PG&E rate hike decision postponed, alternate proposal partially approves undergrounding lines

In a recent development, the California Public Utilities Commission (CPUC) has deferred the decision on Pacific Gas and Electric Company’s (PG&E) application to raise its electric and gas rates until November 16. This delay is part of the General Rate Case review that occurs every four years, allowing stakeholders, including consumers and environmental organizations, to provide input on PG&E’s four-year budget and plans.

The CPUC has partially approved PG&E’s request to underground electric distribution lines for wildfire risk reduction in an alternate proposal after a public comment period. The commission consented to 1,230 miles of undergrounding and 778 miles of covered conductor (insulation of overhead lines). However, PG&E’s request for cost increases due to inflation was only partially approved in the alternate proposal, with only 25% of the requested increase being accepted. Both proposals aim to reduce PG&E’s request for ratepayer funds.

If approved, monthly bill increases reflecting a 12.2% rise for average residential customers (or 11.8% under the alternate proposal) will take effect on January 1, 2024. Over the entire four-year period, bills could increase by 15% overall or by 10.8% under the alternate proposal. The impact on customers’ bills will vary based on usage, location, and participation in other programs.

The postponement of PG&E’s proposed rate hike decision has sparked protests in San Francisco and concerns from customers. An advocacy group, TURN, expressed concerns that this delay might give PG&E more opportunities for lobbying commissioners. Mark Toney, TURN’s executive director, criticized PG&E’s plan of using increased revenue to bury powerlines as costly and slow during a CBS 13 interview. He proposed a cap on rate increases in line with social security recipients’ cost-of-living adjustments.

The Public Advocate Office highlighted a 38% bill increase over the past three years. Meanwhile, PG&E has decided to withhold comments until the CPUC’s final decision at its November 16 meeting.

InvestingPro Insights

In light of recent developments with Pacific Gas and Electric Company (PG&E), it’s crucial to dive into some key metrics and tips from InvestingPro. PG&E operates with a significant debt burden, which could be relevant in the context of the requested rate increases. The company has, however, been showing accelerating revenue growth and consistently increasing earnings per share, which are positive signs for investors. Seven analysts have revised their earnings upwards for the upcoming period, indicating optimism about the company’s future performance.

InvestingPro data shows that PG&E has a market cap of $33.63 billion and a P/E ratio of 18.69, which is high relative to near-term earnings growth. The company’s revenue for the last twelve months as of Q3 2023 is $22.76 billion, with a growth of 5.57%. The gross profit margin during the same period stands at 33.38%.

It’s worth noting that InvestingPro offers more than 200 additional tips and metrics for PG&E and other companies, which can provide a more comprehensive picture of their financial health and market position. These insights can be particularly valuable for investors looking to make informed decisions in a volatile market.

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