New California governor prioritizes PG&E as CPUC moves to examine wildfire cost recovery
- California Governor Gavin Newsom, D, spent his first full day on the job Tuesday focusing on the continuing problems with Pacific Gas & Electric (PG&E), which faces significant potential liabilities related to the state's recent wildfires.
- PG&E is exploring several options to address those liabilities, which could run more than $30 billion. It has retained Citi and Morgan Stanley to assess potential asset sales and is working with EverCore and Alix Partners, too, Spark Spread reported on Wednesday.
- The California Public Utility Commission (CPUC) is expected to open a docket that would help determine how much of any utility liability for wildfires should be borne by shareholders and how much by ratepayers.
While California's new governor only briefly touched on the devastation of last fall's Camp Fire during his inaugural address on Tuesday, he is prioritizing the related issue of PG&E and its solvency, holding a meeting on the matter at 8 a.m his first day in office, Bloomberg reported on Wednesday.
Visiting state fire and emergency response personnel in Colfax on Tuesday, Newsom said, "I try to be objective about these things as much as I can," ABC 7 reported. "My role for the state of California is to protect your interests and not PG&E's interest, but sometimes those interests align and that's where it gets complicated," he continued.
In Colfax, Newsom said he will propose $305 million in new funding in his upcoming budget for wildfire prevention and response. He did not provide any specifics about his plans for PG&E, but said California needs a "healthy" utility that can invest in the future, according to Bloomberg.
Meanwhile, PG&E is reportedly exploring various options, including selling its gas system and filing for bankruptcy — state regulators are keen to avoid the latter. Three top executives of the utility are retiring this month amid the turmoil, the San Francisco Chronicle reported.
PG&E's stock was down about 26% in 2019, as of Jan. 9, propelled in part by S&P Global's decision to cut the utility's credit rating to junk. Another factor that will significantly affect the stock price is how much shareholders will have to pay for wildfire costs compared to how much customers will pay.
The CPUC, at its meeting today, will vote on opening a new rulemaking docket to develop criteria and a methodology to evaluate wildfire cost recovery. But "no cost recovery determinations will be made in this" rulemaking, CPUC clarified in the meeting agenda.
The CPUC also announced in December it is considering a range of options to improve safety at PG&E. Opening comments in that proceeding are due Jan. 30.