How should PG&E be overhauled?

Having declared “I own it,” Gov. Gavin Newsom is stepping up his personal involvement and political investment in the disaster-tinged bankruptcy of Pacific Gas and Electric Co., wagering his still-new governorship on reforming — or dissolving — the nation’s largest investor-owned utility.

Almost daily, Newsom denounces PG&E for shoddy maintenance of power lines that sparked devastating wildfires and abrupt blackouts in suburban and rural areas to prevent more conflagrations.

Late last week, he ratcheted up his war on PG&E, appointing a trusted aide to study how the utility might be transformed and suggesting that if it doesn’t satisfactorily reform itself and/or change ownership and emerge from bankruptcy, some kind of state seizure is a possibility.

“If the parties fail to reach agreement quickly to begin this process of transformation, the state will not hesitate to step in and restructure the utility,” Newsom wrote in an Internet posting.

The “parties” to which Newsom refers are dueling factions of hedge funds that either own large blocs of PG&E stock or hold the utility’s bonds, plus the current company management and wildfire victims.

Newsom appointed Ana Matosantos, a top aide and a former state finance director, to explore restructuring alternatives. Her working group will, as he put it, “Game out every option and prepare a plan should the state need to intervene. All options are on the table.”

PG&E’s future would seem to be one of several scenarios, or some combination thereof, to wit:

—Maintain the ownership and managerial status quo with a bankruptcy workout plan that settles outstanding claims from wildfire victims, perhaps with a dedicated corporate bond issue.

—Concentrate ownership, now mostly in the hands of large institutional investors and hedge funds, in a single owner. Newsom more or less invited Warren Buffet, the multi-billionaire who already owns Pacificorp, the utility serving much of the Northwest, to take over PG&E, but Buffet has not responded publicly.

—End PG&E as an investor-owned utility by transforming it into some sort of public entity.

California already has a number of publicly owned power providers, although none that also supplies natural gas. They fall into three categories — rural irrigation districts that own power-generating dams such as Modesto Irrigation District, city-owned systems such as the Los Angeles Department of Water and Power, and independent entities such as Sacramento Municipal Utility District.

A governmental successor to PG&E might eliminate the profit factor, but would have the same problem of maintaining a power grid in fire-prone regions. It would have to raise tens of billions of dollars to buy out shareholders, settle claims from fire victims and make the heavy investments in vital system upgrades.

Placing the system in public ownership might mean more political accountability, but also could mean political manipulation. Matosantos, who serves on the federal board overseeing Puerto Rico’s debt crisis, should be well-versed in how politics can undermine good public utility operations, since the Puerto Rico Electric Power Authority has been a model of mismanagement. In fact, Puerto Rico now wants to sell major portions to private investors.

There’s another example closer to home, the aforementioned Los Angeles Department of Water and Power, which became an arrogant fiefdom controlled by its unions as they flexed their political muscle.

PG&E clearly needs an overhaul of some kind — and the state, by the way, is complicit in its fall from grace, since its Public Utilities Commission oversees operations.

However, it should be the right kind of overhaul, not something that’s politically expedient. And whatever happens, good or ill, will be laid at Newsom’s feet.