Thomas Fire

The CPUC approved a nonbypassable charge on utility customer bills to feed into the state's wildfire insurance fund. 

The California Public Utilities Commission at its Oct. 24 meeting approved a monthly charge on utility customers to support the state's new $21-billion wildfire insurance fund.

The nonbypassable charge will go into effect in 2020, and collectively amount to $10.5 billion in ratepayer contributions to the wildfire fund, established by AB 1054 earlier this year. The CPUC adopted a $902.4-million annual revenue requirement for the charge, broken down into $404.6 million, $408.2 million, and $89.6 million for Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric, respectively. Low-income and medical-baseline customers are exempt.

At the meeting, Commissioner Clifford Rechtschaffen acknowledged that the decision engenders "strong feelings," especially in light of the public-safety power shut-offs going on across California.

"The size of the ratepayer contributions is not insignificant. I think this speaks to the magnitude of the very large-scale risks posed by utility-caused wildfires in this state. In considering the cost burden on ratepayers, the proposed decision finds several ratepayer benefits justify imposing these costs," he said.

The decision conforms with AB 1054, signed into law by Gov. Gavin Newsom in July. The bill requires the CPUC to open a rulemaking to consider whether it could use ratepayer funding to bolster the wildfire fund. The commission launched the proceeding on July 26. Utility customers will not see any increase in their bills, as the charge will replace an existing bond charge that is set to expire in 2020.

One of the implications of the fund is that the costs of future utility-caused wildfires, where the utility is found to have acted "prudently" in managing its equipment, will be borne by both ratepayers and shareholders. Prior to AB 1054, utilities could recover all costs of such fires from their customers.

"Very, very importantly, the wildfire fund ensures that victims of a catastrophic wildfire will be paid quickly—more quickly than is now occurring," Rechtschaffen added. Victims of the 2017 and 2018 wildfires who filed claims against PG&E are currently tied up in the utility's lengthy bankruptcy proceeding.

Commissioner Martha Guzman Aceves said the fact that bills will not increase is one of the reasons she is supporting the new charge.

"I think this is a structure that the Legislature and the governor set up to really look to the future for a way to maintain affordability for the ratepayers," she said.

The new charge, however, is not popular. On Oct. 10, the CPUC heard oral arguments on the proposal from a variety of parties who largely criticized saddling ratepayers—who are already shouldering the price of system hardening and wildfire mitigation—with additional costs (see CEM No. 1560). Some public commenters echoed this view at the Oct. 24 meeting. Jessica Tovar, representing the Local Clean Energy Alliance, called it "corporate-sponsored genocide."

"We oppose this bailout because the wildfire victims should be paid by PG&E and shareholder profits," she said, adding, "Ratepayers of California are not a cash machine for PG&E."

Kavya Balaraman covers the California Public Utilities Commission and PG&E Corp. for California Energy Markets. She has reported on climate policy and science in Washington, D.C. and graduated from Columbia University's Graduate School of Journalism.