rain
Sunday December 9th, 2018 11:16PM

Utility asked last month to hike bills over California fires

By The Associated Press
Related Articles
  Contact Editor

SACRAMENTO, Calif. (AP) — A utility facing severe financial pressure amid speculation its equipment may have sparked a deadly Northern California wildfire asked U.S. energy regulators last month for permission to raise its customers' monthly bills to harden its system against wildfires and deliver a sizable increase in profits to shareholders.

In an October filing with the Federal Energy Regulatory Commission, Pacific Gas & Electric Co. laid out a variety of dangers confronting its transmission lines running through Northern California, saying its system faced a higher risk of wildfires than any other utility.

"The implications of PG&E's exposure to potential liabilities associated with wildfires are dramatically magnified," the filing said. "Overcoming the negative financial impact of any significant damages that might ultimately be attributed to PG&E will require an ongoing commitment of capital from investors."

San Francisco-based PG&E — one of the nation's largest electric utilities serving most of Northern and central California — made the request a month before the Camp Fire broke out Nov. 8 and quickly ballooned into the deadliest U.S. wildfire in a century. No cause has been determined, but speculation has centered on PG&E, which reported an outage around when and where the fire ignited.

The company has lost $15 billion in market value, its shares plummeting 60 percent in a week.

PG&E already faced financial pressure from its suspected role in a series of deadly fires in California wine country last year. The company's filing last month said it needed to boost revenue to keep investors from fleeing, noting that its credit rating was downgraded and its shares had plummeted since the 2017 fires.

Wildfires threaten PG&E's ability to attract and maintain the investment necessary to support its system and meet California's clean energy goals, company spokeswoman Lynsey Paulo said.

"PG&E's electrical system is not immune from the impact of increases in the frequency and severity of extreme weather," Paulo said.

California Public Utilities Commission President Michael Picker sought to calm financial markets late Thursday with a statement noting "an essential component of providing safe electrical service is the financial wherewithal to carry out safety measures." But he added that he's expanding an investigation of PG&E's safety culture to look at the company's "corporate governance, structure and operation."

PG&E shares rebounded in after-hours trading, regaining Thursday's losses but remaining far below their value when the fire broke out.

The company said in its rate-hike request that the extreme wildfire risk justified a higher profit than an average utility is allowed to earn. It cites a California legal standard holding utilities entirely liable for damage caused by their equipment regardless of whether the company was negligent.

A state law approved this year makes it easier for the company to raise rates to pay off lawsuits, but the company says it still faces high risk and got no relief for fires that started this year.

The precipitous drop in the stock price shows investors are taking into account not just the fires but also the risk of future wildfires for which the utility could be responsible, analysts said.

"It's going to be very difficult for PG&E to finance its needs in the short run, so we think at this point, regulators need to step in and give the market some reassurance," said Travis Miller, a strategist at Morningstar.

PG&E is asking for a 9.5 percent increase in transmission charges — the cost of high-voltage lines that move power across large distances. That amounts to about $1.50 more per month for the average residential customer, Paulo said.

Advocates for utility customers have balked at PG&E's contention that it needs to raise rates because of wildfires. They say its problems are the result of poor management decisions.

"We don't pay electric bills in order to keep bailing PG&E out from its own negligence and incompetence, and we can't afford it," said Mindy Spatt, communications director for The Utility Reform Network.

PG&E reported to the Securities and Exchange Commission this week that it had renewed its insurance coverage for wildfires to about $1.4 billion for the year covering this fire season. But an analyst at Citi Investment Research estimated damages could exceed $15 billion. And the company's potential liability for last year's fires has been pegged at upward of $10 billion.

Some analysts believe PG&E will be able to survive financially as long as there isn't another major catastrophe. But wildfires are getting bigger, deadlier and more destructive as housing pushes into rural areas and drought and high temperatures tied to climate change become the norm.

"The business doesn't earn enough money to pay for that in any kind of regular way," said Michael Wara, director of the Climate and Energy Policy Program at Stanford University. "These have to be extreme, once-in-a-generation events."

PG&E's ability to raise capital will be constrained, so it will probably be forced to cut back on expenses such as replacing aging equipment, analysts said. California utilities also need to invest in the type of upgrades that will allow the state to meet its aggressive renewable energy and carbon reduction goals.

Fire investigators have blamed PG&E equipment for 12 of last year's wildfires, including two that killed 15 people combined. In eight of those fires, investigators said they found evidence of violations of state law and forwarded the findings to prosecutors.

The company is facing dozens of lawsuits from insurers and people who lost their homes in last year. And a lawsuit this week blames PG&E for the latest fire, accusing the company failing to effectively maintain power lines.

California regulators generally allow utilities to pass on the costs of those lawsuits to their customers, but only if the company can show it prudently managed its equipment. The new state law makes it easier for utilities to bill customers if they can show a fire got worse from things outside their control, like severe weather. But lawmakers didn't drop the standard that puts all the liability on the utility, which is unique to two states.

"Very large damage payments of the size faced by California utilities are very unusual in other states," said Hugh Wynne of Sector and Sovereign Research, an investment research firm.

___

Bussewitz reported from New York.

  • Associated Categories: U.S. News, Associated Press (AP), AP National News, Top U.S. News short headlines, AP Business, AP Business - Corporate News, AP Business - Industries, AP Business - Utilities, AP Business - Small Business
© Copyright 2018 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
California town's wildfire evacuation plan raises questions
Some are questioning if a wildfire evacuation plan created by a Northern California town a decade ago was the right approach for a blaze that's killed dozens of people
10:15PM ( 32 minutes ago )
Utility asked last month to hike bills over California fires
A utility facing severe financial pressure amid speculation that its equipment may have sparked a deadly California wildfire asked U.S. energy regulators last month for permission to raise its customers' monthly bills
10:08PM ( 39 minutes ago )
Winds that fanned Southern California wildfire diminish
Winds that fanned a deadly, destructive Southern California firestorm are fading and more areas are reopening to residents
9:52PM ( 55 minutes ago )
U.S. News
The Latest: Authorities: 631 people unaccounted for in fire
Authorities say that 631 people are still unaccounted for after last week's deadly wildfire in Northern California
10:16PM ( 31 minutes ago )
North Korea says it has tested 'ultramodern tactical weapon'
North Korean media says leader Kim Jong Un observed the successful test of "a newly developed ultramodern tactical weapon," though it didn't describe what the weapon was
10:06PM ( 41 minutes ago )
Point scores 3 PP goals in 1:31, Lightning beat Penguins 4-3
Brayden Point scored three straight power-play goals in 1:31 _ the sixth-fastest three goals in NHL history _ and the Tampa Bay Lightning beat the Pittsburgh Penguins 4-3
10:02PM ( 45 minutes ago )
Associated Press (AP)
Boston's Betts, Milwaukee's Yelich win MVP Awards
Boston's Mookie Betts and Milwaukee's Christian Yelich were runaway winners of the Most Valuable Player awards after the 26-year-old outfielders each led their teams to first-place finishes with dominant seasons that included batting titles
9:07PM ( 1 hour ago )
The Latest: San Francisco cable cars halted over smoky air
San Francisco's iconic open-air cable cars have been pulled off the streets because of choking air wafting in from a wildfire in Northern California
8:51PM ( 1 hour ago )
Kim Porter, Diddy's former longtime girlfriend, dies at 47
Kim Porter, Diddy's former longtime girlfriend and the mother of three of his children, has died
8:42PM ( 2 hours ago )
AP National News
Women elected in record numbers in state legislative races
State legislatures across the country will include more than 2,000 women for the first time next year, and women could be the majority of lawmakers in the lower chambers in both Colorado and Nevada
6:34PM ( 4 hours ago )
Criticized deputy refuses to testify about school massacre
The then-sheriff's deputy who was on campus during the Florida high school massacre didn't appear to answer an investigative panel's questions
6:11PM ( 4 hours ago )
Dartmouth sued following professor misconduct allegations
Dartmouth College was sued Thursday for allegedly allowing three professors to create a culture in their department that encouraged drunken parties and subjected female students to harassment, groping and sexual assault.
6:10PM ( 4 hours ago )
Top U.S. News short headlines
China woos Pacific islands with loans, showcase projects
As world leaders arrive in Papua New Guinea for a Pacific Rim summit, the welcome mat is especially big for China's president
8:19PM ( 2 hours ago )
How Democrats will rule: Roadmap drafted for House overhaul
House Democrats have unveiled a draft rules package for how they would govern the chamber as the majority in Congress next year
8:17PM ( 2 hours ago )
Mexico's president elect reaches out to business elite
Mexico's President-elect Andres Manuel Lopez Obrador has formed a business advisory council including some of the country's biggest names, especially in media
7:34PM ( 3 hours ago )
AP Business
Walmart flexes its muscle against Amazon
Walmart's latest quarterly report shows it can flex its muscle against Amazon
3:03PM ( 7 hours ago )
Walmart sales strong, both online and in stores
Walmart is reporting surging online sales, strong performances from established stores
8:49AM ( 13 hours ago )
Feds subpoena Snap over shareholder lawsuit
Snap Inc. has received federal subpoenas related to a class-action lawsuit stemming from its 2017 initial public offering
8:16PM ( 1 day ago )
AP Business - Corporate News
Fed announces wide-ranging review of its practices
Federal Reserve launches wide-ranging review of how it conducts monetary policy
3:57PM ( 6 hours ago )
Technology companies lead afternoon rebound for US stocks
U.S. stocks are recovering from an early slide, placing the market on course to break a five-day losing streak
3:57PM ( 6 hours ago )
Gobble gobble: Low turkey prices cut Thanksgiving meal cost
Low food prices have driven the cost of a Thanksgiving feast down to their lowest level since 2010
2:59PM ( 7 hours ago )
AP Business - Industries
Global stocks higher after Wall Street fall, Brexit approval
Asian stocks higher after British Cabinet endorses Brexit deal and Wall Street falls
4:24AM ( 18 hours ago )
Asian stocks higher after Wall Street fall, Brexit approval
Asian stocks higher after Wall Street falls for fifth day and British Cabinet endorses Brexit deal
1:48AM ( 20 hours ago )
Asian stocks lower after Wall Street fall, Brexit approval
Asian stocks lower after Wall Street falls for fifth day and British Cabinet endorses Brexit deal
10:29PM ( 1 day ago )
AP Business - Utilities
Q&A: Preparing a small business for a possible attack
Small business owners who want to prepare their companies for a possible attack by a shooter or other assailant can find information and resources online, or they can bring in security consultants to train staffers
3:46PM ( 1 week ago )
Supply shortages plague Canada's new cannabis marketplace
Canada's legal recreational market is off to a bumpy start with rampant supply shortages
11:40PM ( 2 weeks ago )
Gone to pot: Marijuana shortages plague Canada
Demand has outstripped limited supply in the two weeks since Canada legalized recreational pot, sending some consumers back to the black market
1:02PM ( 2 weeks ago )
AP Business - Small Business
California town's wildfire evacuation plan raises questions
Some are questioning if a wildfire evacuation plan created by a Northern California town a decade ago was the right approach for a blaze that's killed dozens of people
10:15PM ( 32 minutes ago )
Winds that fanned Southern California wildfire diminish
Winds that fanned a deadly, destructive Southern California firestorm are fading and more areas are reopening to residents
9:52PM ( 56 minutes ago )
Fire refugees camp in Walmart parking lot amid uncertainty
Hundreds of fire survivors are camping in a Walmart parking lot as uncertainty hangs over them like smoke still clouding the sky
9:23PM ( 1 hour ago )
Snowstorm slows evening commute in New York City
The first snowstorm of the season to hit the New York City area brought several inches of snow and slowed Thursday's evening commute to a crawl
9:15PM ( 1 hour ago )
Smoke spreading from California fires sparks health concerns
Smoke from major wildfires is spreading into California cities and raising concerns about the impact on people's health
9:13PM ( 1 hour ago )