CPUC Gives Initial Approval to PG&E for $7.5 Billion Securitization of 2017 Wildfire Costs
Despite concern from customer advocacy groups, the California Public Utilities Commission (CPUC) granted PG&E initial approval to securitize costs from a series of 2017 wildfires on Thursday, April 22. If the CPUC approves a similar financing order in May, PG&E will be able to issue $7.5 billion of recovery bonds, resulting in a charge to ratepayers of $394 million per year for thirty years.
The utility applauded the approval, which they hope will improve its creditworthiness, thereby saving customers money. PG&E also insists securitization will allow the utility to retire $6 billion of debt and accelerate wildfire victim payments. PG&E spokesperson James Noon said in an emailed statement to Kavya Balaraman of Utility Dive, “[T]he commission’s decision confirms that this proposal is rate neutral, will not increase energy bills and will strengthen PG&E’s going-forward business, while supporting our ability to provide safe, reliable, affordable and clean energy to our customers.”
Consumer advocates, however, are not as optimistic. Though PG&E intends to get funding from net operating losses or shareholder-owned tax deductions, the utility’s most recent Securities and Exchange Commission (SEC) filings reveal the limitations of accessing the carryforwards. Consumer advocacy group The Utility Reform Network (TURN) modeled a 40% chance of a shortfall in the shareholder-funded trust; because of these results, TURN Executive Director Mark Toney believes the shareholders should guarantee compensation to the ratepayers.
Information for this article came from Kavya Balaraman, PG&E gets initial approval to securitize &7.5B of wildfire costs, despite ratepayer impact concerns, Utility Dive (April 23, 2021), https://www.utilitydive.com/news/pge-gets-initial-approval-to-securitize-75b-of-wildfire-costs-despite-r/598909/