PG&E Woes: Political Failure, Not Market Failure

Pacific Gas & Electric (PG&E), an investor-owned utility company serving 16,000,000 customers primarily in Northern California, cut the flow of electricity to 800,000 of those customers last week in what it has deemed "public safety power shutoffs." According to PG&E, the shutoffs were a necessary precaution to reduce the risk of wildfires in the region as it experienced high sustained winds, with gusts of over 70 miles per hour, along with dryer than usual conditions. The shutoffs are an acute reminder for Californians of the fundamental importance of reliable energy with some analysts estimating that the multi-day episode might have cost the region's economy over $2 billion.

PG&E's Recent History

The shutoffs, which came with just hours of warning for most of the affected customers, caused Californians dismay and confusion. But, while undoubtedly frustrating, the shutoffs should come as no surprise.