Securitization—Just another word for a Bailout
TURN files in Court to reverse risky CPUC $11 billion PG&E Bailout
The Utility Reform Network filed a challenge in the State Court of Appeals on September 10 to reverse the May 6 California Public Utilities Commission approval of a $7.5 billion bond financing securitization scheme that requires ratepayers to be responsible for $11 billion in principal, interest, and financing fees over the next 30 years. Ratepayers would be on the hook to cover monthly bond payments, and be reimbursed by shareholders only if PG&E returns a profit.
Bond financing violates AB 1054 ratepayer neutrality protections
TURN is asking the Court of Appeals to rule that the CPUC–approved bond financing of PG&E wildfire debt violates ratepayer neutrality protections in AB 1054 that protected ratepayers from 2017 and 2018 wildfire costs that drove PG&E into bankruptcy. While PG&E claims that shareholders would provide customer credits to offset utility bill increases caused by ratepayer bond payments, customers would have an iron clad responsibility for making bond payments, whether or not PG&E shareholders earn sufficient profits to provide the credits to customers.
Ratepayers on hook for 30 years, even if shareholders’ funds run dry
PG&E promises, but does not guarantee, that it will fully reimburse ratepayers for 30 years. Ratepayers have an irrevocable responsibility for monthly bond payments, whether or not PG&E shareholders earn sufficient profits to provide the credits to customers. If another series of catastrophic wildfires, such as the current Dixie Fire, eliminates profits, shareholder responsibility vanishes, and ratepayers end up with full responsibility for bailing out PG&E.
PG&E is already asking ratepayers to cover $18 billion increase
PG&E has recently submitted a General Rate Case increase requesting a revenue increase of $18 billion over the next four years that would increase typical residential bills by $660 a year by 2026. In addition, PG&E is planning to request that ratepayers cover billions more for wildfire mitigation, as well as unknown billions for undergrounding 10,000 miles of electrical lines.
Court of Appeals must require CPUC to comply with AB 1054
TURN is requesting that the Court of Appeals reverse CPUC approval of the PG&E bond financing and require that any future bond financing for 2017 and 2018 wildfire costs contain the same iron clad guarantee that shareholders reimburse ratepayers for bond payments as ratepayers have to make monthly bond payments.
Contact: Mark Toney • TURN Executive Director • mtoney@turn.org • (510) 590-2862
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