Wildfires have become a way of life in California, relentlessly ravaging lives and communities. But millions of electric utility customers will continue to be reminded of their potential for more destruction – every month for at least the next 15 years.
Beginning last October the state’s three largest investor-owned utilities – Pacific Gas & Electric (PG&E), Southern California Edison (SCE) and San Diego Gas & Electric (SDGE) began collecting a surcharge on monthly electric bills to help finance the California Wildfire Fund.
These surcharges will augment the $7.8 billion already contributed by the three utility companies. At first surcharge revenues will be used to repay a $2 billion state loan that financed the ratepayers’ initial contribution to the Fund. Ultimately, they will be combined with annual contributions from the utilities to fill a $21 billion pool of money available to help pay damage claims for wildfires caused by the electric companies in 2019 and future years.
Along with the utilities’ initial Wildfire Fund contribution (7.8 Billion Total) customers were expected to pony up an additional $2 billion as their share – money provided by the state with a loan from the Surplus Money Investment Fund (SMIF). This loan is now being repaid with customer surcharge revenue.
Surcharge revenues will take a circuitous path from customer pocketbooks to ultimate distribution in paying damage claims from future wildfire victims. Once collected from customers the revenue will be paid into a special DWR fund and then transferred to the actual Wildfire Fund administered by the California Earthquake Authority (CEA).
Under terms of individual servicing agreements with DWR, the utilities will be reimbursed for the cost of modifying their billing systems to accommodate surcharge collection and receive annual fees ranging from $50,000 to $250,000, possibly more, for providing the service.
On December 31 the Wildfire Fund contained around $10 billion in cash- $7.8 billion contributed by the utilities and $2 billion from the surplus money fund loan. Continuing revenues will be generated from combined annual payments of $300 million by the utility companies for 10 years and customer surcharge payments totaling $902.4 million each year for the next 15 years.
For PG&E customers, however, the monthly Wildfire Fund assessment won’t be the only price they pay for years of the utility’s lackadaisical approach to equipment and powerline maintenance.
Last month the California Public Utilities Commission approved a PG&E rate hike effective March 1 that will increase residential electric bills by 8% — money the utility says it needs to upgrade and maintain aging equipment that’s been blamed for causing many major wildfires during the past five years. The increased rates, specifically earmarked for that purpose, will add between $13 and $14 to monthly bills in addition to the Wildfire Fund surcharge.
In a statement PG&E said revenue generated from the increased rates will help fund a series of important improvements that include adding “new and enhanced safety measures, increase vegetation management and harden our electric system to increase resilience and help further reduce wildfire risk.”
For that many billions of dollars seems to me the focus should be on getting all the power lines tucked away safely underground.
In addition, Bob Porterfield of Patch.com dives deeper into how the surcharge affects you.
DID YOU KNOW? According to Attom Data Solutions ,owning a home was affordable in 41% of counties nationwide as of the fourth quarter of 2020. The largest metropolitan areas where owning a home is still affordable for the average household include Chicago, Houston, Philadelphia, Cleveland, and Tampa.
DID YOU KNOW? Many industry observers believe mortgage rates will remain below 3% in 2021 as the Fed uses low rates to combat the economic effects of the COVID. If you think that’s low, Denmark is offering 20-year mortgages at 0%….
DID YOU KNOW? Americans grew their personal savings by 173% year-on-year between March and November last year, as disposable incomes ballooned by $1 trillion and household spending tumbled by $535 billion. Economist Paul Krugman forecasts a dramatic and sustained period of economic growth ahead of us. Reported by the NY TIMES.
DID YOU KNOW? America’s 651 billionaires collectively grew their net worth a cool $1 trillion, going from $2.95 trillion to $4 trillion, a 36% bump.
Now for your Real Estate News…
There are currently 27 active listings in 90402. With the holidays there wasn’t much new activity last week.
101 17th Street was reduced by One Million Dollars to $9,500,000.
588 Entrada Drive was reduced to $2,500,000 from $2,900,000.
544 Euclid Street was re-listed for $5,495,000. This one has been on and off the market since the summer of 2018, originally asking $6,495,000.
There are 9 properties in escrow, with 446 Lincoln going under contract this week. It was on the market for just 10 days and listed at $3,229,000.
There have been 4 sales since December 1st.
780 Latimer Road sold for $5,675,000. Originally was listed for $6,200,000.
521 26th Street was sold by Pence Hathorn Silver for $4,600,000. It was originally listed for $5,750,000.
2230 La Mesa Drive sold for $6,375,000. Originally listed at $6,895,000.
444 10th Street, listed by Pence Hathorn Silver, sold for $8,640,000. Originally listed at $10,500,000.