PG&E Corp. is spending hundreds of millions of dollars to try to keep California from catching fire — and wants its customers to pay for it.
California’s largest electric utility Wednesday asked state regulators for a rate hike totaling $3.6 billion starting in 2023. If granted in full, the average residential bill would jump $36 a month for gas and electric service — although the Public Utilities Commission typically accepts only a portion of any rate hike request.
PG&E spokeswoman Lynsey Paulo said half of the rate increase would be devoted to wildfire safety.
As PG&E labors to prevent the kinds of mega-disasters that drove Pacific Gas and Electric Co. into bankruptcy two years ago, the company said it’s spending heavily on everything from “enhanced vegetation management” to more advanced weather forecasting technology.
The utility is deploying technology to “detect downed power lines within minutes” to help prevent ignitions, and installing micro-grid systems to reduce the impact of the blackouts it imposes when fire risks flare-up.
As a general rule, the utility is allowed to bill customers for wildfire prevention efforts but not for damages paid to wildfire victims.
The request provoked immediate outrage from The Utility Reform Network, a consumer advocate group in PG&E’s hometown of San Francisco. “This mindboggling PG&E increase is a slap in the face to millions of California residents still hurting economically from the pandemic and struggling to get back on their feet,” said the organization’s executive director Mark Toney in a prepared statement.
The big rate filing comes as California, suffering through a major drought, is already seeing the onset of what’s likely to be another difficult wildfire season. The Lava Fire, the first significant fire of the season, was burning through more than 17,000 acres early Wednesday near Weed in Siskiyou County.
In an interview two weeks ago, Scott Strenfel, PG&E’s director of meteorology and fire science, said dry conditions have accelerated the start of the fire season by about a month.
“These investments will strengthen our electric system against wildfire and other environmental risks, and enhance gas and electric system safety,” said Robert Kenney, the company’s vice president of regulatory and external affairs, in a prepared statement. “We know this is a significant request that comes at a pivotal time when many of our customers are struggling to recover from the pandemic.”
Paulo said the rate hike proposal is bigger than usual, in part because it includes costs related to the utility’s natural gas storage and transmission operations. Those costs are normally filed separately from the general rate case. She added that, over a five-year period ending in 2026, rates are expected to rise an average of 5% a year.
As it is, the average residential customer pays $198.78 a month — $138.86 for electricity and $59.92 for gas. The proposal filed Wednesday would increase electric bills by $25.19 and gas bills by $10.81 starting in 2023.
Low-income customers, who get discounts under the California Alternate Rates for Energy program, would see increases of $16.37 a month for electricity and $7.42 for gas.
TWO WILDFIRES COULD COST PG&E $600 MILLION
PG&E remains under intense scrutiny from regulators and elected officials following a string of catastrophic wildfires linked to faulty equipment, including the 2018 Camp Fire in Paradise, the deadliest in California history. In April, the Public Utilities Commission voted 5-0 to place PG&E in its “enhanced oversight and enforcement” category after concluding that utility crews weren’t doing an adequate job of trimming and removing trees near its power lines.
PG&E exited bankruptcy last year with a state-approved plan to pay $13.5 billion to victims of the Camp Fire and other big fires. Since then, the utility’s equipment has been linked by state investigators to two other significant fires: the 2019 Kincade Fire, which prompted the evacuation of nearly 200,000 residents of Sonoma County; and last year’s Zogg Fire, which killed four people in rural Shasta County.
Those two fires could end up costing PG&E shareholders more than $600 million in damages, according to estimates the company filed with the Securities and Exchange Commission. PG&E agreed in May to pay $43 million to settle claims by local governments affected by the fires.