California regulators, already under fire for allegedly growing too close to Pacific Gas and Electric Co., voted Thursday to let the utility collect an extra $2.37 billion from its customers over the next three years, adding roughly $7.50 to a typical customer’s monthly bill in the fall.
California Public Utilities Commission voted unanimously to approve the increase, which is about half of the $4.84 billion revenue boost that PG&E initially sought.
PG&E will use much of the money to improve the safety of its vast natural gas pipeline network and electric grid. Although the revenue increase was not directly tied to the fatal 2010 PG&E pipeline explosion in San Bruno, many of the programs it will fund are designed to boost safety.
“It is PG&E’s duty to use its resources effectively to ensure its system is operated in a manner that provides safe, reliable and affordable service to its customers,” said Commissioner Mike Florio. “We expect and demand PG&E to be proactive and prudent in fulfilling this duty.”
PG&E, which posted a profit last year of $814 million on revenue of $15.6 billion, had argued that it needed more to update its operations and infrastructure.
“Although the decision represents a significant cut in our request for additional resources to modernize our system for the 21st century, we will continue to make safety our top priority as we plan our work going forward,” said Chris Johns, president of the utility.
The vote came two weeks after San Bruno officials released e-mails that they said showed an inappropriately “cozy” relationship between PG&E and the commission. They also called for the resignation or removal of commission President Michael Peevey, who participated in Thursday’s vote.
Peevey on Thursday declined to respond to San Bruno’s complaints. A spokesman for San Bruno officials had no comment on Thursday’s vote.
Still, the commission’s decision angered consumer advocates, who noted it isn’t the only possible rate increase facing PG&E customers.
The commission is still weighing another PG&E request to increase natural gas rates, with the money earmarked for improving PG&E’s system for gas storage and transmission. If the commission grants that request in full, the utility’s average residential gas bill would rise an additional $5.23 per month. A decision in that case isn’t expected until next year.
“If PG&E gets its way, further increases will follow,” said Mark Toney, executive director of the Utility Reform Network (TURN). “That may not seem like a lot of money to a utility executive with a salary of a million or more, but for low-income workers with stagnant wages, a few more dollars a month can be a huge burden.”
The revenue increase approved Thursday will add $4.50 to the average PG&E gas bill, starting in September, and $3 to the average monthly electricity bill, starting in October. Further bill hikes will follow in 2015 and 2016, as a result of Thursday’s vote. PG&E, based in San Francisco, expects those hikes to be smaller than the increases taking effect in the fall, but the company does not have a specific monthly estimate.
Among other things, the extra money will help the state’s largest utility accelerate the replacement of old gas distribution lines, more aggressively hunt for gas leaks and strengthen the grid to protect against blackouts.
“Importantly, our residential bills will remain well below the national averages for gas and electric service,” PG&E’s Johns said, “and we are committed to working as efficiently as possible to keep bills low in the future as well.”