Does it make sense to see the California blackouts as an effect of inequality, as a tax the 1% is imposing on the 99%?

I wonder how many of the executives (and board members?) who made this decision will feel the effects themselves?

Two days ago Tyler Cowen had a post, The economics of California power blackouts. He began by quoting from a NYTimes article [1]:

“When you turn the lights out on 3 million people because you have to keep the power lines safe then there’s no reason you should be allowed to continue,” Mr. Court said.

Michael Lewis, PG&E’s senior vice president of electric operations, said the issue was safety.

“We would only take this decision for one reason — to help reduce catastrophic wildfire risk to our customers and communities,” Mr. Lewis said in a statement.

PG&E filed for bankruptcy in January after amassing tens of billions of dollars in liability related to two dozen wildfires in recent years. As speculation grew that its equipment might be the cause of the Kincade Fire, its stock price plummeted about 30 percent on Friday to $5.08, a small fraction of its 52-week high of $49.42.

He then went on to observe:

I would think the market expectation is that if PG&E is allowed to continue, as is likely to be the case, that it slowly will claw its way back to profitability, given that this is a highly regulated sector with barriers to entry. So the company is afraid of losing its expected remaining profit from further liability, and thus it plays it safe with power, too safe because they don’t suffer so much from the power blackouts. Sadly, the retail customers do not have many other options.

The rest of his column is about how this situation might better be handled. Let's set that aside. What interests me is just what's set forth above. It looks like the 1% who are making PG&E's are protecting their own financial interests rather than the interests of the 99% who they are supposed to serve, not out of good will mind you, but because they are customers. They are paying for power, but not getting it in this instance.

Cowen has a more recent post in which he laments that economists are all over it when it comes to opining on Big Issues, but when it comes to "designing a better incentive model for California power utilities — a concrete problem for which economics is remarkably well-suited — there has been close to complete silence." Whoops!

* * * * *

[1] Cowen's link points to a running compilation of reports; that particular one is no longer in the compilation. But this NYTimes article, PG&E Warns It Could Cut Power to California Users Again, contains the relevant statements (from Lewis) and information (about the bankruptcy filing).