So what's the point of keeping them if they get to keep on going bankrupt while their CEO made $17 million in 2023?

https://www.sfchronicle.com/california/article/pge-ceo-pay-p...

Why should shareholders be taking on the risk of a city's power grid failing? Does packaging that risk as an investment opportunity somehow produce incentives to improve grid reliability and guide resources to be used efficiently?

PG&E emerged from their most recent bankruptcy with more debt than they entered with! This was largely because of the wildfire liabilities - $30 billion. In more direct terms, the lucky Californians are paying the unlucky Californians, and it was financed by bonds which used PG&E's existing assets as collateral (which for some reason weren't already collateralized.)

The best case for Californians overall would have been PG&E's debt and equity to go as close to 0 as possible, and all that extra debt have been used to actually upgrade the aging electricity infrastructure. Instead you are paying interest on past fire damage claims.

In 2018 PG&E had about $18b of long term debt, they now have just under $59b. Their outstanding shares also quadrupled. The bankruptcy didn't wipe out the equity, but investors got f'd hard if they thought they were acting conservatively. Would you accept a 1.25%ish dividend with the prospects of the stock going to 0 higher than it doubling in the next 10 years?

For all of the whiners about how utility investors shouldn't make any money, and possibly earn below their cost of capital, -- I spent some time looking at the utility industry over the last few years (including PG&E.) These are basically money pits which more money goes in than comes out over decades.

The other layer here is if the billions of dollars being borrowed are to build new infrastructure results in billions more in future liabilities to maintain everything. The first layer looked so bad I didn't go any further.

The petty dividend payouts utilities make just keep the equity investors from examining what they really own. Higher equity valuations let utilities borrow money cheaper than they really should be able to.

Functionally the whole thing looks like a ponzi scheme that perhaps could only happen with the 40 year run of ever shrinking interest rates. If the bond bull market is over then this utility ponzi scheme is going to blow too.

Bottom line, if investors were paying attention, your utility bills would be a lot higher. If utilities ever have a big problem getting Wall Street to keep funding their debt ponzi, they will be.

The alternative is the state owns the utility. Given how ugly the math is for utilities right now, I doubt it would be cheaper.

On the other hand, if the US is going 100% EV (AI datacenters or not), then there trillions of federal dollars are inbound and maybe utilities will be ok. One thing is for certain, the utilities, their investors (debt & equity) their customers, and the US states don't have the money to pay for all that has to be built.

Except that the state of California ended up on the hook for the first bankruptcy. The shareholders were the only ones who came out fine. The customers and the state got stuck with the bill.

Exactly what risk did they take on? A few missed dividends, and two years for the stock price to recover?

As for the second bankruptcy, the main result of that was that their customers ended up paying the bill for other customers whose houses were destroyed. But you are partially correct, the shareholders did take a haircut of a few percentage points from stock dilution. I wouldn't be too upset for them, the stock's now double what it was before the bankruptcy.[1]

California's cities wanted them to take a haircut of 100 percentage points, but that clearly didn't happen.

[1] For some reason, the wise stewardship of the shareholders and the board did nothing to mitigate the crisis that caused the company to get sued for 50 billion dollars. They were too busy squeezing dividends out of it to worry about liabilities. [2]

[2] And why should they? They aren't personally liable.