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As Californians pay higher electric bills because work and other activities are confined to home, the California Public Utilities Commission unanimously approved a request from Pacific Gas & Electric to increase its revenue this year by $9.1 billion, a nearly 7% increase over last year. In 2021, there will be an additional $316 million rise in the utility’s revenue requirement, a 3.5% increase over 2020 rates. It will jump by another $364 million in 2022, a 3.9% hike.

“This was a tough decision,” Commissioner Cliff Rechtschaffen said during the Dec. 3 CPUC meeting. He and his fellow regulator acknowledged many ratepayers are under financial strain from increasing rates during Covid 19. But it is “ultimately necessary,” he said.

As a small concession, the five commissioners voted to delay the rate increase by three months, from January of next year to March. Starting in March 2021, the cumulative residential increase will be folded in with the 2021 revenue hike, raising average household bills by $13.44 per month, for a total 8.1% rise. Of that amount, $10.40 is for costlier electricity, and $3.05 from a gas rate increase.

Much of the increase arises from PG&E’s fire risk mitigation costs, agreed to as part of a multi-party settlement. Of the increased revenue for this year, $603 million is for wildfire mitigation and increased safety costs. In 2021, $930 million is for wildfire protection, and that amount rises to $1.5 billion in 2022.

“It reflects a shared intent for reasonable and adequate funding for safety and reliability work,” Commissioner Liane Randolph said. The settlement was reached with nine parties, including residential and small business advocates and the utility employees’ coalition.

“We are pleased that today’s action by the Commission approves much of the negotiated multi-party settlement, which allows us to continue those efforts and underscores our commitment to the 16 million people we serve,” Robert Kenney, PG&E vice president and regulatory affairs, said in a statement.

In the massive and complex multi-year general rate case proceedings, the CPUC authorizes funding of key utility work, including making electric and gas systems fire resistant, in part through vegetation management, although PG&E has fallen short in this area. Last month, PG&E’s so-called enhanced vegetation program, funded by ratepayers, actually lost ground with respect to safety improvements this year, as warned by a court monitor. The added general rate case funds also are for investments in fire resistant poles, and situational awareness using weather stations and high definition cameras.

General rate cases are “where the rubber hits the road,” Randolph noted.

Power disconnections restricted

The new decision puts a 4% cap on the percentage of residential customers that can have their utility service turned off for nonpayment of bills.

PG&E is required to report on the impact of the rate hike on disconnections.

It also is required to keep close and transparent track of its fire mitigation revenue and spending. Any unspent funds are supposed to be returned to ratepayers.

The utility initially proposed creating a safety-related shareholder incentive that tied a portion of annual earnings to PG&E’s safety performance. It withdrew that controversial proposal.

A rate hike by advice letter

In related news, PG&E is seeking additional rate hikes via an Advice Letter process. Members of the public and Mark Toney, The Utility Reform Network executive director, urged the regulators to oppose this move at their Dec. 17 meeting, adding it would increase utility bills another $150 a year.

“With the unprecedented Covid crisis, it is absolutely the wrong time to implement rate increases without a thorough review,” Toney said. “Instead of freezing customers out, the CPUC should freeze rates.”

In other news, the CPUC approved reworking the rules of the road of the new local resource adequacy centralized procurement . Over the protest of community energy, PG&E and Southern California Edison were authorized to buy local supply cushions for the community aggregators in their territories for three years starting in 2023.

The change requires that community energy be credited for new, local, non-fossil resources and energy storage.

The California Community Choice Association welcomed the CPUC’s adoption of the change it proposed. It will prevent load serving entities “with RA resources that are less effective in meeting local reliability needs from relying on other LSEs' more effective RA resources,” CalCCA stated.