Page 46 of this week’s issue of Businessweek had a large article on PG&E. (See here) Lots of good information on the company’s history and problems. There is one nuance of the situation that the article seemed to miss. The article discusses the work PG&E has done with renewables, and all of the power the company has contracted for these resources. The article then says that the market price for this type of power has dropped dramatically and that if older contracts were renegotiated that PG&E could save $1.1B/year. What the article fails to mention is that PG&E recovers these renewable energy costs through a fuel rate mechanism, that passes the renewable energy costs directly to customers. So if PG&E were to have these costs reduced through the bankruptcy process, the corresponding rate customers pay would go down as well, and PG&E doesn’t end up with any more money to pay its bills. So it really seems unlikely that PG&E would try to renegotiate their renewable power contracts.
Businessweek PG&E article
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