Battle for PG&E, a coming housing crisis, transit funding, oil divestment and child care

Good morning, California.

“They can’t afford these increases, and they leave crying. We can’t help them.”—Richard Harris of Harris Insurance Services in Grass Valley, describing to the Sacramento Bee the rising cost of homeowners’ insurance in fire-prone areas.

• Insurance Commissioner Ricardo Lara: “I wouldn’t say it’s crisis mode yet, but it’s definitely a different story for people living in a high-risk area.”

Odd allies in fight for PG&E

The California Public Utilities Commission’s public advocates’ office, Sonoma County’s green energy provider, a labor group and the Trump administration are weighing in on the same side in the fight for control of Pacific Gas & Electric Co.

They asked a U.S. bankruptcy court judge this week to permit a dozen hedge funds that hold billions in PG&E’s bond debt to compete to take over the troubled utility.

The group that controls PG&E—major investors in the utility’s stock—contends the bondholders are trying to hijack the company. Both sides filed the documents Wednesday and Thursday, ahead of a hearing set for next week before U.S. Bankruptcy Judge Dennis Montali.

Remind me: PG&E declared bankruptcy under the weight of billions in liability from wildfires sparked by its equipment. That bankruptcy threatens investments of Wall Street players who had seen the utility as an investment that paid dividends.

• Parties seeking to end the current ownership’s exclusivity aren’t necessarily siding with bondholders. 
• Rather, they contend competition could result in a better deal and more money for fire victims. 
• Attorneys representing fire victims offered a different view, saying the bondholders’ offer isn’t rich enough but suggesting they might be welcome at the table if they sweeten the deal.

Why Trump? The U.S. Department of Agriculture, Forest Service, Interior Department, Bureau of Land Management and National Park Service all claim major losses as a result of the fires.

• The Sacramento Bee’s Dale Kasler offers a summation: “The bondholders’ takeover attempt reflects the belief on Wall Street that a well-run PG&E, once it clears up its liabilities, could be a profit machine.”

Early education’s missing link

California’s new budget significantly expands subsidized child care and spending on early childhood education.

But even as the budget promises 22,000 more slots, it omits pay increases for early childhood educators, whose chronically low compensation may undermine the overall quality of California’s child care and preschool offerings, CalMatters’ Ricard Cano reports.

Median pay for child care workers was $12.29 an hour in 2017.

Preschool teachers’ median pay was $16.19 an hour, less than half of what kindergarten teachers received, UC Berkeley researchers found.

Lorena Gomez, a Sacramento preschool teacher who makes $14 an hour and works as a rideshare driver and nanny to make ends meet:

•  “There’s people who are cashiers at McDonalds that make more than (preschool) teachers. We’re completely underpaid, by far.”

California providers say they’re stuck. Those who rely on state subsidies to operate say the state pays them too little to address pay. And those supported by private family fees and tuition can’t pay teachers more without raising fees and pricing families out.

A solution, perhaps:

• Assembly Bill 125 by Assemblyman Kevin McCarty of Sacramento would pay more per kid for programs that meet specific quality standards.

• Senate Bill 174 by Sen. Connie Leyva of Chino would raise reimbursement rates for early childhood providers.

Pushing UC to divest in oil

Professors are urging the University of California to divest from the oil and gas industry, calling it a moral imperative in the fight against global warming, CalMatters’ Felicia Mello reports.

UC has made statements with its investment decisions before, most notably pulling funds from South Africa to protest apartheid. More recently, it sold holdings in private prison companies, and in coal and tar sands.

UC has about $105 million invested in the so-called Carbon Underground 200 companies, according to the university. 

• UC Academic Senate Chair Robert May: “A thousand years from now, our generation will be remembered only for what it did or did not do to address the climate crisis.”

Divestment opponents say addressing climate change would be better achieved by pressuring oil companies from within as an institutional investor.

• UC’s response: “UC takes the issue of climate change very seriously, and as a shareholder, works to advance corporate progress on disclosing greenhouse gas emissions and on developing emissions strategies consistent with the Paris Agreement on Climate Change.”

The university’s goal is to become carbon-neutral by 2025, and invest $1 billion in clean energy by next year.

A housing crisis to come

Earthquakes that struck the Mojave Desert earlier this month provoke unsettling questions, not the least of which is what will happen to housing costs when the inevitable happens and a big quake hits a major city?

On the latest episode of Gimme Shelter, the California Housing Crisis Podcast, CALmatters’ Matt Levin and the L.A. Times’ Liam Dillon explore that question with Maiclaire Bolton Smith, seismologist with the real estate data firm CoreLogic. 

Some takeaways:

• The wildfires that devastated Santa Rosa and Paradise show what could happen to housing demand after a major quake hits a major city, only more so. 
• 400,000 people could be displaced by a 7.0 earthquake on the Hayward fault, which runs from Oakland to San Jose. 
• An 8.0 quake on the San Andreas fault could affect Northern and Southern California simultaneously, damaging up to 3.5 million homes.

That’s the exact number of homes Gavin Newsom said he wants to build to ease the state’s housing shortage.

P.S.: This would be an excellent time to check your personal earthquake disaster plan. For a guide, please click here.

Police officers’ dangerous work

Deadly attacks on police officers have decreased dramatically over the past 50 years, but there is no doubt that policing remains a dangerous profession.

• Witness the killing of Sacramento Police Officer Tara O’Sullivan, who was gunned down in June while responding to a domestic violence call.

• Or Davis Police Officer Natalie Corona, who was ambushed in January while helping at the scene of a traffic accident in that city’s downtown.

Risks officers face are the focus of the next episode of the Force Of Law podcast, by CalMatters reporter Laurel Rosenhall. The podcast seeks to look at all facets of the Legislature’s attempt this year to reduce police shootings of civilians.

Police lobbied against early versions of the bill to limit the use of deadly force, contending it would put officers at greater risk. They dropped that argument—and their opposition to the bill—after lawmakers made changes to the legislation.

Episode 4 explains why many people in law enforcement say the bill no longer puts them in greater danger, and explores the deadly hazards inherent in police work. 

The episode will go live this weekend, so subscribe to Force Of Law now to be notified as soon as it’s out. Find it on Apple podcasts or other major podcast platforms.

Take a number: 100 billion

Bay Area business groups are floating the idea of a $100 billion transportation mega-measure to transform the region’s transit network, the Marin Independent Journal’s Will Houston reports. 

• Houston: “Dubbed ‘Faster Bay Area,’ the proposed ballot measure is in its early planning and outreach stages but seeks to raise $100 billion from nine Bay Area counties over several decades to overhaul and integrate the region’s transit services.”

The Silicon Valley Leadership Group’s Carl Guardino blogs: “On average, Valley commuters spend 73 minutes per day in traffic, totaling 316 hours each year.”

If those numbers don’t hurt enough, Guardino writes: 

• “While the Bay Area is often associated with blazing the trail for others, in this effort, we are actually following Los Angeles to the south and Seattle to the north.”
• L.A. and Seattle voters approved taxes in 2016 to generate $125 billion and $45 billion, respectively, for transportation.

Commentary at CalMatters

Gladys Limón and V. John White, California Environmental Justice Alliance: Under Marybel Batjer’s leadership, the California Public Utilities Commission must prepare California to move beyond gas. Creating an equitable, safe and secure phase-out of gas in coming decades will be no small feat. But Batjer has demonstrated she is not afraid of taking courageous action and shaking things up.

Mike Males, author of “Teenage Sex and Pregnancy: Modern Myths, Unsexy Realities”: From the 1990s to 2017, the birth rate among California teens fell by a staggering 80%. Why did this happen? Ignore the interest groups clamoring for credit. The reason is not sex education in California or contraceptive programs in Colorado. Teens themselves are reducing births, especially those involving adult partners.

Please email or call me with tips, suggestions and insights, dmorain@calmatters.org, 916.201.6281. Thanks for reading, please tell a friend and sign up here.

See you on Monday.

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