Updated Sept. 22
Ratepayer and local power advocates and others are urging Gov. Gavin Newsom to reject a bill on his desk that would allow Pacific Gas & Electric and the other two investor-owned utilities to recover up to $100 billion from ratepayers to pay for their undergrounding of power lines in high fire-threat areas.
A key concern with the final version of SB 884 by Sen. Mike McGuire (D-North Coast) is that the last round of amendments weakens ratepayer protections by taking away the California Public Utilities Commission’s primary role in assessing how the utility’s undergrounding plans impact ratepayer affordability and cost effectiveness. Opponents also contend that the prohibitive undergrounding costs would be at the expense of decarbonizing the grid and electrifying buildings and transportation.
PG&E plans to spend at least $40 billion over 10 years to bury lines in fire-prone regions, a cost that soars to about $70 billion when long-term financing costs are added in, according to The Utility Reform Network (TURN). Southern California Edison and San Diego Gas & Electric are expected to follow suit, and also seek limited CPUC review of the undergrounding plans that will be folded into their requisite annual Wildfire Mitigation Plans.
“Higher bills and less oversight—that’s what’s at stake with SB 884,” said Mark Toney, TURN executive director. He said PG&E wants to “skip full CPUC review,” avoiding scrutiny of their undergrounding plans and costs. TURN is not opposed to undergrounding power lines but wants it done on a careful and limited basis, with ratepayer affordability put on par with safety.
“PG&E and their lobbyists have turned (SB 884] into a disaster for our lives, our energy system and our wallets,” said Pete Woiwode with local power advocate, Reclaim Our Power.
A report released Sept. 22 by the Energy Institute at Haas at the University of California, Berkeley, warned that high utility bills are already undermining needed electrification, particularly in overburdened communities. Residential customers in 2019 “were paying an effective electricity tax that averaged $678,” according to Paying for Electricity in California: How Residential Rate Design Impacts Equity and Electrification. It added that electricity bills take a large financial bite out of lower-income households, making “this invisible electricity tax far more regressive than the state income tax and somewhat more regressive than the state sales tax.”
If SB 884 is signed into law, PG&E said it “will work within this new regulatory framework to place 10,000 miles of power lines underground to mitigate fire risk.” Spokesperson James Noonan added the “framework will provide the long-term certainty needed to bring our undergrounding efforts to scale and create efficiencies needed to keep customer costs as low as possible.”
Jennifer Tanner, with Indivisible California Green Team, said PG&E should follow SCE’s lead and triple insulate its power lines, which is a sixth of the cost and is a far faster fix than burying overhead lines. SCE expects to insulate 4,000 miles of its 10,000 miles of wires in areas with high fire risk by the end of this year.
Not only would insulating bare wires be “a far better use of ratepayer money” but so would investing in rooftop solar with batteries, Tanner said of the billions of dollars at issue. “PG&E looks at how much money it can make, not how it can solve the problem” of its power lines starting fires.
Limited CPUC role
Under SB 884, the fairly new Office of Energy Infrastructure Safety that is within the Natural Resources Agency is given the primary responsibility for evaluating PG&E, SCE and SDG&E undergrounding plans. But it is charged with looking at the safety aspect of undergrounding, whereas the California Public Utilities Commission traditionally looks at both safety and cost. Making matters worse, says Toney, is that the OEIS has no ex parte rules so staff can meet with PG&E without reporting those meetings while the CPUC is required to report them. Further, the CPUC provides intervenor compensation and the OEIS does not, which discourages participation by nonprofit interested participants.
SB 884’s initial language focused on permit streamlining. Provisions were added detailing the utility application process and the requirements for CPUC’s review of impacts to ratepayer affordability and cost effectiveness. But in the end, much of that was stripped out. In addition, the CPUC’s review is limited to nine months, in place of 18 months, and restrictions on utilities reaping a rate of return on undergrounding cost removed, according to Katy Morsony, TURN staff counsel. On top of that, utilities are no longer required to pursue federal and state funds before seeking ratepayer dollars, no oral arguments will be allowed at the CPUC, and cost accountability is missing. Morsony added that the bill also does not require PG&E to take down wooden poles that held overhead lines.
TURN, small business, local power, Hispanic, agriculture, large energy consumers and disability advocates sent a Sept. 9 letter to Newsom outlining their opposition and calling for a bill veto.
An average PG&E residential customer would be paying an additional $400 each year on their electric bill to pay for PG&E’s undergrounding program by 2032, they stated. “These increases would be on top of the 30% increase in PG&E’s residential electric rates that took place between January 2019 and January 2022.” In contrast, the Consumer Price Index rose 12 % during that same four-year period. They added that the bill threatens California’s leading climate strategy.”