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How the PG&E Bankruptcy Can Affect Northern California Homeowners

January 25th, 2019

On Monday 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 in 2017 and 2018.

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

PG&E gets cleared in deadly 2017 Tubbs Fire

Yesterday, however, some of that 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—some 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 its 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 last time PG&E filed for bankruptcy?

The last time that PG&E filed for bankruptcy in 2011, customers ended up paying approximately $1,300 to $1,700 in raised rates (CALmatters). PG&E’s customers are fearful that their already high gas and electricity rates will soar even higher.

PG&E has filed for bankruptcy before and the cost was passed on to customers in the form of higher rates. 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).

What does this mean for Central and Northern California homeowners?

PG&E filing for bankruptcy won’t mean you’ll be left without gas or electricity, but it will mean higher rates.

If PG&E files for Chapter 11 bankruptcy, they will be given time to submit a reorganization plan for reducing expenses and freeing up assets.

The Chapter 11 filing would also automatically put a stay (halt) on lawsuits against PG&E.

Basically, the customer will end up footing the bill.

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).

While recent news might help dissuade the PG&E board from seeking bankruptcy, gas and electricity prices will rise regardless. This is what we want our customers to be aware of.

What should customers do?

This is a perfect time to install solar and replace old gas and electric appliances with energy-efficient models so that when PG&E rates go up, your energy bills won’t increase. With solar equipment, you won’t be at the mercy of one of the largest utilities in the nation.

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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