OAKLAND — PG&E customers face the ominous prospect of higher monthly bills — yet again — in a case tied to the utility titan’s efforts to connect new homes and businesses to the electricity grid.
In the wake of growing complaints over what critics say is PG&E’s sluggish pace of energizing residential and commercial buildings, a bill authored by state Sen. Josh Becker, a Democrat who represents parts of Santa Clara and San Mateo Counties, directed state regulators to come up with an average and maximum period for utility companies to complete an energy connection for a property.
Becker said in a state Assembly committee hearing last year, “Californians are experiencing extreme delays in the time it takes for utilities to complete these energization projects — From six months, even up to one or two years.”
Now, two state hearing officers with the Public Utilities Commission, which oversees PG&E, have issued a proposal representing the first step of a process that could trigger steeper monthly bills for customers. Exactly how high bills — which as of January were approaching $300 for the typical residential customer who receives electricity and gas services — might go is not yet clear.
The proposal sets up a tug-of-war over how much of a burden existing ratepayers should bear to finance Oakland-based PG&E’s efforts to link new residential and commercial customers to the power system.
The big question is who should pay for these connections within the mandated amount of time — and how much should be paid.
“To reduce greenhouse gas emissions, PG&E’s electrical distribution system must be substantially upgraded to allow new customers to be promptly connected to the electrical distribution system and allow existing customers increasing their load to have their service level promptly upgraded,” the state administrative hearing officers wrote in their proposed decision.
The proposal — which noted that PG&E and consumer advocates such as The Utility Reform Network have submitted their own ideas about what should be covered — also says that proactive planning, engineering and construction would be needed so PG&E could promptly provide electricity to future customers.
Loretta Lynch, a former member of the powerful five-member, governor-appointed PUC, thinks it makes sense for customers to help foot the bill for some of the basic costs PG&E will incur to comply with whatever standards the PUC crafts by year’s end.
But PG&E wants to include some expenditures that aren’t directly linked to the basic connections, according to Lynch.
“It would be like if you go to a car mechanic to replace a radiator, but the mechanic also wants to charge you for new tires, a new paint job, new doors,” Lynch said. “This is classic PG&E. They are trying to stuff all sorts of costs into this proceeding that shouldn’t be there. Buying land, building substations.”
The proceeding arrives at a time when California politicians, facing a housing crisis, are under pressure to find ways to get housing projects completed and occupied.
“The demand for housing in California means a lot of homes and apartments have to be connected to the grid,” Lynch said. “But now there is a huge backlog to connect that housing to electricity. You can’t move homeless people into supportive housing without an electrical connection. It’s not just businesses, it’s also housing.”
The bottom line is it appears likely that electricity demand will only increase. PG&E says that might actually help keep monthly bills in check.
“This type of electrification work and increased electrical usage by customers ultimately can put downward pressure on rates by spreading the costs over a larger number of customers using more electricity,” Mike Gazda, a PG&E spokesperson, said in comments emailed to this news organization.
PG&E Chief Executive Officer Patricia Poppe recently told this news organization the company sees prices “falling in the future,” possibly as early as next year.
The notion that prices will fall runs counter, however, to the economic theory that, if demand increases, the supply or availability of a service or commodity typically must also increase just to keep prices stable. And consumer advocates are not convinced a drop in bills is coming.
“I’ll believe it when I see it,” Mark Toney, head of The Utility Reform Network, previously told this news organization in response to Poppe’s comments.
Lynch urged the PUC to ensure that the current case associated with the hearing officers’ proposal doesn’t enable PG&E to harvest too much money from customers.
“PG&E wants a closet full of shoes, and it wants the customers to pay for all those shoes,” Lynch said. “PG&E should only be paid for the one slipper.”
