Electrical corporations: wildfire and undercollection.
The passage of AB 913 will have significant implications for state laws governing public utilities in California. By allowing electrical corporations to securitize costs related to catastrophic wildfires and other financial deficits—like those resulting from unpaid bills during the pandemic—the bill represents a shift towards greater financial flexibility for utilities. However, it also raises questions about consumer protections and how rate increases, necessary for the recovery of costs, will be managed in an economically vulnerable environment.
Assembly Bill No. 913, also known as AB 913, focuses on the relationship between electrical corporations and the financial repercussions of wildfires, particularly concerning the recovery of costs associated with such events. The bill aims to empower electrical corporations to apply for financing orders to recover undercollection amounts incurred in 2020 due to factors including the economic downturn caused by the COVID-19 pandemic. Such costs can be recovered through the issuance of bonds secured by rate components, and the bill outlines specific procedures for verification and acceptance of these costs by the Public Utilities Commission (PUC).
The sentiment surrounding AB 913 is mixed. Supporters, mainly from the energy sector, view the bill as a necessary step to stabilize utility finances in the wake of unprecedented economic challenges. They argue that allowing utilities to recover costs through financing orders will prevent drastic rate hikes while maintaining service reliability. Conversely, critics worry about consumer implications, fearing that unsecured costs could lead to higher bills in a time of economic hardship, exacerbating issues of affordability for many Californians.
One notable point of contention lies in the inherent balance between ensuring utility solvency and protecting consumer interests. Opponents of AB 913 argue that its provisions might undermine consumer protections by permitting electrical corporations to pass recovery costs directly to consumers without adequate oversight. The concern is that it could lead to increased financial burdens on households, especially amid lingering economic uncertainty caused by the pandemic.