PG&E must curb wasteful spending before receiving another rate hike
At least 51.2 million reasons should compel the California Public Utilities Commission to carefully scrutinize PG&E's demand for an 18% rate hike next week.
The $51.2 million in compensation garnered by PG&E CEO Patti Poppe made her the highest paid CEO of any for-profit utility in the United States in 2021, weeks before customers learned of double-digit rate increases, and the company still lost more than $88 million in net income.
It's a symptom of a much larger disease at PG&E, and indeed, in the CPUC's regulatory oversight. Residential rates already have doubled since 2006 and nearly tripled for low-income customers, according to The Utility Reform Network. The proposed $39-per-month rate hike the commission will consider Thursday will further burden struggling residents and small businesses.
The company responds that higher rates will fund longoverdue infrastructure improvements to mitigate the risk of wildfires and gas explosions. PG&E pits our calls for affordability against our safety.
Yet Californians deserve both. We can achieve affordability and safety if the CPUC holds PG&E and other for-profit utilities accountable by compelling them to redirect wasteful spending to core safety needs.
What do we mean by accountability? In 2020, PG&E executives sought to give themselves $188 million in bonuses, only a few days after telling a bankruptcy judge that it was “not financially sustainable” to employ 5,500 tree trimmers to reduce vegetation-triggered wildfire risk. The CPUC needs to condition rate increases on PGE's forbearance of ratepayerfunded executive bonuses.
PG&E could trim fat in other places, such as slashing the $2.1 million it spent in 2021 on campaign contributions or the $4.9 million it spent last year on lobbying.
It could stop offering dividends to its preferred PG&E shareholders well in excess of the average yield in the utility industry. It could more tightly regulate its excessive attorney fees, such as the $140 million ratepayers paid for lawyers during PG&E's bankruptcy, only to see the company emerge with more debt than it carried into bankruptcy. And it could cut its multimillion-dollar weekly spends on those omnipresent feel-good cable and internet TV ads — a puzzling expenditure for a utility with a government authorized monopoly over its customer base.
If Californians must tighten their belts to pay PG&E's bills, so must the company. The CPUC must demand it.
The CPUC also must heed public objections to its proposal to allow for-profit electric utilities to seek additional rate increases weeks or months after the public resolution of the current rate battle, without any public hearing at all. Californians deserve better. Will some rate increase be justified to improve safety? Of course — but the company has no credibility in deciding how to do so. More than a decade after the cracking of PG&E's outdated plastic piping caused an explosion at a Cupertino apartment complex, the company has replaced only 21% of its 6,200mile system of defective pipes.
In 2021, Poppe accelerated a headline-grabbing announcement of a plan for undergrounding 10,000 miles of electric transmission and distribution lines because it “couldn't wait,” yet 21/2 years later, the company will have accomplished only 6% of its goal. That hasn't spared Californians' having to endure countless TV and internet ads every week placing a positive spin on PG&E's torpid undergrounding efforts — ads funded by our ratepayer dollars.
What prevents PG&E from keeping us safe and from doing so affordably? Accountability. The CPUC must insist on it — starting with Thursday's hearing.