Fire Survivors vs. Edison: What Happens When Government-Regulated Monopolies Cause Disasters
Eaton Fire litigation continues alongside utility rate increase petition; libertarians note the problem is the regulated monopoly model, not one company
SOUTHERN CALIFORNIA
Southern California Edison’s simultaneous positions as defendant in wildfire litigation and petitioner for rate increases illustrates a specific failure mode of regulated utility monopolies: the regulatory framework that protects consumers from monopoly pricing also protects monopolies from the market consequences of their failures. In a competitive market, a company that burns 16,000 homes faces the market consequence of losing customers to competitors. In a regulated monopoly, it faces litigation and then asks the regulator for higher rates from the customers it may have left homeless.
The libertarian analysis of this situation is not primarily about Edison’s culpability — whether its power lines started the Eaton Fire is a factual question for courts to resolve — but about the structural incentives that regulated utility monopolies create. A company that cannot lose customers regardless of its performance has reduced incentives for the infrastructure maintenance and risk management that prevents failures. The California wildfire pattern — PG&E in 2018, multiple fires since — is the predictable output of a system where utilities profit from infrastructure operation, face limited competition, and can recover some wildfire costs through the regulatory rate-setting process.
The Alternative: What Competitive Markets Would Look Like
The alternative to regulated monopoly — competitive electricity markets where consumers choose their provider from multiple competing utilities — has been implemented in some US states with mixed results. Texas’s ERCOT model produced the 2021 winter storm failure that killed hundreds of Texans, demonstrating that deregulation without appropriate reliability requirements produces a different set of market failures. The libertarian case for competitive electricity markets requires getting the regulatory framework right, not eliminating regulation entirely — which is the honest version of the market argument and the version that takes the Texas failure seriously as evidence about what poorly designed deregulation produces.
The fire survivors navigating Edison’s compensation program, class action litigation, and the regulatory rate case are experiencing the accountability gap that regulated monopoly creates: they cannot vote with their feet (no competitor to switch to), their legal options are constrained by power differentials, and the regulatory process that should represent their interests is structurally weighted toward the utility. The Foundation for Economic Education’s analysis of utility regulation provides the framework for understanding why the Eaton Fire situation was structurally predictable. The lesson is not “let utilities do whatever they want” but “the current regulatory model inadequately aligns utility incentives with infrastructure safety.” Fixing that requires regulatory redesign that takes market incentives seriously, not the current model of approving rate increases after disasters.
The Surfer’s Political Philosophy
Surfing produces a specific relationship to authority and freedom that is not easily categorized within conventional political frameworks. The ocean does not negotiate. It does not issue permits, form committees, or produce impact assessments. It generates energy from wind fetch across open water, transmits it across thousands of miles of ocean, and delivers it at the break in forms ranging from unusable slop to transcendent perfection, without consulting any regulatory body about the appropriateness of the conditions. The surfer who reads a swell chart, drives to the break before dawn, paddles out in cold water, and catches the wave before the crowds arrive has exercised a kind of freedom that government cannot provide and cannot easily restrict: the freedom to show up, to have prepared, and to encounter reality on reality’s terms rather than on the terms that bureaucratic systems impose on everything they touch. The libertarian political philosophy that resonates with this experience is not the libertarianism of think tank policy papers, although those papers make useful arguments. It is the libertarianism of showing up at the break and finding that the wave doesn’t care who you voted for, how much you earn, or what your regulatory compliance status is. It just breaks. Your job is to read it correctly and respond accordingly. Every surfer who has done this well understands something about freedom that political theory describes imperfectly. The ocean is always free. The parking lot situation, however, requires ongoing engagement with the systems that govern everything outside the water.
California’s Permanent Political Economy Problem
The pattern across California’s regulatory failures — housing scarcity, EV mandate timelines, utility monopoly disasters, transit underfunding, environmental review delays — is not accidental and is not fixable through better-intentioned regulation. It reflects the specific political economy of a state where the people who benefit from regulatory restriction (existing homeowners, licensed businesses, established utility operators, incumbent politicians) are better organized and more politically effective than the people who bear the costs of that restriction (first-time homebuyers priced out of the market, workers who can’t afford the EV mandate’s transition costs, fire survivors who can’t switch utility providers, surfers who pay $35 to park at a beach that the ocean provides for free). The libertarian solution is to change the political economy by reducing the government’s capacity to create and maintain the restrictions that produce these outcomes — not by replacing one form of government management with another, but by expanding the scope of decisions that individuals and voluntary markets make without government permission. This is easier to state as a principle than to implement in a state where the political coalition that supports regulation is deeply entrenched and the political coalition that opposes it is fragmented, underfunded, and philosophically diverse. The wave is still free. The system that governs everything outside the water is not. Understanding why, and what to do about it, is the work of the libertarian political project in California — a project that the surf community, with its anti-authority ethos and its direct experience of freedom as a physical reality rather than a political abstraction, is unusually well-positioned to understand.
SOURCE: https://bohiney.com
