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How the PG&E Bankruptcy Affects Northern California Homeowners

January 25th, 2019

On Jan. 14, Pacific Gas & Electric (PG&E), the primary gas and electric provider for Northern California, said that it would be filing for Chapter 11 bankruptcy due to an estimated $30 billion of liability for wildfires in the state during 2017 and 2018.

This news affects our company, our community, and our customers. Here’s what we know so far.

PG&E gets cleared in deadly 2017 Tubbs Fire

Yesterday, some of PG&E’s liability was reduced when the California Department of Forestry and Fire Protection cleared PG&E of any wrongdoing in regard to the 2017 Tubbs Fire. CAL FIRE investigators conducted a thorough investigation and traced the cause of the fire back to a private electrical system next to a residential structure.

While this news caused PG&E’s stock to soar — closing up 75 percent by Thursday’s closing bell — many experts don’t think it will make a difference in the company’s decision to file for bankruptcy.

Others argue that PG&E shouldn’t rush to file for bankruptcy because they have enough cash on hand and assets to meet their wildfire liabilities, which still include the Camp Fire — California’s deadliest wildfire, and at least 17 of 21 major Northern California fires in 2017 (New York Times).

What happened the last time PG&E filed for bankruptcy?

The last time PG&E filed for bankruptcy was in 2011 and customers ended up paying approximately $1,300 to $1,700 in raised rates (CALmatters).

PG&E has filed for bankruptcy before and the cost was passed on to customers in the form of higher rates. PG&E’s customers are understandably worried that their already high gas and electricity rates will experience a sudden surge.

It’s up to the state’s elected officials and regulators, but there’s a good chance a similar solution will be adopted. The California Public Utilities Commission (CPUC) would need to approve any bankruptcy plan that would raise costs for ratepayers. At a CPUC meeting in November, protesters chanted and carried signs reading, “No PG&E bailout” (New York Times).

Already, “the utility already has sought permission from U.S. energy regulators for a 9.5 percent increase in transmission charges due to the higher risk of wildfires. PG&E says that translates to an increase of $1.50 per month for the average residential customer” (CALmatters).

What does this mean for Central and Northern California homeowners?

The PG&E bankruptcy will not affect your electrical or gas service, but it could mean higher rates.

Update: As expected, PG&E filed for Chapter 11 bankruptcy on Jan. 29.

In a statement to customers, PG&E said they “will continue to provide you with updates as we move through this process. You can also find additional information at”

The Chapter 11 filing gives the company time to submit a reorganization plan for reducing expenses and freeing up assets. It also automatically puts a stay on all lawsuits against PG&E.

This restructuring process will be a test for Gov. Gavin Newsom and other California officials to deliver a better plan than last time. It’s too early to tell what the company is going to look like after this is all over.

What should customers do?

This may be the perfect time to adopt solar technology and replace the energy hogs in your home with energy-efficient models. When PG&E rates go up, the impact won’t be as strong.

It’s also a good idea to reduce your energy use by making sure your home is properly sealed and insulated.

Learn if it’s time to replace your heating and air conditioning system, and why it’s probably a good idea to replace both at the same time.

Contact Service Champions for more information on solar and energy-efficient water heaters and HVAC systems.

Cover photo by Michael Held on Unsplash

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