PG&E seeking to raise rates to cover losses from wildfire issues

April 23, 2019


PG&E requested permission from the California Public Utilities Commission (PUC) on Monday to hike rates, which would result in the average household’s electricity and natural gas bill increasing by $22.67 a month. [Sac Bee]

Currently in bankruptcy over the massive liabilities it incurred from its involvement in Northern California wildfires, PG&E is also requesting that the PUC raise its return on equity, or maximum profitability, from 10.25 percent to 16 percent. However, the company says it is open to discussing alternatives with state officials that would reduce the size of the increase the utility is requesting.

PG&E says it needs increases in its rates and profits in order to raise investment capital and invest billions of dollars in wildfire safety measures and system reliability. Because of its financial woes, PG&E needs to give investors a higher return in order to attract capital, the utility is arguing.

“In order to invest in the affordable, safe, reliable and clean energy future our customers expect and demand, investors must continue to play a vital role in providing the capital necessary to fund essential safety and reliability infrastructure upgrades,” PG&E Chief Financial Officer Jason Wells said in a statement.

Mark Toney, of The Utility Reform Network consumer advocacy group, said PG&E’s request is outrageous and would produce a windfall to Wall Street.

On Monday, California’s other major utilities, Southern California Edison and San Diego Gas & Electric, joined PG&E in requesting that the PUC grant them larger profit margins. Edison likewise says its needs to compensate for financial losses caused by major wildfires.

Edison is asking the PUC to raise its maximum profit margin from 10.3 percent to 16.6 percent. The proposal would likely result in a $12.20 a month increase to customers’ bills.

San Diego Gas & Electric is seeking to raise its profit margin from 10.03 percent to 14.3 percent. It is unclear how much the proposed increase would raise utility bills.

The requests from the three utilities, but particularly PG&E, are expected to draw backlash from legislators. Sen. Jerry Hill (D-San Mateo) has already introduced a bill, SB 549, that would give the Legislature a say over authorizing rate increases for PG&E.

If PG&E’s request is approved, the rate hike would take effect in Jan. 2020.

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Wait, they (PG&E) need higher profits? How is it rates here approach 30 cents/KWh once you exceed their stingy first tier, and in much of Texas for example, rates are ten or eleven cents? With NO tiers or jumps?

And there, usually there are TWO entities with TWO overheads, nice buildings and pricey line trucks and HV linemen. The generating entity often uses gas turbines (just like PG&E) then the distribution entity has all it’s second layer of overhead, yet both Texas entities make it work (exist and prosper) on ten or eleven cent juice?

Obviously this is an oversimplified comparison, but with nearly TRIPLE the Texas rates by PG&E, one thinks the comparison makes a valid challenge to why PG&E is so high even PRIOR to the fires………