California Devastated Utility Proposes $2 Billion Rate Hike To Fund “Wildfire Safety”

Zero Hedge – by Tyler Durden

One month after the stock and bonds of troubled California Utility Pacific Gas & Electric cratered after the company hinted of a liquidity crisis as a result of mounting legal obligations following California’s destructive Camp Fire, shocking and infuriating its investors…  

… PG&E is now set to reap the ire of its clients as well after a demand for a rate hike of almost $2 billion from customers, saying more than half will go toward wildfire safety.

In a proposal submitted late last week to the California Public Utilities Commission, PG&E asked for $1.1 billion in new revenue in 2020, including $576 million for the Community Wildfire Safety Program, $273 million toward liability insurance, and $209 million for core gas and electric operations. The proposal also asks for another $454 million in 2021 and $486 million in 2022.

If the commission approves the hike, California clients of PG&E could see their bills jump more than $10 a month, a troubling development for Californians who already pay one of the highest prices in the nation for electricity. According to the US Energy Information Administration, last year’s average monthly bill was $101.49.

PG&E claims the money for the Community Wildfire Safety Program would go toward reducing wildfire threats. According to Fox6, parts of those efforts will include installing “stronger poles, introducing technology to respond faster to fallen power lines, enhancing weather forecasting models, and increasing coverage in high-threat areas by adding close to 600 cameras.

“We understand and embrace our responsibility to safely provide electricity and gas to the communities we have the privilege to serve,” PG&E Senior Vice President of Energy Supply and Policy Steve Malnight said in a news release.

“As California experiences more frequent and intense wildfires and other extreme weather events, we must take necessary, bold and urgent steps to protect our customers. The prudent investments we are proposing will help build a safer and more resilient energy system for the future.”

While the explanation will hardly mollify the angry clients, PG&E’s legacy liquidity problems still remain as the proposal does not include money for potential claims from the 2017 and 2018 California fires, PG&E said.

The proposed rate increase will have an even more difficult time to pass in light of the company’s operational negligence to date. A class action lawsuit filed last week accuses the utility of negligence and poor maintenance of electrical infrastructure.

“Even though PG&E knew that its infrastructure was aging, unsafe, and vulnerable to weather and environmental conditions, it failed to fulfill these duties, and failed to take preventative measures in the face of known high-risk weather conditions, such as de-energizing its electrical equipment,” the lawsuit states.

Another suit calls the Camp Fire an “inevitable byproduct of PG&E’s willful and conscious disregard of public safety.”

Meanwhile, as the company heads toward legal collision course which analysts believe will cost it tens billions, in a PG&E report this week the company outlined employee reports of damaged power towers minutes before the Camp Fire broke out. One employee called 911 the day the wildfire started after spotting flames close to a high-voltage tower in Butte County. That was 15 minutes after a transmission line went out near that location.

On Wednesday, the state’s insurance commissioner reported $9 billion in insured losses from the 2018 wildfires.

“The tragic deaths of 88 people and over $9 billion in insured losses to date are shocking numbers — behind the insured loss numbers are thousands of people who’ve been traumatized by unfathomable loss,” Insurance Commissioner Dave Jones said.

The utility could see $26.5 billion in liability costs, co-head of Utilities, Power Equipment & Renewable Energy at SSR, Hugh Wynne said. It might be less if the company isn’t found to have started one or more of the 2017 and 2018 fires, although according to its own admission at least in regard to the latter, that seems unlikely.

“PG&E may also be able to avoid liability for certain claims (but not claims for property damage) if it is found not to have been negligent in the operation and maintenance of its equipment,” he said. “Plaintiffs bringing claims for damages due to loss of business revenue, loss of wages, pain and suffering or death would have to file these claims in court and would be required to prove PG&E’s negligence to collect them.”

For now however, PG&E faces an even more uphill climb: convincing its clients that they should pay for PG&E’s negligence. The upcoming battle will surely be incendiary.

2 thoughts on “California Devastated Utility Proposes $2 Billion Rate Hike To Fund “Wildfire Safety”

  1. How come these weasels always run out of money, then claim they need more money to fix the problem, yet the problems never get fixed? To borrow a phase from another California loon, Nancy Reagan; Just say NO!!!!!!!!!!!

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