Wildfire Fund Joshua Tree

Utilities and ratepayer advocates outlined their recommendations for the state's new wildfire fund in comments with the CPUC. 

It would not be fair to expect Pacific Gas & Electric customers to pay for a wildfire fund if they aren't able to benefit from it, the utility told state regulators seeking comment on a new ratepayer charge that would create the fund.

PG&E and other utilities outlined their concerns in Aug. 7 filings to the California Public Utilities Commission as the agency begins steps to implement the $21-billion fund required by the AB 1054 legislation. Under the law, PG&E's access to the fund is contingent on its exiting bankruptcy by June 2020.

In their pre-hearing conference statement, PG&E attorneys noted that while the utility is working on putting together a reorganization plan that could be approved by June 2020, the outcome of its bankruptcy case is largely in the hands of the court, a process that could result in it not being able to access the fund.

"If this were to occur, it would not be just and reasonable to require PG&E's customers to pay into the wildfire fund for 15 years," they said.

The legislation signed by Gov. Gavin Newsom on July 12 requires the CPUC to look into imposing a nonbypassable charge on utility ratepayers in order to support the fund, which would help pay for claims filed against utilities due to wildfire-related damages caused by their equipment. The agency on July 26 launched a rulemaking to consider the charge, including the payment of any bonds issued pursuant to AB 1054 that are allocated to the fund (see CEM No. 1549 [8]).

In the order instituting rulemaking, the CPUC asked parties to weigh in on whether it is appropriate to add the wildfire fund nonbypassable charge to ratepayer bills.

Southern California Edison urged the commission to adopt the charge, noting that AB 1054 would do little to bolster utilities' financial situation without creation of the fund.

"The state needs financially healthy utilities to attract capital investment at a reasonable cost to support infrastructure investment, including programs designed to mitigate the wildfire crisis," SCE attorneys said in the filing.

Under AB 1054, the state wildfire fund will include contributions from multiple parties, including $10.5 billion from the utilities themselves and $10.5 billion from electricity customers. The legislation requires the CPUC to consider extending the implementation of a Department of Water Resources bond charge collected from ratepayers, which was established because of the 2000-2001 Western energy crisis and is currently scheduled to expire next year.

For regional utilities with fewer than 250,000 customers in California, participation in the fund is voluntary. PacifiCorp, which qualifies as a regional utility under AB 1054, has decided against participation, the utility said in its filing. It thus declined to comment on the CPUC proposal and did not offer a reason why it chose not to participate. Liberty CalPeco, meanwhile, said it has not yet decided whether to contribute to the fund.

For ratepayer groups, the chief concern is the impact the nonbypassable charge, and the fund more broadly, will have on utility customers. Attorneys for The Utility Reform Network said in their Aug. 7 filing that the group's support of AB 1054 was based on the assurance that it would not increase rates for electric customers. The group noted that wildfire risks have already increased customer bills, and that in 2017 alone, more than 800,000 California households had their utility service disconnected. Moreover, PG&E has already requested a hefty hike in its rates as part of its 2020 general rate case.

"Accordingly, the commission must be mindful of these affordability concerns while it evaluates the annual revenue requirement necessary to support the Wildfire Fund non-bypassable charge," TURN said.

The Public Advocates Office recommended that the commission split the proceeding into two phases—one that focuses entirely on whether the proposed nonbypassable charge is a reasonable measure, and a second to delve deeper into issues connected with implementing it.

Meanwhile, the Energy Producers and Users Coalition drove home the significance of the CPUC's eventual decision, noting that while the charge is merely a continuation of a previous charge, it will still represent an increase in customer rates in 2022.

"While this may not seem shocking—particularly in light of the billions of dollars in play—it is not the only wildfire-related costs ratepayers will bear. They will be asked to bear billions more for new infrastructure, as well as other potential impacts from AB 1054 that are not yet clear," the group said.

The CPUC intends to issue a proposed decision in the proceeding in September, with a final decision in October.

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 of Journalism.