Pacific Gas and Electric Co. wants to increase its monthly rates by $14.69 per customer. That works out to about $176.28 for a year. The utility says it needs more than half of that money for “wildfire risk management” — ensuring its power lines and related equipment don’t spark any giant fires again.
Yet the San Francisco-based firm has had remarkably shoddy safety practices in the past. Case in point: the devastating Paradise fire last year near Chico that killed 86 people, most of them elderly residents trying to escape the flames. That inferno was caused by the failure of a line at a 100-year-old power pole that, by PG&E’s own estimate, was 25 years overdue for replacement.
So why should Northern and Central California customers pony up any money to help the firm? The question is especially relevant to residential customers in the central San Joaquin Valley, many of whom are poor and can ill afford the increase. Or Valley farmers who have negotiated fixed prices for their crops. While their income does not go up, they face the reality of a significant higher cost when PG&E comes along with its hand out.
The truth is PG&E has to make the wildfire safety upgrades it is planning. Too many lives have already been lost as a result of the company’s negligence. Without the ability to “harden” its electrical grid from the threat of fire, grave danger — and big financial losses due to liability claims — will continue.
Given the billions in liability claims already filed against the company, higher rates now are the only way PG&E can accomplish the upgrading. But it is a bitter reality.
State regulators held a meeting in Fresno on Aug. 14 to hear from local residents about PG&E’s rate request. The consensus: no.
That’s understandable. Fresno has some of the state’s poorest residents. The Census Bureau estimates the poverty rate at 28 percent, twice the state rate. Some of the census tracts in Fresno have the second highest concentration of poverty in the nation. Additionally, people living here face high electricity bills due to the air conditioning needed to cool down one’s home in the triple-digit heat of summer.
Mayor Lee Brand implored the state Public Utilities Commission to hold the line. “I ask for continued support of the disadvantaged in Fresno,” he said.
West Fresno activist Mary Curry put it more bluntly: “The ratepayer did not cause these situations, and the ratepayer should not be penalized.”
Nor should farmers. An example is Riverdale tomato grower Dan Errotabere. He entered into contracts with a Modesto-based tomato sauce producer well before this year’s crop was ready. The price for his tomatoes was fixed. So when the utility he depends on for power asks for more, Errotabere has to find it somewhere else in his operation. That is difficult.
Will PG&E survive?
The utility says California’s fire danger is like nothing before, with extremely dry conditions that are more widespread as the result of climate change.
PG&E faces as much as $30 billion in wildfire liabilities from blazes caused in 2017 and 2018, according to The New York Times. PG&E Chief Executive Officer William D. Johnson visited with legislators on Wednesday, seeking a bill to allow the company to spread out repaying those liabilities over several decades.
PG&E’s rate request has two parts: a $10.57 general increase and another $4.12 for cost of capital. The general rate hike works out to be a 12 percent increase. One energy industry consultant quoted by The Times said the national average return for utility hikes is 9.6 percent.
The money from the higher rates will be used to install fire-resistant poles and lines in areas prone to blazes; pay for tree-clearing work along power line routes; add 1,300 weather stations that can report conditions in real time; and install nearly 600 high-definition cameras in high-threat spots.
Those measures are similar to what San Diego Gas and Electric has been doing since 2007, when it was sued for causing a giant wildfire.
Some of PG&E’s critics have called for the company to sell off parts of its operations; others have suggested PG&E be broken up. Its service area is huge — from the California-Oregon border south to Bakersfield, and from the Pacific to the California-Nevada line.
One thing now in place: A $21 billion state fund to help California’s utilities pay for damage from future blazes.
The rate hikes will fall hard on many of PG&E’s customers. The company has done a bad job of maintenance on its system. A judge has found it criminally negligent in the San Bruno gas-line explosion case.
And yet giving it more money — $1.1 billion more — for safety work is the only real option.
The PUC will review the utility’s request from Sept. 23 to Oct. 18. The commission will then announce its decision sometime in the first quarter of next year. It should hold PG&E to a rigorous program of upgrading, with full accountability to make sure the work gets done as quickly as possible.
It would be a show of good faith if Johnson and other top officers gave up a year’s salary while the trees were trimmed and electrical lines and poles were made more resilient.
That is probably wishful thinking. But to honor the victims of the Paradise fire, PG&E executives should do no less.