“Rate neutral framework”, whatever that is, promised as PG&E offers plan to pay wildfire costs and get out of bankruptcy

by Steve Blum • , , , ,

PG&E filed its plan for coming out of bankruptcy with the federal judge handling the case yesterday. The company proposes to give $8.4 billion to those harmed by wildfires over the past four years, both individual and public agencies, another $8.5 billion to insurance companies that have already paid out claims resulting from those fires, as well as a previously agreed $1 billion to a group of northern California public agencies.

In a press release, PG&E’s CEO, Bill Johnson, was quoted as saying the reorganisation plan is a “rate neutral framework”, but didn’t elaborate. Media outlets have interpreted it as meaning that wildfire settlement costs won’t be passed onto electric customers, but there’s potentially a lot of weasel in those few words. The press release also promised “participation in the state wildfire fund established by Assembly Bill 1054” and “satisfaction” of its requirements.

AB 1054 was passed by the legislature in July, and sets up a couple of funds – one paid for by utilities, the other directly by their customers – that will provide a way of financing wildfire liabilities for Southern California Edison and San Diego Gas and Electric, and for PG&E if it clears the bankruptcy process by next summer. Since the $2.50 monthly charge for the second fund is already tacked onto customers’ bills, keeping it presumably qualifies as “neutral”. There are other ways to pass on costs to customers, directly and indirectly, so don’t assume that northern California electricity costs won’t go up even further if the judge eventually accepts PG&E’s plan.

The proposal also says that PG&E will honor existing contracts with community choice aggregators, lean energy producers and employees, and pay back its debts to lenders.

Just ahead of the filing, the City and County of San Francisco sent PG&E a letter offering to buy its electric (but not gas) system for $2.5 billion. It’s a follow up to a municipal power plan floated earlier this year by San Francisco mayor London Breed. According to the San Francisco Chronicle, PG&E unsurprisingly responded that the offer wasn’t in “the best interests of our customers and stakeholders”.