This commentary in the WSJ (Nov. 2019) describes a way to improve the incentives PG&E faces. Currently, PG&E must pay the external cost for damages caused by fires started by its power lines. However, it does not bear the external cost paid by users who suffer during blackouts. As a result, it is choosing blackouts instead of investing to reduce the chance its lines start fires. Making PG&E pay for damages users suffer during blackouts as well as damages caused by the fires, would encourage PG&E to invest in ways to reduce fires, to cut off power, or to risk firm depending on which cost is lowest.
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