(CN) – State lawmakers won’t approve a proposed package of $20 billion in tax-free, low-interest bonds to help Pacific Gas and Electric pay wildfire victims this year, but supporters of the legislation say they will try again next year.
The bill’s author, Chad Mayes, R-Yucca Valley, said there is not enough time for a “proper debate” before the legislative deadline of Sept. 13.
Opponents had branded the bill a “PG&E bailout,” arguing it would put taxpayers on the hook if the company fails to pay off the debt. Supporters, including former state Sen. Kevin DeLeon, said the bonds will allow wildfire victims to be quickly compensated and prevent hedge funds from swooping in and providing the cash as part of a campaign to seize control of the company.
The tax-free bonds are supposed to be repaid by shareholder profits, not by ratepayers, but some consumer groups are suspicious of that claim.
Californians for Energy Choice coordinator Eric Brooks said PG&E’s promise to make shareholders shoulder the debt burden is belied by its recent request to boost profits. The company is asking state regulators to approve bigger profit margins – which will result in higher rates – arguing they are needed to attract investment at a time when investors are spooked by wildfire-related liabilities.
“They’re claiming they’re going to pay for something and then getting more money from ratepayers to cover it,” Brooks said.
In a statement, PG&E called the recovery bonds a critical element to charting a path forward for California to address wildfire risk that will ensure victims are “quickly paid at shareholder expense, without increasing customers’ bills.”
PG&E says the bonds would also help ensure it can meet a June 30, 2020, deadline to emerge from bankruptcy so it can access a $21 billion, state-sponsored fund to help cover future wildfire claims.
“We’re pleased to see policymakers acknowledge the merits of this proposal and look forward to lawmakers considering it in January as a balanced approach that prioritizes and protects both wildfire victims and customers,” PG&E spokesman James Noonan said.
PG&E filed for bankruptcy this past January as it faced a potential $30 billion in liability for wildfires allegedly caused by its failure to maintain equipment and vegetation around power lines.
State Sen. Scott Wiener, D-San Francisco, took aim at PG&E and other utilities in the Golden State on Friday, announcing plans to introduce a bill next year that if passed would restrict the use of planned blackouts during windy weather. PG&E and utilities in Southern California have decided to shut off the power during high fire danger in an effort to end wildfires caused by their equipment.
Wiener’s bill would give power customers a process to recover costs associated with planned blackouts within two weeks of the event and force shareholders – not ratepayers – to foot the bill. He also wants to see utilities fined for every hour the power is shut off during wind events.