PG&E Seeks Rate Hike to Fund Wildfire Safety Measures

SAN FRANCISCO (CN) – As it fights to limit its liability for deadly wildfires in bankruptcy court, Pacific Gas and Electric started making its case Monday for state regulators to approve gradually raising 16 million customers' utility bills by $360 per year on average.

PG&E’s main request for $2 billion over three years is part of its general rate case, a triennial proceeding in which the regulated monopoly asks state regulators to decide what it can charge for gas and electric service. PG&E says it needs that money for wildfire safety improvements.

The first day of a 20-day administrative hearing started at the California Public Utilities Commission (CPUC) headquarters in San Francisco on Monday.

Testifying as the first witness, PG&E's vice president for internal audit and chief risk officer Stephen Cairns said PG&E identified 27 "top risks" in its threat assessment, including 22 safety risks that carry potentially fatal consequences.

Thomas Long, legal director for consumer advocacy group The Utility Reform Network (TURN) asked if some of those non-safety threats were singled out because they pose a financial risk to PG&E's business.

"That's fair to say," Cairns answered.

PG&E says it needs an extra $2 billion over three years to fund safety measures, such as replacing old utility poles with stronger ones, covering exposed power lines and expanding its work to clear trees and vegetation from around power lines. The company also wants to build 1,300 new weather stations and deploy 600 high-definition cameras in areas prone to wildfires by 2022.

A PG&E spokeswoman said any new revenue from the proposed rate hike will not be used to pay wildfire claims for deadly fires allegedly sparked by PG&E's equipment in 2017 and 2018.

"PG&E’s proposed grid-hardening investments are driven by our most important responsibility – the safety of our customers and communities we serve," PG&E spokeswoman Kristi Jourdan said by email.

The general rate case proposal calls for a 6.4% increase, or $11.06 per month on average, in 2020, followed by a 4.7% increase in 2021 and a 4.8% increase in 2022. If approved, the average PG&E customer's utility bill would rise from $172.94 per month to $192.25 in three years.

TURN spokeswoman Mindy Spatt said her organization is skeptical of PG&E's request, considering the company demanded money for safety improvements in that past but failed to protect its customers from fatal catastrophes like the 2010 San Bruno pipeline blast and wildfires in 2017 and 2018.

"After years of explosions and fires, customers are now being told that the only way to prevent disasters is for PG&E to shut off their power, so naturally they are wondering what PG&E did with all the money it collected under the guise of creating a safe system, and why PG&E has failed to deliver," Spatt said, referring to PG&E's plan to cut power in certain areas when fire risk is high.

Also on Monday, a five-day hearing started on a separate PG&E request for a six-year rate increase to cover the costs of shutting down two nuclear power plants in Eureka and San Luis Obispo. That proposal would raise the average customer's utility bill by $1.98 per month.

If both requests are approved, the average PG&E customer will pay an extra $22.29 per month, or $267.48 per year.

Earlier this month, the CPUC approved another PG&E request to raise rates for gas transmission and storage improvements, which will add $4.80 per month to the typical residential utility bill.

The CPUC has not yet held hearings on PG&E's request to increase shareholder profits from 10.25% to 12%, which would add another $4.12 to the average customer's monthly bill. All told, the combined rate hike requests would raise the average customer's bill by $30 per month, or $360 per year.

PG&E said in a statement that it welcomes an open and transparent review of its rate requests, and that it encourages customers to share their feedback on its proposals.

"PG&E recognizes any increase to a customer’s bill can be a significant impact," Jourdan said. "As always, our commitment is to keep customer costs as low as possible while meeting our responsibilities to safely serve our customers."

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