After weeks of speculation, Pacific Gas & Electric, the largest utility in the Golden State, has announced plans to file Chapter 11 bankruptcy protection in the face of an estimated $30 billion in wildfire damage liabilities.
PG&E’s shares have dropped from a 52-week high of $49.42 to $8.33 as of this writing.
While many details remain to be determined, the biggest question on our mind is: How will this affect PG&E’s more than 300,000 customers with solar?
Let’s explore the potential ramifications for going solar in PG&E territory, in light of this announcement.
We sat down with James Kelly, former Senior Vice President for Southern California Edison and Board Member to a multitude of grid modernization ventures, to learn his perspective.
“PG&E and policymakers want to ensure that customer safety and service is not affected by this. That’s going to be tough to do. I lived through the financial crisis of 2000 and 2001 with Edison. It was very hard to retain qualified employees, it was difficult to keep focus and keep funding because we were all insolvent.”
– James Kelly, Former SVP, SoCal Edison
A Very Simple Look at Solar in PG&E Territory
To start, let’s clarify what kind of solar projects were concerned with.
PG&E handles two different categories of PV projects:
- Utility-scale. Solar projects in this category are massive solar fields (more than 1 MW) in remote areas. Utilities purchase solar power from project developers under decades-long Power Purchase Agreements.
- Distributed-scale. Utilities also manage “behind the meter” solar generation from much smaller systems on homes and business (usually less than 50 kW). System owners receive bill credits for the excess solar they generate and save money by reducing their need to draw power from the grid.
Utility-scale solar doesn’t offer much insight here. When PG&E filed for bankruptcy in 2001 during the state energy crisis, Power Purchase Agreements were “essential services” that did not get curtailed.
Unfortunately, it looks like large solar projects in development have already taken a hit this time around. The Topaz Solar Farm, a stunning 550 MW, was recently downgraded in its credit rating from B to BBB- junk status.
How will homeowners with solar be affected by PG&E’s bankruptcy?
The California Public Utilities Commission’s President, Michael Picker, compared reforming the utility to “repairing a jetliner while it’s in flight.” Homeowners in PG&E should get ready for some turbulence.
1. Higher customer rates. One thing that is almost certain for PG&E customers is to expect higher rates for gas and electricity. That’s exactly what happened last time in 2001, and it took the company roughly 5 to 10 years to smooth over that premium. California Senate Bill 901, passed last year, gives utilities like PG&E the ability to pass on some of the costs from wildfire damages to ratepayers, so the stage is set for significantly higher bills.
“All of what is going on with PG&E is almost inevitably going to raise the cost of power from PG&E to it’s customers, which means solar becomes a more attractive economic deal for those customers.”
– James Kelly, Former SVP, SoCal Edison
2. Continued service… for now. Under Chapter 11 bankruptcy, PG&E has temporary protection from creditors and can keep the grid operational. That means things are business as usual for six months to a year.
However, this also means the company is subject to the will of a bankruptcy court. If PG&E were forced to run a skeleton crew, non-essential departments like distributed solar may cease to function. That would mean interruptions to Net Energy Metering service claims, incentives processing, and inspections that are necessary to first turn on your system.
“I think it’s going to be very difficult for PG&E to keep focus on doing things like solar roof interconnection. I think they will try. I think the PUC will order them to continue processing requests in a timely fashion. But it will be tough.”
– James Kelly, Former SVP, SoCal Edison
3. Delay in grid modernization. PG&E has been slated for many grid investments to meet the state’s 100% clean energy climate goals, particularly around vehicle electrification and energy efficiency. Their participation in the rebate portion of the Energy Upgrade program may come to a halt. Expect delays in broader access to vehicle charging infrastructure. This will generally impact the adoption of EVs, which in turn could slow the adoption of home solar.
The Silver Solar Lining
The last thing PG&E ratepayers want is higher rates. It seems almost unavoidable now, regardless of how stakeholders decide to manage the wildfire damage expenses.
There is a thin silver lining here, at least. Higher utility costs can be avoided by going solar. By going solar now, you can lock in your electricity costs to the solar system instead of being subject to utility rate hikes.
“Ultimately, consumers will pay more for electric power as a result of this. So, the conclusion is that the value of self generating power like rooftop solar, with or without the Investment Tax Credit, ought to increase because you’re bypassing higher cost utility power.”
– James Kelly, Former SVP, SoCal Edison
An Expedited Solar Experience with Solar.com
For a limited time, Solar.com will help PG&E customers go solar as quickly and efficiently as possible, to lock in electric rates and install before any potential issues arise.
- We will provide a guaranteed 24-hour turnaround on designs and bids from our provider partners in PG&E territory.
- We will also guarantee that your system is fully installed within 90 days.
- We will provide a $250 rebate to homeowners who pair a home battery with their solar array.
Visit our solar marketplace for PG&E customers to learn more and get started.
Be sure to spread the word to your friends and family in PG&E territory – it’s a critical time to build a safeguard around your electrical service.
The Solar.com team would like to extend a special thank you to Eric O’Shaughnessy and Robert Margolis, who authored the report!
