Natural monopolies go down in flames 

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Firefighter Giannis Giagos battles the Maria Fire in Santa Paula, Calif., on Friday, Nov. 1, 2019. According to Ventura County Fire Department, the blaze has scorched more than 8,000 acres and destroyed at least two structures. (AP Photos/Noah Berger)

Firefighter Giannis Giagos battles the Maria Fire in Santa Paula, Calif., on Friday, Nov. 1, 2019. According to Ventura County Fire Department, the blaze has scorched more than 8,000 acres and destroyed at least two structures. (AP Photos/Noah Berger)

San Bruno, Kincade, Camp, Paradise, Napa, Sonoma, Lafayette—this is a partial list of tragedies caused by Northern Californian utility Pacific Gas and Electric. Ignoring the amount of effort PG&E put into hiding their knowledge of these cases and their quid pro quo relationship with Michael Peavey, former head of the California Public Utilities Commission (CPUC), any one of these tragedies in isolation could be considered mere innocent negligence. However, when combined with the knowledge of their manipulation of the CPUC and the failure to correct such practices, a pattern of prioritizing profit over safety measures emerges. When PG&E filed to bankruptcy to avoid liability for the numerous torts leveled against them, they were required to engage in maintenance work on their power lines. As can be seen by the current wave of fires, PG&E did not comply. PG&E and Southern Edison Electric, another utility accused of negligence leading to this year’s fires, are not alone in this practice of corrupting oversight committees.  Such corruption is commonly seen in California and in other states in the presence of natural monopolies. Natural monopolies enable the companies holding them to place members sympathetic to them on regulatory boards, or offer political donations in exchange for leniency of regulatory organizations. Furthermore, their control of a resource that the public feels it needs makes government officials hesitant to prosecute them, fearing the vacuum that the dismantling of the monopoly would cause. Remember the bank bailouts of 2008 and how people claimed that the banks were “too big to fail?” PG&E and Southern Electric are in a similar situation.    

Clearly, the current system, which alternates between giving these companies little oversight and excessive criticism of these companies in the wake of tragedies, cannot persist. Several solutions exist to this conundrum: First, the state could take over natural monopolies. However, this would not solve the underlying issue of the electrical natural monopoly. Furthermore, a desire to avoid political suicide would lead to negligence when safe handling of the monopoly would result in the ire of consumers, who vote for the politicians in government. And we can’t ensure that political theater wouldn’t ensue when these crises arose, with politicians firing scapegoats within the department instead of targeting the structural or procedural flaws that caused the crisis.    

As the problem is more one of relative power and the size of PG&E, a better approach would be to diminish the power through either antitrust litigation or by utilizing alternative power sources, like solar power or giving up gas and electricity. However, economies of scale dictate that the smaller resulting companies would face issues that PG&E does not. Furthermore, the Sherman Antitrust Act has been irregularly applied to natural monopolies. Solar power and leaving the grid are means of noncompliance that grant more power to the public and diminish the power of the utility company. Furthermore, solar or non-involvement are probably cleaner than the current grid as PG&E supplies power.   

While this may be hard for some of us, including the author of this article, solar or autonomy are means of competing with these natural monopolies by offering alternatives. Furthermore, they also reduce risk for fires as the lines that cause fire risks would be less necessary and could be shut off with less effect, reducing risks of fires and gas-main explosions. Such competition would force utilities to either prioritize safety or risk insolvency. 

This solution is a means of decentralization and neither alternative falls prey to conditions that would lead to a natural monopoly. A lesser reliance on a single company enables the state to see that utilities are not too big to fail and prosecute them accordingly. This paradigm provides a means of avoiding both the risk of centralized networks and deprives natural monopolies of the power that enables their abuses of power. If the grid is not centralized as solar power and removing oneself from the grid allow, the pleas of any utility that their failure would be catastrophic would fall on deaf ears. This decentralization moves the power from the utilities to the public and state and thus allows the current system which fuels these tragedies to be effectively reformed. 

Thumbnail photo courtesy of (Ventura County Fire Department via AP)

Disclaimer: The views and opinions expressed by individual writers in the opinion section do not reflect the views and opinions of The Daily Campus or other staff members. Only articles labeled “Editorial” are the official opinions of The Daily Campus.


Jacob Ningen is a contributor for The Daily Campus. He can be reached via email at jacob.ningen@uconn.edu.

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