SAN FRANCISCO (CBS SF) — San Francisco City Attorney Dennis Herrera announced Friday his office has filed a legal protest against PG&E, accusing the utility of using a new ratepayer charge to raise $7.5 million in bankruptcy-related costs.
PG&E, now in the final phase of Chapter 11 proceedings, filed for bankruptcy protection in January 2019 in the face of billions of dollars of claims for wildfires in the North Bay in 2017 and Butte County in 2018.
While the California Public Utilities Commission has approved PG&E’s reorganization plan, Herrera’s office alleges it hasn’t yet reviewed the utility’s proposed plan to secure funds through a new charge to ratepayer bills, which aims to borrow money at a lower interest rate to fund the bankruptcy.
In addition, PG&E has proposed establishing a trust that would be used to eventually pay customers back for the surcharges.
Herrera called the plan a “complex financial scheme,” noting that because there is no guarantee that PG&E can actually earn back the money, the risks and costs would ultimately fall on customers, which is a violation of AB 1054, the state’s new wildfire liability law.
“PG&E’s securitization plan is a financial house of cards,” Herrera said in a statement.
“We can’t lose sight of what this proposal does: PG&E wants to add a new charge to ratepayer bills with no guarantee that customers will be paid back. PG&E wants ratepayers to take on all the risk. This plan does not come close to the standards of ‘ratepayer neutrality’ established in state law, nor does it protect the public interest.”
Herrera said that “PG&E’s proposal would shift all of the risk to ratepayers and leave the CPUC with no recourse to alter this arrangement in the years ahead — regardless of any future bankruptcies, negligent or criminal behavior, or other financial schemes and gimmicks. To protect ratepayers and the public interest, the CPUC should reject this proposal.”
City supervisors Hillary Ronen and Aaron Peskin have both spoken out against PG&E’s plan.
“Once again, they are trying to shoulder the ratepayers with huge increases that they will never return. I hope the CPUC will not be bamboozled by PG&E again,” Peskin said.
“PG&E has come up with yet another overly complicated solution to a problem it caused in the first place: If the utility is serious about compensating the victims of wildfires started by its equipment and building a safer, more reliable electric system, there’s no need to borrow money on top of borrowed money,” Ronen said.
In a statement, PG&E defended the plan, saying it was “designed to ensure a safe and financially sound PG&E moving forward, as we satisfy our commitment to compensate the victims of past wildfires.”
The utility added that the total impact on customer bills would result in a rate reduction through a credit to customers on their bills, funded by PG&E shareholders. The utility expects that the shareholder contributions will be sufficient to equal or exceed the customer charges, thereby providing rate neutrality for customers.
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