Stakeholder Capitalism in California

You knew it was true but, if you are like me, you did not have enough information to argue the case. You knew that the problems California is having with electricity were produced by the leftist politicians who run the state. But, you did not know exactly how they had wrecked the company and deprived their citizens of a steady and reliable source of electric power.

Now, we are grateful to the Wall Street Journal’s Alyssia Finley for showing us what she calls stakeholder capitalism in action. You will recall that Sen. Elizabeth Warren, a woman who could be our next president, proclaimed one day that capitalist enterprise was not just about shareholders, i.e., those who owned the company, but that it had to care for the interests of community activists, a diversity mongers, environmentalists and trial lawyers.

It does not matter whether the company makes a profit or produces wealth. What matters is that it fulfill the terms of leftist and socialist policies. Funnily enough, the same imbecile who wants to strangle business with regulations also believes that she can pay for her grandiose social schemes by taxing the wealth she will be destroying. Alas and alack. Today’s Democratic Party is no longer the home to the best and the brightest.

Finley explains the regulatory madness:

Utilities are among the most heavily regulated businesses. In California, their rates and return on equity—that is, profits—are set by the California Public Utilities Commission and the Federal Energy Regulatory Commission. Every three years PG&E must submit funding plans to the CPUC, which holds public hearings with “stakeholders,” including customers and activist groups.

The commission and the state Legislature can also dictate energy investments. State law requires utilities to obtain 60% of their power from “renewable” sources by 2030. The commission has also ordered utilities to buy energy from homeowners with solar panels, paying them a higher rate than wholesale power providers get. Last year the commission directed PG&E to install 7,500 electric-car charging stations at apartment buildings and workplaces.

If shareholders want to earn a decent profit, they have to indulge their political masters’ fashionable views on matters such as climate, identity politics and corporate governance. Thus PG&E’s website defines “environmental justice” as “making better business decisions by understanding and considering the potential impacts of our activities and investments on low-income communities and communities of color.”

The utility also proclaims that “diversity and inclusion are integral to how we do business” and “are embedded throughout the lifecycle of our talent management programs.” PG&E boasts a chief diversity officer, a Diversity Council and a Compliance and Public Policy Committee on its board to review its diversity metrics.

So, PG&E does not know anything about electricity, but it is a world beaters when it comes to diversity. Apparently, more and more people are beginning to care. One can sympathize with them. One can also note that they voted for this:

PG&E hasn’t kept detailed records on the age or condition of its transmission towers and wires, but it knows that 1.2% of its workforce is American Indian and 0.6% Native Hawaiian or Pacific Islander. All told, 43.9% employees belong to ethnic minorities. The utility also reports the precise demographics of its board and contractors. Five of its 14 directors are female, one is black, and two are Hispanic. “Diverse” suppliers constituted 41.43% of PG&E’s procurement spending last year, which includes contractors owned by “LGBTQ individuals” ($2.5 million) and service-disabled veteran-owned businesses ($322 million).

The Human Rights Campaign gave the utility a 100% rating on its “corporate equality index” from 2003-18. PG&E boasts that it was the first major company in California to oppose Proposition 8, the 2008 initiative against same-sex marriage, and it donates hundreds of thousands of dollars each year to liberal advocacy groups such as Black Women Organized for Political Action, the LGBTQ Victory Fund and the labor-affiliated Building and Protecting a Strong California. In 2018, it contributed $208,000 to Gov. Newsom’s campaign.

The company is also beating the world in producing electricity from renewables. Unfortunately, this causes increased electricity rates.

In 2012, PG&E requested a $4.84 billion rate increase over three years that it said was needed to ensure grid reliability—which has become more challenging due to increased renewable generation—and replace aging equipment. TURN urged customers to “speak out against PG&E’s greediest grab yet” at public hearings, and the Public Utilities Commission ultimately approved a $2.4 billion rate increase.

Nobody likes paying more for power, but environmental groups worry that customers might turn against the state’s climate goals if they find out the price they’re paying for green energy mandates. PG&E rates are double the national average and have climbed 41% since 2010—about four times the nationwide rate.

Thus, we see stakeholder capitalism in action. Good luck, America.