alt Hacker NewsPussyfooting around this issue is the worst of both worlds.
Why on earth is a government-protected monopoly entitled to 10% margins? Or even 6% margins? It's risk-free money with a captive market.
What is the point of all this bullshit? Why not just call it a day, and run it as a crown corporation?
> The companies pointed to the January wildfires in Los Angeles County, saying they needed to provide their shareholders with more profit to get them to continue to invest in their stock because of the threat of utility-caused fires in California.
What utter nonsense. The shareholders need nothing. Take out a bloody loan.
The firm's entire concern, as reflected in the article - is it's stock price.
> Under the state’s system for setting electric rates, investors provide part of the money needed to build the infrastructure and then earn an annual return on that investment over the assets’ life, which can be 30 or 40 years.
Wait, why is this financed by investors and not lenders, like it is in the rest of the civilized world? Is this some kind of novel California-specific innovation, and if it is, what value has it produced for the world?
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It’s certainly not risk-free. PG&E went bankrupt twice. There will be more wildfires. It could happen again.
Also, much of the point of having shareholders is that they take the risk. If something goes wrong, they lose their money first.
Capping margins at a percentage also directly breeds inefficiencies. If you could spend $10M to fix a problem that costs you $4M/yr, you're effectively paying $10M now to lose $400k in annual profit potential.
> Why on earth is a government-protected monopoly entitled to 10% margins?
Indeed, how do they pick any margin? If higher is better, why not pick 1000%? If lower is better, why not pick 0%? If we want something reasonable, why not make it market based to figure out what people think when they have to stump up real resources themselves? Once profit margins are set by committee decision there is little point trying to claim that the concern is profit motivated. The profits aren't doing much useful signalling. It just sounds stupid.