For-profit, investor-owned utilities (IOUs) that are responsible for causing fires and other disasters should not be bailed out. Victims of utility-caused disasters, such as the 2017 Napa and Sonoma fires and 2018 Camp Fire, should be fully compensated for their losses by the utilities, but not at the expense of ratepayers.
PG&E “Stress Test” SB 901 Bailout Application
CPUC proceedings A.20-04-023 and A.21-01-004. Unfortunately in May 2021 the CPUC approved PG&E’s application for a bond for wildfire victim claim costs on even more favorable terms than it requested. Wild Tree has joined TURN and San Francisco in applying for a rehearing of the decision. Wild Tree strenuously objects to PG&E’s plan to profit off of the death and destruction it has caused by causing catastrophic fires in 2015, 2017, and 2018. Despite a past CPUC decision prohibiting PG&E from relying upon SB 901 bond bailout because it filed for bankruptcy, PG&E has applied to have $7.5 billion of wildfire victim claims settlements costs be securitized. This would mean that PG&E would be permitted to issue $7.5 billion in bonds for which ratepayers would see increases in their bills for the next 30 years to pay for interest and financing costs. PG&E’s plan is to “repay” ratepayers from supposed anticipated profits from an investment fund it would provide seed capital to. If this fund has a surplus in 30 years, ratepayers would only get 25% while shareholders would benefit from 75% of any profits thus profiting off of settlement costs. Ratepayers would hold all the risk while shareholders would profit off of PG&E’s felonious prioritization of profits over safety. This would be unconscionable and contrary to PG&E’s bankruptcy reorganization plan, SB 901, AB 1054, and Commission precedent.
- Wild Tree Opening Brief & Reply Brief – PG&E’s application for a ratepayer-backed bond does not meet any of the requirements of CA Public Utilities Code section 451.2 and must be denied.
- Decision approving stress test application in A.20-04-023
PG&E $1.3 Billion Rate Increase
CPUC proceeding A.20-09-019 PG&E application for $1.3+ billion rate increase. The request covers many different costs over many years including wildfire mitigation costs and costs associated with catastrophic event. Wild Tree protests the application on the grounds that some of the costs requested were not reasonably incurred by PG&E and should be born by shareholders, not ratepayers. In particular, Wild Tree objects to $230+ million in costs PG&E claims it incurred for “public safety power shutoffs,” the power outages that resulted when PG&E uni-laterally decided to turn off power to millions throughout Northern California in 2019 during not uncommon high wind events.
- Wild Tree Protest to Application– PG&E should not be able to increase rates to cove costs associated with the 2019 power outages, the January/February 2019 rains, the October 2019 Wind Events, or the Tubbs Fire
- Wild Tree Opening Brief – PG&E’s 2019 power shut offs violated the law, did not prevent the catastrophic Kincade Fire, caused billions of dollars of economic harm, and ratepayer charges for costs of 2019 PSPS program and events would be unjust and unreasonable. PG&E should also not be able to recovery costs from ratepayers for regular and expected rainy or windy weather as “catastrophic events” of for fires for which the cause has not yet been determined.
SCE Wildfire Mitigation Costs Recovery Bond
In A.20-07-008 Southern California Edison (SCE) applied for securitization of $300 million of wildfire mitigation costs through the issuance of a recovery bond, the costs of which will be born by ratepayers. SCE would have had the Commission approve the bond prior to any of the material terms being determined, instead of leaving it all up to underwriters which do not have ratepayers best interest in mind.
The Commission adopted Wild Tree’s recommendations that a pre-issuance finance review team must review and approve the structure, marketing, and pricing of the bond to ensure that the material terms of the bonds meet the statutory requirements including that savings to ratepayers over traditional financing be maximized. Ultimately, the Commissions issued a financing order that established that such a finance team would approve the material terms of the bond.
- Wild Tree Opening Brief – Wild Tree argued that the application should be denied as incomplete and failing to comply with the law. In the alternative, the application could be approved and a financing ordered issued in compliance with the law only if the financing order required the use of a finance team.
PG&E Violations for 2017 Napa-Sonoma-Mendocino Fires and 2018 Camp Fire
CPUC proceeding R.19-06-015 was supposed to be an investigation into PG&E violations of the law that resulted in 19 wildfire in 2017 and 2018 that led to over 100 deaths, destruction of over 30,000 homes and business, and burning of 100,000’s of acres. Wild Tree sought to ensure that the fines assessed for violations of laws intended to prevent utility-caused disasters and otherwise protect public health were substantial enough to have a deterrent effect against prioritization of profits over safety as well as punitively addressing loss of life, homes, and communities; degradation of human and environmental health; and harm to our climate. Unfortunately, there was been insufficient investigation and in a rush to close the proceeding in just a few months the Commission approved a modified proposed settlement that failed to
Wild Tree’s advocacy was important in convincing the Commission that it must assess a true fine and a $200 million fine was proposed by the ALJ. The $200 million fine was technically ordered, but, at the 11th hour, the Commission “suspended” the fine, meaning that PG&E will never have to pay it. The final decision did increase the amount of the “penalties” whereby PG&E would by punished by not being allowed to recover costs from ratepayers, most of which it wouldn’t have been able to recover anyhow. But, the Commission also changed the ALJ’s proposed decision to permit PG&E to walk away with $10’s of millions in tax saving that it will get from deducting penalties, when the ALJ has sought to ensure that ratepayers would benefit from any tax savings from the alleged “penalties” assessed against PG&E.
- Wild Tree Opposition to Proposed Settlement – The CPUC Safety Enforcement Division staff has, shockingly, proposed that the CPUC approve a settlement with PG&E for dozens of violations regarding the fires that were ignited by PG&E in 2017 and 2018 that includes NO FINE! Even worse, CPUC staff is trying to convince the public that this is the biggest “financial obligation” ever imposed in regards to a utility-caused wildfire. This could not be farther from the truth. Under the proposed settlement, PG&E would agree to not pursue ratepayer recovery for some costs it has already incurred. But, the majority of this is for costs incurred as a result of PG&E starting the fires and would not, therefore, be recoverable anyhow. Even though it is clear that PG&E destroyed evidence of the ignition source of the Tubbs Fire and there is strong evidence that PG&E equipment was responsible for starting the Tubbs Fire, CPUC staff has not alleged that PG&E violated the law in any way in regards to Tubbs. Wild Tree has formally opposed the settlement working together with PG&E customer Thomas Del Monte.
- Wild Tree Motion for Evidentiary Hearings – Wild Tree moved that evidentiary hearings be held on the settlement agreement to address PG&E violations regarding the ignition of the Tubbs Fire, issue of how long PG&E knew about the risk that C-hooks pose to transmission lines, and other issues. In December 2019, NBC Bay Area reported that it had uncovered a 1987 PG&E internal report that documented that C-hooks, like that which failed outside of Paradise causing the Camp Fire, failed at strengths much lower than rated in laboratory testing. Wild Tree sought hearings to investigate the possibility that PG&E knew for 30 years that C-hooks posed a risk and did nothing and thereby violated safety laws for decades. The motion was denied in the ALJ decision approving the settlement with modifications.
- Presiding Officer’s Proposed Decision Approving Proposed Settlement Agreement with Modifications – The ALJ proposed approving the proposed settlement but adding a $200 million fine, directing that ratepayers benefit from any tax deductions, and increasing the amount that PG&E would not seek to recovery in rates. Although the modified settlement is still lacking in that it would prevent the CPUC from pursuing any further actions against PG&E in the future and does not address violation related to the Tubbs Fire, Wild Tree was pleased that its arguments were heard regarding the need for an actual fine and that the “financial obligations” were in fact much lower than advertised. PG&E has appealed, claiming they can’t possibly afford any $ fine and shouldn’t have to provide ratepayers the benefit of tax deductions. Wild Tree is opposing the appeal.
Rate Increases Disguised as “Interim” Rate Recovery
PG&E would have the CPUC approve $900 million in rate increases on an “interim” basis with no review whatsoever, instead just basing the increase on PG&E’s word that it must increase rates beginning August 2020. This would lead to an average rate increase for PG&E residential customer of 5% and 6.8% for CCA customers, just for this one case. Most of the increase would be to recover the cost of vegetation management. PG&E already convinced the CPUC to order “interim” rate increase in 2019 and has a motion pending in another case for additional “interim” rate increases – all of which is push PG&E and CCA rates higher and higher. PG&E would later apply for approval for the rate increase and claims that there will be no harm to customers because customers will be reimbursed if the CPUC later finds the increase is not reasonable. PG&E has also applied to create a permanent system where every time it claims to have spent $100 million on certain activities such as tree trimming it automatically gets an interim rate increase subject.
In the midst of the pandemic and associated economic crisis, the Commission approved an interim rate increase thereby increasing rates years sooner than it would have otherwise, even assuming future rate increases were found to be reasonable. The Commission did approve less than half of what PG&E requested but it should all have been denied in full.
- Wild Tree Protest to Application – Wild Tree strenuously objects to PG&E’s application to utilize ratepayers as their personal piggy bank. It would be unconscionable and illegal for the Commission to approve PG&E’s application and increase PG&E electric rates that are already some of the highest in the country with no reasonableness review, no hearings, and no record upon which to base a decision. PG&E would also have the Commission rewrite the basic tenants of ratemaking and permit standardized interim rate increases based solely upon the word of the utility that it has incurred costs that it deems eligible for interim rate increase. Both schemes are illegal and unconscionable and should be denied at the outset. This application is, frankly, a waste of the Commission’s time and should progress no further.
2017 Fires Bailout aka Stress Test
CPUC proceeding R.19-01-006 regarding ratepayer recovery for 2017 fires under SB 901. Wild Tree fought a bailout for PG&E for the fires it caused in 2017 and a bailout for SCE for the Thomas Fire. Wild Tree supported the CPUC decision that PG&E decision to file bankruptcy made it ineligible for a bailout but opposed the CPUC’s leaving the door open for an SCE bailout. PG&E has filed an application for rehearing of the CPUC’s decision which Wild Tree has opposed.
- Wild Tree Comments on the Proposed Decision – The CPCU should have deferred approval of SB 901 stress test methodology to a full administrative hearing opened if and when SCE files an application for recovery of costs for the 2017 Fire it caused. Nonetheless, Wild Tree supported a decision that was limited to prohibiting PG&E from a SB 901 bailout, not expanding bailouts beyond 2017, and only allowing a bailout following an application for cost recovery.
- Wild Tree Opposition to Pacific Gas and Electric Company’s Application for Rehearing – Wild Tree has argued that the Commission’s decision to prohibit PG&E from being bailed out by the ratepayer for the 2017 fires under SB 901 because it filed for bankruptcy should be upheld.
Bailout for Future Fires
CPUC proceeding R.19-07-017 implementation of AB 1054. Wild Tree advocated that a $15+ billion rate increase to fund the pre-bailout wildfire insurance fund is unconstitutional, unreasonable, unjust, and unsafe. Unfortunately, the CPUC approved future bailouts as part of AB 1054 “wildfire insurance fund.”
- Wild Tree Comments on the Proposed Decision – Approval of the proposed decision to fund the Wildfire Fund would be an abuse of discretion and an unconstitutional taking of ratepayer property without due process of law.
- Wild Tree Comments on the Scoped Issues – Commission must deny increase in rates to fund Wildfire Fund because it cannot guaranteed due process rights of ratepayers and because the Fund will disincentive the investor owned utilities to prioritize safety over profit.
- Wild Tree Reply Comments on the Scoped Issues – Evidentiary hearings are required pursuant to the right to notice and meaningful opportunity to be heard.