The California Public Utilities Commission (CPUC) issued for public comment a proposal that would approve with conditions Pacific Gas and Electric Company’s proposed reorganization plan pursuant to the requirements of Assembly Bill 1054 and under the CPUC’s regular authority.
The proposal will be on the CPUC’s May 21, 2020 Voting Meeting agenda.
The proposal, officially termed a Proposed Decision, by CPUC Administrative Law Judge Peter Allen, would require Pacific Gas and Electric to modify its governance structure, submit to an enhanced oversight and enforcement process if it fails to improve safety, and create local operating regions.
These new oversight tools and changes to Pacific Gas and Electric’s Board of Directors and management are designed to ensure Pacific Gas and Electric will emerge from bankruptcy as a fundamentally changed company that has a commitment and ability to provide safe and reliable service and can simultaneously continue needed improvements to mitigate wildfire risk and achieve the state’s climate goals.
Pacific Gas and Electric would be barred from burdening ratepayers with costs from pre-2019 fires, but could propose rate neutral securitization to refinance those costs with shareholder-backed offsets;
Pacific Gas and Electric would have to demonstrate efforts to pay down the wildfire-associated debt and return to a normal utility capital structure over time;
There would be a modest reduction of ratepayer costs by replacing nearly $12 billion of existing long-term debt with lower interest rates, offset by Pacific Gas and Electric’s associated financing fees; and,
Pacific Gas and Electric would be denied from collecting its professional fees incurred in the bankruptcy proceedings.
Pacific Gas and Electric needs CPUC approval, as well as federal Bankruptcy Court approval, of its reorganization plan by June 30, 2020 to participate in a wildfire insurance fund established by the California Legislature last year.
The fund is designed to facilitate prompt payments to future wildfire victims and benefit ratepayers by reducing the utilities’ cost of financing for future investments in safety and other infrastructure improvements.
If confirmed by the Bankruptcy Court, Pacific Gas and Electric’s reorganization plan will establish a $13.5 billion trust fund to pay wildfire victims.
Victims of the devastating 2017 and 2018 wildfires cannot begin receiving compensation until Pacific Gas and Electric emerges from bankruptcy. ■