Dive Brief:
- Pacific Gas & Electric on Monday requested that California regulators raise its return on equity from 10.25% to 16%, adjustments the utility says are necessary to attract capital for safety and reliability investments amid growing wildfire risks.
- PG&E's proposal comes a little more than a week after Southern California Edison (SCE) made a similar request, and highlighted impacts the state's wildfire crisis could have on ratepayers.
- The Federal Bureau of Investigation has also reportedly seized PG&E equipment for examination related to the Camp Fire, though the utility already recorded a $10.5 billion charge after concluding its equipment was likely responsible for the deadly 2018 blaze.
Dive Insight:
PG&E expects to invest $28 billion in energy infrastructure upgrades over the next four years, with three-quarters of the total going toward safety and reliability. In order to fund those upgrades, the bankrupt utility says it needs to sweeten the deal for investors.
"In order to invest in the affordable, safe, reliable and clean energy future our customers expect and demand, investors must continue to play a vital role in providing the capital necessary to fund essential safety and reliability infrastructure upgrades," Jason Wells, PG&E senior vice president and chief financial officer, said in a statement.
In addition to $21 billion for system hardening, PG&E expects to spend $4 billion on new gas pipelines and electric power lines, $1 billion on power generation and $2 billion on information technology and equipment.
The utility's cost of capital proposal would amount to a $1.2 billion rate increase for customers. If approved by the California Public Utilities Commission it would raise average residential electric rates $7.85/month, or about 7%. The average residential gas customer would see monthly bills go up $4.25, or about 7.7%.
PG&E said it "understands that any increase to customers’ rates can be significant and that this approach is neither the best nor preferred solution to the current crisis," in a statement.
Wildfires and PG&E's resulting bankruptcy have thrown the utility's future into uncertainty.
Earlier this month the utility unveiled broad leadership changes, selecting Bill Johnson, who led the Tennessee Valley Authority for six years, to take over as president and CEO. PG&E also announced 10 new directors have been appointed and seven current directors will step down.
Monday the utility announced the appointment of Fred Buckman, former CEO of Consumers Energy and PacifiCorp, as a new independent director on the PG&E board. The utility also sad it will be hiring Christopher Hart, former chairman of the National Transportation Safety Board, to serve as a special independent safety advisor.
