Utility rates could skyrocket by 50% if PG&E- linked wildfires continue

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An energy analyst says PG&E customers' bills could double if the utility racks up billions more in wildfire damages like it did in 2017 and 2018. 

Steven Weissman, a lecturer at UC Berkeley’s Goldman School of Public Policy, on Wednesday outlined reasons for future potential rate hikes in a letter to Gov. Gavin Newsom’s cabinet secretary. 

The governor had requested expert opinions after PG&E earlier this year filed for bankruptcy in the wake of billions in liability exposure from the devastating and deadly 2017 and 2018 wildfires in both Northern and Southern California.

KTVU reached out to the governor’s office for a response on Weissman’s letter, but have not heard back. 

Weissman says that in the last two years, California wildfires caused more than $36 billion in damages, of which PG&E claims $30 billion in liability. 

“But the operating revenue of their electricity business is less than $13 billion a year,’’ Weissman wrote. “While one-time losses can be spread over years by borrowing money, that strategy does not work if the losses recur every year.” 

Weissman goes on to say that if liabilities for future wildfires fall to PG&E and the utility giant can’t cover new losses by selling bonds, rates would “have to double in the first year and continue to grow at an unsustainable rate year after year.” 

To be clear, state investigators found PG&E sparked a series of 2017 and 2018 fires. But the utility has yet to announce the cause of the 2018 Camp Fire in Butte County, But has said its equipment will likely be blamed for that fire, which killed 85 people and caused $16.5 billion in damages.

Massive utility rate hikes could also impact the state’s ability to get more electric cars on the road and meet the state’s ambitious climate change goals, said Weissman, who worked for the California Public Utilities Commission for decades. 

“If the cost of electricity climbs to a point where it's aggressively more expensive to drive an electric car, than it is to drive a gasoline car, that's gonna have a huge dampening effect on the adoption of electric vehicles,’’ Weissman said in his letter to the governor’s office.  

Higher rates could also threaten the state’s ability to carry out some of its top clean-energy initiatives, such as phasing out natural gas use in buildings. “Dramatically higher electric bills would make the building electrification transition harder, sacrificing greenhouse gas emission reductions…” Weissman claims. 

To reduce the potential for future fires, the state must work to reduce the fuels that are available for fires to burn. Experts say that means more controlled burns, removing drought stricken dead trees from forests near communities, thinning out forests and better regional and local control of vegetation.

In response to the analysis, PG&E spokeswoman Lynsey Paulo told the San Francisco Chronicle that the company remains committed to supporting people in its service area affected by recent disasters.

“It is clear that more needs to be done to adapt and address the threat of extreme weather and wildfires,” she said. “We welcome this constructive dialogue and are open to a range of solutions that will make the energy system safer and safeguard California’s clean energy future.”

KTVU asked several PG&E customers how they feel about the possibility of higher bills.

PG&E customer Pierre Bellevue said increased rates does not seem fair. 

"Why should we have to pay for their mistakes and everything else?” he said. “From my understanding, the fires were basically caused by them. From that sense, why do we have to pay for it?  At the same time, all these CEO's get their bonuses, but we're stuck with the bill? That's not really fair.”

Utility customer Robert Leeds said raising customer’s rates to cover the utility’s problems is not a good idea.

“I think we need to invest in alternative energies; solar, wind, whatever else is available. That's the future. That's the life of our planet,” Leeds said.

KTVU's Tom Vacar contributed to this report.