New legislation would block $1.68 billion PG&E tax deduction for wildfire payments
Lawmaker wants to prohibit breaks for utility’s settlements
Like millions of U. S. taxpayers, PG&E anticipates tax deductions for certain events — but a state senator wants to bar tax breaks for wildfirelinked settlements conducted by the embattled utility.
“It’s obscene for PG&E to contemplate a billion-dollarplus tax break on the financial obligations the company agreed to shoulder as its penalty for the deadly wildfires its equipment caused,” state Sen. Jerry Hill said on Thursday.
In a disclosure that was tucked away in a 33-page filing with the state Public Utilities Commission, PG&E revealed that it would likely be eligible for a tax deduction of roughly $1.6 billion, according to official filings.
“PG&E estimates that the $1.625 billion for certain specified wildfire-related expenditures is likely to be deductible for tax purposes because PG&E has incurred, or will incur, these costs in accordance with its legal obligation,” PG&E stated in documents related to a settlement agreement with the state PUC’s Safety and Enforcement Division.
Plus, an additional $50 million PG& E payment related to system enhancement initiatives also could be eligible for tax deductions. That could be a total of nearly $1.7 billion in tax deductions.
“For California state tax purposes, PG& E’s current best estimate is that the full $1.675 billion in financial obligations will be deductible,” the utility stated in the documents filed with the PUC.
These revelations dismayed Hill, whose district in parts of Santa Clara County and San Mateo County in
cludes San Bruno, the site of a fatal gas explosion caused by PG&E that killed eight people in 2010.
The state senator introduced SB 1139, which aims to prevent a power company such as PG&E to harvest the tax savings.
San Francisco- based PG& E’s equipment has been linked to or been the direct cause of a string of fatal disasters that stretch back a full decade. Both the electricity and the gas systems that the company operates have been involved in these catastrophes.
Among the PG&E-linked calamities besides the San Bruno explosion: a fatal wildfire in Amador County and Calaveras County in 2015, a series of deadly infernos that scorched the North Bay Wine Country and nearby regions in 2017, and a lethal blaze that roared through Butte County and destroyed the town of Paradise in 2018.
PG& E’s wildfire-linked liabilities and other debts eventually towered so high that the company’s finances buckled and the utility staggered into a $51.69 billion bankruptcy in January 2019
By the end of June, PG&E hopes to exit its bankruptcy proceeding on a firm financial footing. It’s unclear how smooth the path is for that anticipated outcome.
Amid all of this financial, legal, and regulatory turmoil, Hill hopes that he can convince state lawmakers to enact and Gov. Gavin Newsom to approve his bill to ensure PG&E can’t take the wildfire tax deductions.
“We should not allow PG&E, or any other electric or gas company, to claim a tax savings windfall for failing to make their systems safe,” Hill said.