By Stephen Hobbs, THE SACRAMENTO BEE
https://www.sacbee.com/news/politics-government/capitol-alert/article317102668.html
Pacific Gas and Electric Co., the major California utility, announced Wednesday that it was deferring billions of dollars in planned work after what it sees as the inability of the Legislature to resolve issues with the company's liability following a wildfire.
The news came a day after the California Assembly killed a controversial bill that aimed to change how the state responds to utility-caused blazes. That surprising decision followed lengthy conversations among legislators about how best to ensure that California utilities are financially stable, victims of wildfires get paid quickly and insurance companies don't cut back more business in the state.
CEO Patti Poppe told The Sacramento Bee that the company, which serves about 16 million people in the state, was planning to move forward with the announcement once legislative Democrats and Gov. Gavin Newsom announced a deal Saturday about the measure the Assembly ultimately rejected. She said the bill was inadequate and praised Assembly Speaker Robert Rivas, D-Hollister, for not moving it forward.
"Our customers need the Legislature to finish the job," she said. "Our customers will pay the price of their inaction."
Poppe said the company was putting off $2 billion in work – not for wildfire mitigation or safety, but for housing developments, renewable energy projects and other efforts. That is about 15% of what the company was planning to spend.
Not borrowing the money means it will save on interest payments. That doesn't necessary lower rates for customer, but it prevents them from going up in the future to pay for the company's cost to borrow money, she said.
"When there was no action, we had to interrupt the status quo," Poppe said. "The status quo is untenable. These actions are certainly required given the current policy that's in place and has been in place for some time."
A major concern is that California courts have interpreted that utilities are liable for property damage from wildfires that their equipment starts, even if they followed safety and mitigation requirements. Insurance companies can also sue a utility after a wildfire it sparked to recover money the insurer used to pay policyholders for damages.
When asked if the timing was meant to put undue pressure on legislators, Poppe said: "I might argue that the Legislature is putting undue pressure on my customers. Look, if I can't access capital to do the work that they're looking for, that's undue pressure."
Jamie Court, president of the advocacy organization Consumer Watchdog wrote a letter to the California Public Utilities Commission in response to the announcement, saying: "Ratepayers are paying for these investments with a generous return on investment. PG&E needs to make these investments or give the ratepayers their money back."
Newsom on Tuesday sent his own letter to the president of the California Public Utilities Commission saying he was "deeply concerned that the financial instability of the utility sector will continue to drive up already high utility bills and jeopardize the ability of all California utilities – public and private – to deliver affordable power."
He asked the commission to prepare a report by Nov. 1 that would look at the consequences of credit rating downgrades for utility companies due to a lack of major changes.
His office did not immediately respond to an emailed question requesting comment on PG&E's announcement.
