maybe electricity is a better example, as the electrons you receive will be exactly the same no matter which provider you use.
Every unit of electricity you use has to be generated somewhere - and not all sources are equal. As a consumer, I might place a premium on low-carbon electricity, and choose a provider which promises to purchase only from wind turbines and other low-carbon sources.
>If that were true, we wouldn't have private airlines because planes would be falling out of the sky every day and nobody would fly.
The economics of airlines and monopoly energy companies are completely different. Flights are subject to intense economic pressure, the airline industry has very thin margins of profit.
You can avoid an unsafe plane but you can't avoid an unsafe statewide power company.
> Eliminate the profit motive, and the service will be cheaper, safer, and directly accountable to the people.
If that is universally the case, and there are no downsides, it would logically follow that everything needs to be nationalized.
Societies that tried that didn't fare well, though. So, clearly, it's not that simple. It may well be the case that this particular company would be better off as a non-profit, but the explanation can't be as simple as "safety" - practically everything has some safety aspect to it.
Neither law nor business operations work like that. For-profit just means owner has the right to reap profits, not that business has sole duty of profit. Non-profit owners do not have the right to reap profits, not that non-profit cannot profit.
Even if energy production were competitive (the various Bay area counties have switched to sourcing power themselves), PG&E still owns the power lines and you can't have much of a competitive market for that. I pay my bill to peninsula clean energy every month but there's still a fixed chunk that goes to PG&E for the distribution lines.
> The problems with PG&E were caused by the government giving it a monopoly. Making it non-profit won't help. The only thing that will help is competition.
Admittedly, I don't know PG&E's history, but as a utility company that offers natural gas and electricity, I know many would call it a natural monopoly.
As such, how does competition work in a natural monopoly?
Certain things like roadways are owned by the state because it's impossible to profit from them. Perhaps the safe delivery of electricity and natural gas to consumers should be managed by the state.
And if anything PG&E and potential competitors would compete on the production of electricity / natural gas, which the state buys and safely delivers to the people.
No offense, but what makes you think this would be any different if it was a zero-profit government monopoly instead of an "allowed rate of return" government monopoly?
And, to be honest, any cause less than ~1000 deaths per year (and PGE is about ~20) would barely even register as a blip on the top 50 causes of death in the state. It's a tragedy, but it's hardly the greatest threat to safety and health.
> No offense, but what makes you think this would be any different if it was a zero-profit government monopoly instead of an "allowed rate of return" government monopoly?
The fact that we have a number of public power agencies in the non-PG&E parts of California and it is different there. It's not a hypothetical.
Those publicly owned utilities collectively have a fraction of the transmission & distribution infrastructure of PG&E alone. Most essentially serve as brokers to buy power and pay T&D charges over other people's lines. They are simply not comparable.
Since the shortcuts appear to all be about cost minimisation, there would seem to be every reason to think that a zero-profit government monopoly would have handled things differently.
How much more money should we be willing to spend to save those 20 lives a year? A million per person, a billion? A trillion? How many lives could we save if we put that money elsewhere?
Probably somewhere between 60 and 200 million for the yearly lives lost. More than would mean the money is better spent on safety elsewhere such as better safety features on highways. Less than that, and spending on safety elsewhere becomes wasteful compared to spending on power infrastructure safety.
The "value of a statistical life" has less to do with making thing whole in terms of not caring about deaths than it has to do with efficiently allocating safety spending.
Then you have percentage of the yearly wildfires attributable to PG&E. So some percentage of let's say a couple billion in fire fighting per year, and maybe 10-50 billion in property lost.
Anyway, the point is that it isn't a slippery slope discussion, and it isn't impossible to come up with an approximate number.
You're moving the goalposts. You asked "what makes you think this would be any different". That's what makes me think it would be different. The question of cost isn't at issue.
I'm not really a huge fan of hyperbole--I don't think it makes for useful conversations online (which are hard enough already, even on HN), and I don't believe any reasonable interpretation of my comment above supports your argument.
Feel free to explain the problems with my math, whatever math there was. Tell me how ~20 people a year is the greatest public safety threat CA faces.
I said the death of 20 people a year does not make it the greatest threat to public safety in the state, not that it isn't a tragedy to be mitigated. Objectively this is true, does that make you upset?
Neither of which make money! You can't have everything consuming more than it produces or you end up looking like Venezuela or (insert hyper inflation or austerity ridden country here).
Also, keep in mind that the government doesn't actually build roads. They pay other companies to do it.
The same PG&E responsible for drinking water contamination with hexavalent chromium? Interesting. At some point monopolies and mismanaged companies should probably be dissolved and negligent management directly responsible imprisoned.
