PG&E just got one rate increase and now it wants another? That’s just wrong | Opinion

Wait a minute. Didn’t PG&E just get a rate increase?

It doesn’t matter. Now it’s asking for another one.

On top of the $35-a-month increase that just took effect, Pacific Gas & Electric Co. is asking for an additional $14 a month beginning in March.

That will bring the average bill to over $300 a month for customers who get both their electricity and natural gas from PG&E.

And here’s the kicker: If approved, the new increase will not pay for any upgrades, equipment or any other additional customer benefits. It will reimburse PG&E for work already done.

The utility is asking the California Public Utilities Commission to retroactively approve $2 billion in expenditures dating back mostly to 2022 and 2023 — and to stick ratepayers with the bill.

The ‘reasonableness’ test

To be fair, it’s not unusual for costs to run over budget, whether it’s a government agency, a private contractor or a utility doing the work. That’s especially the case in times of emergency, which have been all too frequent in California.

For that reason, the PUC allows utilities to submit applications for reimbursement for expenses that went beyond what was already approved. That makes sense, as long as it doesn’t become routine, which seems to be exactly what’s happened.

The commission does analyze documentation to determine whether the expenditures are reasonable — a process that can take several months.

PG&E doesn’t want to wait that long. It’s asked the PUC to allow it to begin collecting 85% of the requested amount from customers in March. If the PUC later determines that the level of reimbursement is not justified, PG&E will refund the money.

Here’s where the money went

So how, exactly, did PG&E wind up $2 billion over budget?

Breaking it down by spending category, the biggest request included in the application — $1.2 billion — is for “catastrophic event” responses, which included restoring power, repairing damage caused by wildfires and storms and removing trees and other storm-related debris.

There were also planned fire prevention activities that went over budget, such as vegetation management.

PG&E wants an additional $833 million for that, on top of the $795 million that had already been approved for both routine maintenance and the once highly touted “enhanced” vegetation management program that was later abandoned.

Enhanced vegetation management — referred to as EVM by PG&E — goes above and beyond existing regulations in an attempt to identify and remove trees that pose a danger. But it didn’t work out that way.

It resulted in only a 13% reduction in ignitions during fire season, and just 7% when measured across an entire year, as reported by The Wall Street Journal.

According to a company publication, “PG&E Currents” Aug. 7, 2023, the utility realized that “engineered controls” were more effective than trying to gauge which trees need to be trimmed or removed.

“We cannot identify every tree that may pose a risk,” the publication explained.

Engineered controls refer to power-line settings that automatically shut off electricity within 10 seconds of a branch or other object hitting a line.

Ignitions decreased 68% in lines equipped with the shut-off feature in 2022, The Journal reported.

That’s a remarkable improvement — and it explains why PG&E is reversing course and relying more on automatic shutoffs and on undergrounding lines, though the utility says it will continue with routine vegetation management and will remove potentially dangerous trees identified during EVM.

But is it fair for ratepayers to pick up the tab for what might be called a failed experiment?

And is the current system that allows PG&E a second bite of the apple, so to speak, the best way to hold the company accountable?

Doesn’t it disincentivize cost-cutting measures if the company can turn to ratepayers to bail them out when things don’t go as planned?

PUC commissioner: ‘This pattern of increase is not sustainable’

Those issues were broached at the PUC’s November meeting when PG&E’s general rate increase was approved.

“I am increasingly concerned that utility risk and the cost of minimizing this risk is being borne disproportionately by ratepayers,” Commissioner Darcie Houck said. “And as we see in this case, the rates that we are asking ratepayers to pay are increasing at a rate that will be unaffordable in the very near future if we don’t find mechanisms to better control costs. As many of the parties in this proceeding have noted, this pattern of increase is not sustainable.”

Consider this: When a government agency in California goes over budget, it can’t raise taxes to offset costs — not without voter approval, anyway.

Yet the PUC allows investor-owned utilities that provide essential public services to continue to raise rates.

Houck is correct. That is not sustainable, and mechanisms must be found to rein in rates.

Simply acknowledging that something needs to be done is not enough. It makes for a good sound bite, but in the end nothing changes.

TURN, a nonprofit organization that advocates for rate reform in California, has proposed tying rate increases to the rise in the cost of living.

That’s worth exploring. Ratepayers cannot be expected to continue bailing out utilities — especially for their mistakes and miscalculations.

Californians deserve a break. The California Public Utilities Commission should deny, or at least substantially reduce, PG&E’s latest request for a rate increase.