PG&E fights for ways to pass costs to consumers
PG& E executives said Thursday that the utility will wage a multi-front battle to upend rules that now make it harder to pass the costs of wildfire liabilities along to customers in the form of higher monthly energy bills.
The San Francisco-based utility could be on the hook for costs from the deadly Wine Country wildfires, but its executives be- lieve the existing legal framework that curbs its ability to recoup such costs from customers isn’t fair.
State Sen. Jerry Hill, a Democrat whose district includes portions of San Mateo and Santa Clara counties, harshly criticized PG&E’s quest, however, warning that customers could suffer as a result.
Current California laws and the application of a complex policy known as “inverse con- demnation” require PG& E and other utility giants to compensate people whose property was damaged by the utility’s equipment. The companies are on the financial hook even if fire investigators can’t prove that the utility’s negligence — such as failing to cut back vegetation or improper equipment maintenance — caused the fires. That is what PG&E seeks to change.
Geisha Williams, PG&E’s chief executive officer, said in a pre- pared release that the company hasmade progress in “advocating for more appropriate public policies regarding wildfire liability.”
But Hill said, “Without inverse condemnation, the sky is the limit on utility bills.”
PG&E executives believe more wildfires are likely, due to climate change, and suggested during a conference call with analysts Thursday that a “new normal” of destructive infernos confronts the utility and California.
“There is no simple fix,” Williams said. “The new normal needs new solutions.”
Hill suggested, however, that PG& E is attempting to use climate change as a scapegoat for the company’s role in the wildfires. He said PG& E’s effort to downplay its responsibilities in a disaster stirs echoes of the company’s efforts to deflect responsibility in the wake of a gas pipeline explosion in 2010, caused
by PG& E, that killed eight people and destroyed a San Bruno neighborhood.
“PG& E is trying to change the conversation and the narrative fromnegligence and their possible responsibility and call all of it the new normal,” Hill said. “There is nothing new about PG& E’s negligence. We saw it eight years ago in San Bruno.”
Looming over PG& E is the possibility that it could be liable for billions of dollars in property damage from infernos that roared through Napa, Sonoma and Solano counties in October.
If PG&E succeeds in lobbying the state Legislature for favorable new laws, PG&E and other big power companies could win the go-ahead to shovel wildfire liabilities onto their customers by raising energy rates for customers.
Meanwhile, PG&E’s profits tumbled in its first quarter, failing to meet Wall Street’s expectations. The company said Thursday it won’t issue projections for profits in 2018 due to unknown outcomes linked to the deadly October wildfires.
During the Januarythrough- March quarter, PG& E’s operating profits, excluding certain one-time items, were $468 million, or 91 cents a share, on revenue of $4.06 billion. Operating profits were 14 per- cent lower than the same period last year, while revenue was down 5 percent, the company said Thursday.
PG& E’s shares plunged 3.3 percent and closed at $44.37 Thursday because operating profits and revenue came in weaker than analysts had projected. Wall Street had expected operating profits of $1.04 per share and revenue of $4.2 billion.
The company suggested its inability to provide guidance on its outlook for operating profits could change.
“We will revisit this as we have better clarity regarding the impact of the Northern California wildfires,” said Jason Wells, PG&E’s chief financial officer, during the conference call.
Yet state fire investiga- tors might still be months away from determining a cause of all the lethal October blazes and the extent of PG&E’s responsibility.
“We haven’t gotten any indication at all about the timing of those Cal Fire reports,” Williams told analysts.
PG& E indicated its revenue was affected by the timing of whenmoney from rate increases approved by the state Public Utilities Commission would be fully flowing fromits ratepayers.
From the end of 2015 to the end of 2016, PG& E monthly bills for the typical residential customer with both gas and electric expenses jumped 10.3 percent. In 2017, they jumped another 8.8 percent, to an average of $165.10 a month.
In addition to those rate increases, PG& E wants to recover costs for future wildfire liabilities by further boosting utility bills. Its CEO told analysts Thursday that the inability to do so “is a risk to the financial health of all the California investor- owned utilities.”
But Hi l l dismissed PG&E’s warnings that current rules jeopardize the utilities.
“PG& E has started the talk of bankruptcy, and they are trying to put the fear of God into everyone at the State Capitol,” Hill said. “PG&E cried wolf before on their liabilities after San Bruno, and now they are trying it again.”