PG&E seeks higher cost of capital on increased wildfire risk

April 22, 2019

(Reuters) – California utility PG&E Corp said on Monday it submitted a proposal with the California Public Utilities Commission (CPUC), which if approved, would result in an increase of about 7 percent in monthly bill for some electricity customers.

The company has proposed a $1.2 billion increase in its currently approved cost of capital to address the heightened wildfire risk in California and for investment in infrastructure safety.

PG&E filed for bankruptcy protection in January in anticipation of liabilities from the California wildfires, including the catastrophic 2018 Camp Fire that killed 85 people.

The increase will not affect customers on the company’s discount plan.

The proposal will also boost PG&E’s return on equity (ROE) to 16 percent from 10.25 percent, the company said.

If approved, the average residential gas customer would see their monthly bill go up by 7.7 percent, effective Jan. 1.

The company said it expects the current plan to help fund about $28 billion in energy infrastructure investments over the next four years.

Separately, Southern California Edison (SoCal) on Monday urged the CPUC to include a wildfire risk component in setting the company’s cost of capital for operations for a three-year period, starting 2020.

SoCal, which is owned by Edison International, earlier this month, requested the Federal Energy Regulatory Commission for an ROE of 17.12 percent, including incentives and investments in new technologies and clean energy projects.

Investigators have found that the devastating Thomas Fire in northwest of Los Angeles was sparked by power lines owned by SoCal.

(Reporting by Shanti S Nair in Bengaluru; Editing by Sriraj Kalluvila)

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