California PUC schedules PG&E bankruptcy hearing; approves SoCal gas rate increases

Published on September 30, 2019 by Hil Anderson


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A proposed reorganization plan for Pacific Gas & Electric Co. and its potential impact on rates will be the topic of discussion at a preliminary hearing before the California Public Utilities Commission (CPUC) in October.

The CPUC set the hearing for Oct. 23 at the commission’s offices in San Francisco. The purpose of the hearing is to ensure that the utility’s plan to emerge from Chapter 11 bankruptcy remains “rate neutral” while also satisfying the various stakeholders and continuing to function as the main energy provider for some 16 million customers in Northern and Central California.

The CPUC is required to review the reorganization plan before it can be approved in U.S. Bankruptcy Court. The agency’s order required PG&E to file its response by Oct. 7 while responses from other parties wishing to be heard must be filed by Oct. 14.

“As we move through this reorganization, we must have a public process that informs and allows us to consider the public’s input, as we, along with the Bankruptcy Court, work toward confirming a safe, sustainable, affordable plan of reorganization,” Commissioner Martha Guzman Aceves said after the commission’s late-September meeting.

The commissioners also approved rate increases for customers of Southern California Gas and San Diego Gas & Electric Co. that will raise their bills, but also pay for safety upgrades on both companies’ pipeline networks.

“Our decision provides the necessary funds for SDG&E and SoCalGas to perform safety initiatives that include pipeline inspections, testing, and maintenance work on their gas transmission and distribution pipelines,” said Commissioner Liane M. Randolph. “And it allows the companies to maintain and replace their aging electric and natural gas infrastructure at a reasonable cost.”

The two companies have adjacent gas-service territories and are both divisions of Sempra Energy. The CPUC combined their respective rate requests for 2019 through 2022 after they were filed in 2017.

The CPUC said in a statement it approved a 2019 revenue requirement for SDG&E’s combined electric and gas operations totaling $1.9 billion, lower than the $2.2 billion the utility had sought. It translates to a 0.7 percent monthly increase in the typical electric bill, which equals about $1.10. Gas bills will rise 13.7 percent, or $4.76, per month.

Southern California Gas’ approved revenue requirement totals $2.77 billion and will increase customer gas bills by 9.1 percent or approximately $3.98 per month. Included in the revenue requirement are costs for the company’s Pipeline Safety Enhancement Plan, which consists of 11 pressure test projects, 10 pipeline replacement projects, and 284 valve replacement projects.

The PG&E ruling means the company will move another step toward a still-uncertain conclusion. The company has been in bankruptcy for nearly a year after being found liable for billions of dollars in damages caused by a series of deadly and destructive wildfires that leveled thousands of homes. California Gov. Gavin Newsom this year signed legislation, Assembly Bill (AB) 1054, which gives PG&E access to a new $21 billion fund to help pay for fire damages linked to utility equipment. In order to access the fund, PG&E must receive court approval of a plan to emerge from bankruptcy by June 30, 2020.

An $11 billion settlement was announced Sept. 23 between PG&E and Californians impacted by fires in 2017 and 2018; the company used the settlement to update its pending bankruptcy plan. “Under the plan, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and still able to continue meeting California’s clean energy goals,” said Bill Johnson, president & CEO of PG&E Corp., the parent company of PG&E.

However, a rival plan was filed Sept. 19 by a group of major PG&E bondholders led by Elliott Management Corp., which would commit nearly $30 billion to help pay off fire victims in exchange for a majority stake in the company. PG&E has dismissed the move as “simply another attempt to take over PG&E at a fraction of its value to the detriment of customers and other claimants.”