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Newsletter: These mayors want to turn PG&E into a giant co-op

Pacific Gas & Electric crews work to restore power lines in Paradise
In this Nov. 9, 2018, photo, Pacific Gas & Electric crews work to restore power lines in Paradise, Calif.
(Rich Pedroncelli / Associated Press)

Good morning, and welcome to the Essential California newsletter. It’s Wednesday, Nov. 6, and I’m writing from Los Angeles.

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How do you solve a problem like PG&E? That’s the question on many Californians’ minds.

We already know that the future of the state’s largest utility company hangs in the balance, that the hedge fund vultures have been circling Pacific Gas & Electric’s bankrupt carcass, that the utility’s current approach is beyond untenable. But what’s next?

Gov. Gavin Newsom has already come out swinging hard against any version of the continued status quo, saying that PG&E “has to be a completely reimagined company” when it comes out of bankruptcy. (PG&E’s January 2019 Chapter 11 filing is actually its second bankruptcy in two decades.)

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In the heart of Silicon Valley, the mayor of California’s third-largest city has been pushing his own radical reimagining of the perpetually embattled utility.

San Jose Mayor Sam Liccardo wants to turn the three most reviled initials in California into a massive, customer-owned cooperative. Liccardo first proposed the plan last month, but it gained major steam Tuesday as more than 20 other California mayors signed on in support.

“While electric cooperatives are common, especially in rural parts of the U.S., the one proposed by the California mayors would be the nation’s largest by a long shot,” according to the Wall Street Journal, which first broke the story.

Any plan for PG&E’s future that emerges out of federal bankruptcy court will require the California Public Utilities Commission to give it a this-is-in-the-public-interest stamp of approval before it can move forward. Liccardo’s coalition — which includes the mayors of Oakland, Berkeley, Sacramento and Stockton, among others — is urging Newsom and the commission to seriously consider its proposal before choosing any bankruptcy reorganization plan. The mayors and five county supervisors who’ve signed on in support collectively represent about a third of the people served by PG&E.

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The utility appears unlikely to go gentle into mutualization (the name for the process of transferring ownership from investors to customers) or government takeover. PG&E’s chief executive rejected a previous $2.5-billion offer from San Francisco to buy the utility’s local power lines, and on Tuesday, the company told the Journal that it was “firmly convinced that a government or customer takeover is not the optimal solution that will address the challenges and serve the long-run interests of all customers in the communities we serve.”

Liccardo, a Harvard-educated former prosecutor, argues that going customer-owned would make the utility better able to meet customers’ needs, and enable them to raise capital from a broad pool of debt financing at a lower cost and in greater amounts than an investor-owned PG&E. It would also be exempt from federal taxes and unburdened from the need to pay dividends to shareholders.

It would be hard to argue that the team currently running PG&E hasn’t ventured into textbook corporate villain territory. (Trying to hand out $16 million in bonuses to top executives months after filing for bankruptcy? Check. Wining and dining employees at a posh venue before enacting mass blackouts? Check.)

But, rousing as the take-back-PG&E-for-the-public narrative may be, it will be far from a walk in the park to pull off.

The potentially deadly crucible where ailing infrastructure meets climate change-worsened fire seasons is already here, far faster than most people imagined. Fifty percent of PG&E’s service area is located in what it deems high-fire-risk zones, compared with just 15% as estimated in 2012.

[See also: “California’s huge, humiliating power outages expose the vulnerabilities of PG&E’s power grid” in the Los Angeles Times]

As noted in the proposal, tens of billions of dollars must be invested over the next decade for system hardening, wildfire protection and cybersecurity. The utility can be investor-owned, customer-owned, government-owned or Martian-owned, but until massive, time-consuming investments are made, the 16 million Californians dependent on it will still largely be getting their power via exposed electrical lines, strung over thousands of miles on vulnerable wooden poles. And we already know all too well of the dangers those lines face in high winds.

“We’re not delusional about the challenges here,” Liccardo told the New York Times.

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And now, here’s what’s happening across California:

TOP STORIES

California fire season is likely to last through December, with no rain in sight. A new report from the National Interagency Fire Center predicts a higher-than-normal chance for other large fires in Southern California through December, with a late start to the rainy season looking increasingly likely. Los Angeles Times

Mass cellphone outages during blackouts and fires are a grim preview of life after a major earthquake. California saw significant interruptions of cellphone service due to the planned power shut-offs at precisely the time customers needed to be alerted about evacuation warnings — raising questions about how prepared California is for future electric shut-offs and other public safety emergencies, such as a major earthquake. Los Angeles Times

Each year, Kern County jails send hundreds of people on suicide watch. Inmates can spend weeks and sometimes months in solitary, with no mental health treatment and nothing to sleep on but a yoga mat. In this investigation, one woman’s treatment raises broader questions about mental health procedures in California jails. Sacramento Bee

Plus: Most local election results were still being tabulated as of late Tuesday night, but here are a few early takeaways. San Francisco Mayor London Breed easily won her first full, four-year term as mayor. A repeal of San Francisco’s e-cigarette ban was overwhelmingly rejected by voters. In the North State special election for California’s 1st Assembly District, Republican Megan Dahle won in the conservative district.

In San Francisco’s much-watched district attorney race, Interim District Attorney Suzy Loftus and public defender Chesa Boudin remained virtually tied in early returns. San Francisco Chronicle

Here are the latest results for the races in L.A. County. Los Angeles Times

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L.A. STORIES

USC trustees have approved far-reaching changes to their governing board, cutting the number of trustees, imposing age limits and pledging to diversify membership in the wake of scandals. Los Angeles Times

A diamond ring was found in the Getty fire debris. It was a woman’s only heirloom to survive two fires in 58 years. Los Angeles Times

A ring was discovered in a gutter while firefighters battled the Getty fire.
A ring was discovered in a gutter while firefighters battled the Getty fire.
(Los Angeles Fire Department)

Will cracking down on password sharing be the next front in the streaming wars? It will probably be a priority as major conglomerates bet on new direct-to-consumer digital services, which will need to grow paid subscribers rapidly. The Hollywood Reporter

“The L.A. Taco Guide to Loving or Not Loving Morrissey”: A week after the Manchester-born singer came “home” Los Angeles to play the Hollywood Bowl, a writer wrestles with questions about whether Morrissey’s fans “should care about his For Britain politics and what those ideologies mean beyond U.K. borders, particularly in Trump’s America.” L.A. Taco

What does a largely unknown Chinese gaming company want with Grindr? It has been far from smooth sailing since Beijing Kunlun dropped $93 million for the gay dating app in 2016. Los Angeles Magazine

From making his own ceramic plates to growing his own strain of rice, this is how L.A. sushi master Mori Onodera exercises about the maximum amount of control a chef can have over food served at a restaurant. Los Angeles Times

Your support helps us deliver the news that matters most. Subscribe to the Los Angeles Times.

IMMIGRATION AND THE BORDER

President Trump called for “war” on drug cartels after nine Americans were killed in Mexico. Investigators in Mexico say a suspect has been arrested. Los Angeles Times

POLITICS AND GOVERNMENT

Gov. Gavin Newsom has an organized labor problem. Some of California’s most powerful unions are openly denouncing Newsom less than a year into his tenure, exposing early fractures in the Democratic governor’s base. Politico

A proposed Fresno law would “criminalize newsgathering,” according to the Fresno Bee’s editorial board. Here’s what the law would do and why the editorial board opposes it. Fresno Bee

CRIME AND COURTS

Wildfires delay Rep. Devin Nunes’ lawsuit against McClatchy: A Virginia judge delayed a hearing after McClatchy lawyer Theodore J. Boutrous’ home was heavily damaged in the Getty fire. Fresno Bee

HEALTH AND THE ENVIRONMENT

Fresno County is in a “state of preterm birth crisis among women of color.” What’s being done? Fresno Bee

The suicide rate in Orange County reached the highest point of the century last year. A new study found that older people are most at-risk, with Laguna Woods outpacing other cities. Orange County Register

The mop-up continues on the Kincade fire in Sonoma County, with full containment expected Thursday. Santa Rosa Press Democrat

A long-running legal battle over federal oil-and-gas leasing in California may be nearing resolution, after a environmental review released by the U.S. Bureau of Land Management’s Bakersfield office found that fracking does not pose undue environmental harm to 1.2 million acres in Kern County and other parts of California. The findings don’t automatically open new lands to the controversial practice, but if the agency moves forward with a formal decision on the matter, then oil companies could resume bidding for the right to produce petroleum on federal lands in places like western Kern. Bakersfield Californian

CALIFORNIA CULTURE

A San Francisco archive has digitized thousands of historic photos. Here are some of the the best ones. SFGATE

KROQ’s Gene “Bean” Baxter is going off the air after guiding Southern California listeners through their morning commutes for three decades on the “The Kevin & Bean Show.” Baxter’s final day on-air will be Thursday. Los Angeles Daily News

How bubble tea became a complicated symbol of Asian-American identity: “Bubble tea is a gimmick, a meme, a stereotype, but it’s also a reference point for identity that generations of Asian Americans have used to cleave out their own place in the world, in ways both small and big, from eschewing Starbucks in favor of Boba Guys to opening a boba shop that can serve as a community gathering place.” Eater

[See also: Los Angeles Times cooking editor Genevieve Ko’s guide to the best boba in the San Gabriel Valley]

Two friends went on an adventure into California’s Lost Coast. Then they vanished. San Francisco Chronicle

CALIFORNIA ALMANAC

Los Angeles: sunny, 77. San Diego: partly sunny, 70. San Francisco: sunny, 61. San Jose: partly sunny, 73. Sacramento: partly sunny, 78. More weather is here.

AND FINALLY

“Here in Pasadena it is like Paradise. Always sunshine and clear air, gardens with palms and pepper trees and friendly people who smile at one and ask for autographs.”
-Albert Einstein, 1931

If you have a memory or story about the Golden State, share it with us. (Please keep your story to 100 words.)

Please let us know what we can do to make this newsletter more useful to you. Send comments, complaints, ideas and unrelated book recommendations to Julia Wick. Follow her on Twitter @Sherlyholmes.


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