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Why Your PG&E Bill is About to Go Up

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PG&E transmission lines like these in South San Francisco could be shut down during periods of extreme fire danger.  (Justin Sullivan/Getty Images)

Starting in January, PG&E ratepayers can expect their monthly bills to increase by an average of about $30. The utility says the money will go toward important infrastructure projects, including work on power lines that will reduce the risk of wildfires. But is this the best way to pay for it?


Episode Transcript

This is a computer-generated transcript. While our team has reviewed it, there may be errors.

Alan Montecillo: I’m Alan Montecillo, in for Ericka Cruz Guevarra. And welcome to the bay. Local news to keep you rooted. At the end of each month. I get an email in my inbox that fills me with trepidation. It has the same subject line, your PG&E Energy statement is ready to view. Every time I open it, I just hope it isn’t too bad because Californians already pay some of the highest utility bills in the nation. And starting in January, your PG&E bill is going to increase again.

Kevin Stark: This is a several billion dollar rate increase. So this is really pretty expensive.

Alan Montecillo: Today I speak with KQED senior climate editor Kevin Stark about why our energy bills are going to get more expensive and what PG&E wants to do with that money. Kevin, why is this happening and how did we get here?

Kevin Stark: What PG&E just did is they just resolved what’s called their rate case? Every few years the utility has to go before state regulators and make a case for their spending priorities. What they’ll charge customers, what they’ll do, the stuff that they’ll build. And this particular plan has a really big project inside of it.

Kevin Stark:  What this plan will do is actually allow them to bury more than a thousand miles of power lines underground, especially in the most risky wildfire prone parts of the state. Insulate a bunch of other power lines. It will allow them to do other mitigation work, invest in clean energy and a whole range of other things.

Kevin Stark: But what I’ve been reporting on and what the big focus of this proposal has been is the wildfire mitigation stuff. It’s part of the story of Jeannie over the last few years that their equipment is outdated. They have not maintained it well. They have been involved in some incredibly tragic incidents. The camp fire was touched off by PGE equipment. We have we have the Dixie Fire, the Zogg Fire. I mean, kind of the list goes on. And a state has really been pushing them to deal with this, to update their equipment. And one of the things that they’ve asked them to do is to bury power lines.

Alan Montecillo: So this increase in all of our utility bills, that money is meant to go to upgrades basically to make sure that another campfire doesn’t happen again.

Kevin Stark: Yeah. In new places. So this is not going to fix some of the areas that I was talking about. This is like new construction that that needs to happen.

Alan Montecillo: So I know this was finalized at a California Public Utilities Commission meeting which PGE attended. What was that meeting like and what were people there to discuss?

Kevin Stark: There was tons of meetings for this, right. So we’ll talk about it.

Alan Montecillo: I’ll talk about naive of me to think it was just one meeting. Right.

Kevin Stark: Right. You really had to get through this. This is like, you know, years of debate leading up to this. There was a hearing where they really like rubber to the road. Were debating the details of this plan.

Carla Peterman: Good morning. I am Carla Peterman. Executive vice president, corporate affairs for PG&E Corporation.

Kevin Stark: You know, PG&E had put forward its proposal, which was to bury 2000 miles of power lines to push that on to ratepayers. That would have been a average rate increase of about $40.

Alan Montecillo: So they wanted a bigger plan.

Kevin Stark: They want a bigger plan. And PG&E has a profit incentive here. Like the way that utilities make money is by doing capital projects. They had a very capital intensive plan. So they came to the C, B, C and made their case. And the state officials really balked at the plan for a couple of reasons. The cost is incredibly expensive and also the scale of what they were proposing is not something that utility has a track record of ever completing. And John Reynolds, who is one of the commissioners, made that pointed and clear.

John Reynolds: Now I’ll offer that. I think it’s uncontroverted here that PGE has never delivered this scale of undergrounding that you’ve proposed here. I have concerns that any failure to meet the plans as you proposed them will result in customers paying for work that doesn’t get done.

Kevin Stark: PGE had this really pointed back and forth, and Carla Peterman was one of the executives at PGE who was there. And she made the case that basically the utility has been doubling, even tripling the amount of work that it’s done undergrounding lines over the last few years, that it’s really figuring it out and that they can get this done.

Carla Peterman: This is also an area where we have applied the best of the best in terms of our work management tools. We have a command center focused on undergrounding. We are tracking every day progress, understanding where the bottlenecks are. So we are approaching this work differently and that is a part of our strategy.

Kevin Stark: And then on top of that, there is just all the other public comment people coming out of the woodwork criticizing the utility advocates, really pushing back on the cost and saying that, you know, this should really be the responsibility of the utility, not of its ratepayers.

Speaker 8: And I only reduce my electricity. I don’t turn lights on inside the dog. I don’t watch TV. I have not hit the pilot light. My cats don’t because I can’t afford it.

Kevin Stark: People are upset and they’re angry and they don’t trust the utility. They don’t feel like they should be paying for this work.

Speaker 8: The having generated communities kills people already raised rates multiple times. And for you to consider that again, it’s really, really turning your back on already struggling payers in California.

Alan Montecillo: Please vote against the agendas desired exorbitant rate increase and restore rates that are in line with the cost of living.

Kevin Stark: And then you can read all the comments online like they’re in. I don’t even know how to put it. The incredibly colorful language used to describe the utility and to criticize it. I’m on this stuff.

Alan Montecillo: A lot of anger.

Kevin Stark: Yes, a lot of anger.

Alan Montecillo: What does all of that lead to?

Kevin Stark: So the end result of the negotiations basically were instead of PGE ratepayers paying to underground 2000 miles of power lines. They’re going to underground about 1200 and then about 800 in which they’re going to insulate the lines, basically put protective covers on them. And that and all of the other facets of this rate case are going to equal an increase on people’s utility bills of about $30 a month, the average utility bill.

Alan Montecillo: And it could have been more right.

Kevin Stark: It would have been up above 40.

Alan Montecillo: Coming up, whether there’s a better way to pay for Puccini’s plan to reduce the risk of wildfires. Stay with us.

Alan Montecillo: So we’ve been talking about this plan having rate payers, all of us find these improvements to these equipment. It seems like that’s basically the norm for how we pay for this stuff. Are there other ways to to fund this, though?

Kevin Stark: Absolutely. Just because it’s the norm does not mean that’s the only way. So there’s sort of three ways that it could get paid for. There’s what’s happening, asking rate payers to foot the bill. And this is how utilities operate. Most utilities in the country, because they’re heavily regulated and they’re monopolies. The other avenues would be that the shareholders that invest in the private company foot the bill.

Kevin Stark: The third option would be that the money would come from the state or from basically public infrastructure investment. The shareholders would cover issues in which the utility has messed up. But we’re talking about new construction. So like really the most common way for this to happen is through pushing onto rate payers.

Severin Borenstein: I think we need to recognize that those are costs that society has to bear.

Kevin Stark: There’s an argument and Severin Borenstein, who is at UC Berkeley, made this case pretty well, that it’s more equitable to have this done through the state budget.

Severin Borenstein: The problem is that when we put it on to utility bills, it is disproportionately paid by low and middle income households. It is much more regressive than paying for it through the state budget, which is primarily financed through income taxes and a bit by sales taxes.

Kevin Stark: If you’re paying for it through taxes, there’s just a lot of other ways in which the government can either offset the costs. The Earned income tax Credit. It can mean that that low income families don’t bear the burden.

Severin Borenstein: We are choosing not to do that and say no, that has to be paid for by ratepayers. I think that’s a glaring difference and I think it’s pretty clearly coming from the fact that legislators know that if they don’t pay for this, they can put it on to utility bills.

Alan Montecillo: Are there any ways that the state could either subsidize the costs for lower income families or just pay for this in a different way?

Kevin Stark: State Senator Josh Becker is proposing that exact thing, which would be to move this outside of ratepayer increases and make this a publicly funded investment. If you want to look at the politics of it, here is where it gets a little tricky. It’s not hard to see how people could see that as a bailout of genie, but there is a lot of money coming from the federal government and the state already to do infrastructure upgrades. And if this is something that needs to happen, then there’s an argument that that it should happen through public investment. Yes.

Alan Montecillo: I guess the other part of this is I want to believe that this extra money that we’re all going to pay is going to lead to on time construction of these projects. Do we have any indication of whether that’s going to happen?

Kevin Stark: You know, it’s such a great question. This stuff is really, really, really hard to do. There is that reported and is up in the Berkeley Hills where there are people who have been pushing for literally decades, decades to get two miles of power lines underground. And what PGE is talking about in this plan is 2000 miles. What they want to do over the next ten years is 10,000 miles. So I think the bottom line is just this is really complicated, difficult to do, and you need does not have a great track record of doing that.

Alan Montecillo: I feel like PGE wasn’t in the headlines that much this year and wildfires weren’t in the news as much. I think we you know, we had a pretty good fire season that said, what do you think this story says about where we are right now, where we’re headed with PGE and this is a big part of our lives. Wildfires, PGE, Climate change.

Kevin Stark: The risk dial has gotten turned way up. And I think we maybe don’t feel that quite as much right now because, as you said, this was a pretty gentle wildfire season, All things considered. Last year was also comparatively not. There was some some big and devastating fires, but it was not. 20, 20, 2019.

Alan Montecillo: No orange sky.

Kevin Stark: No orange sky. But that doesn’t mean that that risk has gone away. And I think maybe that if there’s a big lesson here, it’s that we just we’re running out of space to make mistakes. That leaves us moving forward with trying to figure out how to dial the risk down through mitigation, through reducing emissions, through hardening our systems. Just to put this on a PG and E, like I think the utility is really scrambling to fix that culture to make up for some of the things that it’s done and to try and prevent the next big, huge mega fire. No one wants that. They don’t want that.

Alan Montecillo: And then who should pay the cost of that?

Kevin Stark: Who should pay the cost? It’s a huge question.

Alan Montecillo: Well, Kevin, thanks so much.

Kevin Stark: Thanks for having me.

Alan Montecillo: That was Kevin Stark, senior climate editor for KQED. This episode was cut down and edited by me, Alan Montecillo. Maria Esquinca guest scored it and added all the tape. The Bay is a production of member supported KQED Public Radio in San Francisco. I’m Alan Montecillo, in for Ericka Cruz Guevarra. And thanks for listening.



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