Tuesday, September 14, 2010

Catastrophe CHUTZPAH

Because I encountered news of the firestorm that ensued in San Bruno as a result of the explosion of a Pacific Gas and Electric (PG&E) gas line on the BBC, I figure that this deserves to be treated as far more than a local story. For that reason, while it is early in the week, I have decided that it is now time to present a Chutzpah of the Week award to PG&E. The reason can be found in a story filed today by Bob Egelko, Staff Writer for the San Francisco Chronicle. Here is his lead summary:

State regulators will take their first look today at a proposal backed by Pacific Gas and Electric Co. that would require customers to pay all costs of catastrophic fires, such as last week's gas-line explosion in San Bruno, that exceed a utility's insurance coverage.

It's not clear whether the plan, if approved by the state Public Utilities Commission, would trigger a PG&E rate increase to help pay the utility's cost from Thursday's disaster. In a filing Monday with the U.S. Securities and Exchange Commission, the utility said it has $992 million in fire insurance and a $10 million deductible, and "believes that most of the costs related to the San Bruno event will be covered."

Even if the company has enough insurance, however, the proposal would make rate hikes more likely if PG&E caused fires in the near future.

The best response to this so far is a comment from a reader with the handle solomon_grundy:

So PG&E and shareholders receive the profit from cutting corners on infrastructure, and its customers assume the liability. Sweet!

Once again it all comes down to the battle between Main Street and Wall Street, except that anyone who has seen the footage on television knows that, in this case, there is now a honking big crater where Main Street used to be; and yet, crater or not crater, Main Street (or what is left of it), may have to foot part of the bill for PG&E expenses in repairing all that damage. Isn't capitalism wonderful? Think of the Chutzpah of the Week award as a preemptive salvo at the Public Utilities Commission as they decide on how to respond to the PG&E proposal!

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