PG&E rate case compromise cuts $1.1B proposal to $575M for wildfire mitigation

Dive Brief:

Pacific Gas & Electric (PG&E) reached a proposed settlement with ratepayer advocates, safety officials and other stakeholders that would increase its 2020 revenue by 6.8%, largely to fund wildfire mitigation measures.
The proposal is $483 million less than the 12.4% increase to its 2019 revenue originally requested by PG&E in its general rate case application, filed with the California Public Utilities Commission (CPUC) in December 2018. If approved, it would increase the average residential electric and gas customer's monthly bills by a little under $6.
The increase in 2020 revenue is driven mostly by the utility's wildfire mitigation programs, like trimming back trees around its power lines, according to the settling parties. The settlement would also allocate funding to help reduce the impacts of the utility's public safety power shut-offs, which PG&E estimates will continue at least for the next five years.

Dive Insight:

PG&E's initial general rate case application requested a nearly $1.1 billion increase over its $8.5 billion revenue for 2019, more than half of which was to fund wildfire mitigation measures, as required in Assembly Bill 1054, passed by the California legislature in July.

These include building more resilient poles across 2,000 miles of power lines, trimming approximately 120 million trees and inspecting 81,000 miles of high-voltage distribution lines annually. The plan would have increased the typical electric and gas customer's bill by $10.57 per month. PG&E also requested a $454 million and $486 increase to its revenue for 2021 and 2022 respectively.

The proposed settlement is "a crucial milestone" in its 2020 rate case, PG&E said in a press release. The settling parties include the CPUC's Public Advocates Office, ratepayer advocacy group The Utility Reform Network and the CPUC's Office of the Safety Advocate, among others.

If the settlement is approved, PG&E's 2020 revenue requirement will be increased by $575 million effective Jan. 1, with further increases of $318 million and $367 million in 2021 and 2022 respectively. It would reduce PG&E's initial ask by $428 million, $38 million and $114 million for the three years.

The settlement also calls for the creation of three new balancing accounts for the utility — one to track expenses related to wildfire prevention efforts, another to record the cost of vegetation management, and a "risk transfer balancing account" to record expenses from liability insurance premiums.

"These efforts support PG&E's most important responsibility, which is the safety of our customers and the communities we serve. This agreement furthers our commitment to deliver safe and reliable energy to our customers including making our system more resilient to the growing threat of wildfires," Andy Vesey, CEO and president of the electric utility, said in a statement.

However, the rate case will not fund claims from the 2017 North Bay fires and 2018 Camp Fire, nor compensation for the utility and parent company's executives.

The CPUC will review the proposed settlement and parties to the proceeding can file comments on it until Jan. 21.