PG&E Bankruptcy will hit ratepayers and home solar hard

Pacific Gas and Electric is expected to file Chapter 11 bankruptcy on January 29th. The bankruptcy is due to massive civil liabilities they face caused in part by the Camp fire in Northern California. By declaring Chapter 11, the company will negotiate with its creditors to reduce the amounts it will pay them. If bankruptcy is approved, all of the money to pay that combined settlement will then come out of ratepayers pockets. Home solar power system owners will have to help pay PG&E’s bankruptcy settlement. Part of the cost can be passed along to them as a non-avoidable charge.

Update: PG&E filed for bankruptcy on 29 January, 2019.

PG&E transmission lines caused the fires, but ratepayers and victims will pay the price

Pacific Gas and Electric is facing up to $30 Billion in liabilities resulting from wildfires that their electrical transmission lines allegedly caused. Their bankruptcy filing could be especially devastating to victims of the fires. In bankruptcy, all court proceedings come to a full stop. That will put a stop to the victims’ lawsuits against PG&E. Ultimately, victims can have their cases decided after PG&E exits Chapter 11. However any award would be part of the bankruptcy, so victims would likely receive a small fraction of what they were awarded.

Who will be on the hook for any amounts awarded to PG&E’s creditors in bankruptcy court? PG&E ratepayers! Additionally, PG&E has asked U.S. energy regulators for a 9.5% increase in transmission charges due to the higher risk of wildfires. Based on a prior PG&E bankruptcy, ratepayers will ultimately be expected to cover the billions of dollars that will be paid to PG&E creditors. (PG&E had a bankruptcy that the company settled in 2003 that ultimately cost its ratepayers $7 Billion.)

The State of California could step in to shift the burden

Governor Jerry Brown signed into law Senate Bill 901 in September of 2018. It might offer some relief, but it would need to be revised by the legislature. The bill gives the California Public Utilities Commission (CPUC) authority to oversee new fire-related bonds  issued by the utilities. The proceeds of those bond sales would be used to compensate fire victims. Ultimately, the cost of the bonds would then be paid back by ratepayers over several decades.

But there is a problem for victims of the fires from 2018. Senate Bill 901 only covers 2017 and earlier fires plus future fires after 2018. For some reason victims of the 2018 fires were left out of the bill. There is talk in the legislature of revising Senate Bill 901. Unfortunately, PG&E’s impending bankruptcy puts any legislative action on hold. According to Assemblyman Chris Holden (D-Pasadena). “The landscape has shifted, quite frankly, from a legislative approach to one that’s in the courts,”

Holden, who is the chairman of the Assembly Utilities and Energy Committee, says that the legislature must wait to see how PG&E’s bankruptcy is resolved. But Holden also said that he may ask lawmakers to intervene to ensure that victim compensation is prioritized over creditor compensation. Otherwise, Holden states, “The victims would be victimized once again.”

How much longer will Californians continue to be victimized by dangerous transmission lines?

Overhead power lines represent a real and growing risk of devastating wildfires as the climate continues to warm. The good news is that there are alternatives to dangerous overhead power lines. Transmission lines can be buried. Micro-grid technology can enable communities to generate their own power. That eliminates the need for long-distance transmission lines. Residential solar power can play a big part in providing power to community micro-grids. The only thing that needs to happen is that Californians need to resolve to do what must be done to secure lives and property in an increasingly uncertain future.

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References

Peltz, James F. (14 Jan 2019) PG&E to file for bankruptcy as wildfire costs hit $30 billion.

Its stock plunges 52%. LA Times. Web 21 Jan 2019. https://www.latimes.com/business/la-fi-pge-bankruptcy-filing-20190114-story.html

Simon, Morgan. (18 Jan 2019) If PG&E Goes Bankrupt, Who Benefits? Not Us. Forbes. Web 21 Jan 2019.

https://www.forbes.com/sites/morgansimon/2019/01/18/if-pge-goes-bankrupt-who-benefits-not-us/#63cbd0b22d90