PG&E Seeks Another Multi-Billion Dollar Rate Increase

Just months after the California Public Utilities Commission (CPUC) approved $1.3 billion for Pacific Gas and Electric (PG&E) to connect new customers to the grid, the utility is back – asking for an additional $3.1 billion for work that was already considered in July 2024. PG&E now claims the initial $1.3 billion is not enough – bringing its total request for 2025 and 2026 to $4.4 billion. This new request is concerning because PG&E’s customers are already facing high electricity bills, with PG&E’s rates up 101% over the last decade.

PG&E’s Past Inefficiencies Led to New State Laws and Regulations

PG&E has struggled with delays in connecting new customers and upgrading the distribution grid – known as energization work. Energization refers to the process of establishing new service connections and making necessary upgrades to ensure customers receive power. This is not new or unique work, rather it is a core responsibility of electric utilities, yet PG&E has fallen behind, leading to significant wait times for homes and businesses.

PG&E acknowledged to the Legislature that it previously slowed its energization work to focus on wildfire mitigation and other maintenance concerns – a decision the company now recognizes was a mistake.^[1]  In response to growing customer frustrations over not receiving timely utility services, the Legislature passed Senate Bill (SB) 410, which establishes long-term objectives that balance energization work, workforce readiness for a high electrification future, affordability, and accountability. The bill requires the CPUC to establish clear energization timelines and transparency standards.

For 2025 and 2026, SB 410 allows utilities to recover costs as they are incurred, subject to later review for reasonableness. This means that PG&E might have to return some funding to its customers at a later date if the CPUC determines the funds were not spent reasonably.  However, ordering refunds for money already expended can be challenging – especially when talking about large amounts of funding, which is why cost caps were put in place for each of three largest electric utilities to ensure that they do not spend exorbitantly.  PG&E is now seeking to raise its cap.

PG&E’s Multiple Funding Requests

To date, the CPUC has already authorized PG&E to recover $3.2 billion to perform energization work in 2025 and 2026 – $1.9 billion for this energization work prior to the passage of SB 410 and an additional $1.3 billion to comply with SB 410’s mandate for accelerated energization. These approvals were based on thorough reviews of PG&E’s proposed costs, ability to perform the work, and customer affordability.   

Despite this, in October 2024 – approximately three weeks after the CPUC adopted its decision establishing energization timelines and customer notification requirements, and three months after the CPUC authorized an additional $1.3 billion – PG&E requested to raise cost caps by another $3.1 billion. If the CPUC approves this latest request, PG&E would be authorized to spend up to $6.3 billion to perform core utility functions for 2025 and 2026.

Why PG&E’s Request is Problematic 

PG&E now says it needs to complete 19,000 projects annually for the next 2 years – despite having never completed more than about 12,000 in a single year. It also claims project costs are 38% higher than they were just six months ago, citing increased complexity and a need to rely on contract labor. But PG&E’s own data shows that project complexity is nothing new. The utility based its cost projections on the highest-cost months rather than the 3-year historical average it has traditionally used in its estimates, and external contractors cost nearly three times more than internal labor.

In short, PG&E has not demonstrated that it can deliver the increased volume of work and has not justified its significantly higher cost estimates. Meanwhile, its request would allow it to earn additional profits for work funded by ratepayers.

Affordability and Customer Risk

PG&E’s customers are shouldering the burden of the utility’s failure to accurately forecast its workload and perform traditional utility work.  PG&E’s electricity rates have increased by 41% in the last 3 years and 101% in the last 10 years, surpassing inflation.^[2]  While the utility claims that ratepayers bear no risk if it doesn’t complete the work, that’s only part of the picture. PG&E is financially incentivized to spend as much money as it possibly can because it receives a financial return on some of those expenditures. The more customer-funded energization work PG&E can complete in 2025 and 2026, the more profits PG&E’s shareholders will reap.

By not investing in a long-term, internal workforce – despite the direction of SB 410 – PG&E increases its short-term costs and risks long-term delays. The utility argues that training takes too long. But if it doesn’t start now, it will face the same shortfalls in two years.

Customers are being asked to absorb escalating costs while the utility avoids structural changes that would improve long-term performance and affordability.

Conclusion

PG&E’s latest $3.1 billion request raises serious concerns about accountability, cost justification, and long-term planning. The Legislature and CPUC have already taken steps to support accelerated energization while protecting customers through funding limits and performance expectations.

Now, the focus should be on delivering results – not approving unchecked new spending. PG&E should responsibly manage and expend its existing funds, demonstrate measurable progress, and ensure that any future requests are based on proven performance and real benefits to ratepayers.

[1] Matt Ventura, California Assembly Standing Committee on Utilities and Energy, May 24, 2023, at timestamp 26:50: https://calmatters.digitaldemocracy.org/hearings/257214?t=1603&f=dfa2d8388b30f03e355c4661790a5911

[2] Public Advocates Office “Q4 2024 Electric Rates Report.”  Accessed at: https://www.publicadvocates.cpuc.ca.gov/press-room/reports-and-analyses/2024-q4-electric-rates-report