PG&E bills would rocket 50 percent higher if wildfire disasters caused by the embattled utility descend on northern or central California again, according to a report that’s being circulated in Sacramento ahead of a crucial announcement Friday by Gov. Gavin Newsom.
An array of catastrophes loom if state officials fail to find a fix for California’s utility-caused wildfire woes, according to the report from Steven Weissman, a lecturer with UC Berkeley’s Goldman School of Public Policy.
“Rates would skyrocket, on average by 50 percent in the first year, to keep up with new fires,” Weissman wrote in his report to the governor’s office. “It’s simple math.”
PG&E — already a convicted felon for crimes it committed before and after it caused a lethal gas explosion in San Bruno in 2010 that killed eight people and destroyed a neighborhood — has staggered into bankruptcy because of a mountain of debts and wildfire-linked liabilities that have shattered its finances.
The amount of claims resulting from the infernos of 2017 and 2018 that have been linked to PG&E could reach or exceed $30 billion. That amount, Weissman noted, would dwarf the yearly operating revenue of the company’s electricity units of $13 billion.
As of Jan. 1, average monthly bills for residential customers of PG&E were $167.02 for those who get both electricity and gas services from the company. For the average residential ratepayer, monthly bills totaled $112.08 for electricity and $54.94 for gas services.
If the Weissman calculations were applied to the entire average payment levels, monthly bills would jump to $250.53 a month for gas and electricity. If the Weissman math were applied to the electricity bill only, monthly payments for electric services would leap to $168.12.
Were fires to occur once every several years, PG&E and other investor-owned utilities in California would be able to use loans or bonds to finance the costs by spreading them out over long periods of time.
But PG&E has caused, or been linked to, disastrous and fatal fires in 2015, 2017 and 2018, which could hobble the utility’s ability to spread out the costs over time.
The utility has yet to pay back all the victims of a wildfire PG&E caused in Calaveras and Amador counties in 2015. While PG&E’s equipment caused 17 of the deadly infernos that scorched the North Bay Wine Country and nearby regions in 2017, the company hasn’t paid all of the victims in the PG&E-linked fires in that catastrophe.
Earlier this year, PG&E told federal regulators it was “probable” that state investigators would determine that the company’s equipment was the origin point of a wildfire in November 2018 that tore through Butte County and destroyed the town of Paradise.
An official cause in that blaze, known as the Camp Fire, hasn’t been determined. Still, PG&E’s financial exposure could be significant, since that November conflagration is the most destructive and deadly wildfire in California history.
PG&E compensation to wildfire victims landed in limbo after the company filed for bankruptcy on Jan. 29, listing $51.69 billion in debts and hoping to use a Chapter 11 proceeding to ward off its liabilities and reorganize its finances.
Gov. Newsom was scheduled to release on Friday a wide-ranging plan to deal with California’s wildfire woes.
“If future fires continue to create liabilities similar to those over the last two years and PG&E can’t cover the new losses by selling bonds, rates would have to double in the first year and continue to continue to grow at an unsustainable rate year after year,” Weissman stated in his report.