PG&E submits updated financing proposal for safety, reliability investments
Pacific Gas and Electric Company filed its Cost of Capital proposal with the California Public Utilities Commission designed to make sure PG&E is meeting the energy needs of its customers by attracting the critical funding necessary to invest in and increase the safety and reliability of its energy system, while also addressing the heightened risks of California's year-round wildfire season. Over the next four years, PG&E expects to fund up to $28B in energy infrastructure investments. Among the critical investments the Cost of Capital would support: $21B towards electric and gas safety and reliability and increased system hardening; $4B towards new gas pipelines and electric powerlines; $1B toward power generation, and; $2B toward information technology, equipment, and other facilities. The company is working with regulators, policymakers and other stakeholders to develop shared solutions to address the current financial impacts of extreme weather and wildfires facing all Californians. PG&E understands that any increase to customers' rates can be significant and that this approach is neither the best nor preferred solution to the current crisis. The Governor recently issued a report including key principles intended to preserve the financial health of California's energy companies and safeguard the state's energy future, while the Commission on Wildfire Cost and Recovery is expected to release specific recommendations by July 1 on how to more equitably assign the financial risks associated with wildfire. "PG&E is committed to working collaboratively with all parties to reach a sustainable, and equitable, policy solution to the current situation," the company said. "If such a solution is reached, PG&E is committed to amending its application with an updated Cost of Capital, decreasing the impact on customer bills." The Cost of Capital is how much a company is allowed to charge in rates as a return on invested capital and is subject to an open and transparent public review and approval by the CPUC, the company said. PG&E added it strongly supports and encourages its customers to provide feedback and participate in this important process which will help shape customer rates and California's energy future. If approved by the CPUC, PG&E's proposal would update the current return on equity from 10.25% to 16%. PG&E is proposing a $1.2B increase in its currently approved Cost of Capital, based on a 16% return on equity. Approval of the request would result in a monthly bill increase for the average residential electric non-CARE customer of $7.85, or an increase of 7%. For the average residential gas customer, the monthly bill impact would be $4.25, or a 7.7% increase. If approved, the change in customer bills would be effective Jan. 1, 2020.