Protesters hold signs as they march to the Pacific Gas and Electric headquarters in San Francisco, California, on December 11th, 2018. (Photo: Justin Sullivan/Getty Images)

Nearly every major news outlet is reporting that Pacific Gas and Electric's bankruptcy, filed Tuesday morning, is the first climate bankruptcy. After last year's Camp Fire left the utility company in dire straits—according to its filing with the Securities and Exchange Commission, PG&E's debt is estimated at more than $30 billion—analysts are now questioning who will pay for rising costs associated with a warming planet.

If history is any indicator, it's likely that the answer is consumers and the public, one way or another.

Last year, when PG&E was recovering from its losses during the 2017 wildfires, the California state legislature passed a bill allowing the company to defray those costs by raising customers' rates. Though the bill doesn't apply to subsequent fires in 2018, the bankruptcy will still ultimately end up costing ratepayers: In order to help the company pay off its debts, the California Public Utilities Commission will likely allow PG&E to charge customers more to recoup some of their debt, according to various energy experts.

"Will the CPUC allow higher costs?" asks Arthur O'Donnell, a former energy journalist who worked for six years as a supervisor in the energy division of the CPUC. "Yes, of course."

That's what happened the last time PG&E went through this. In 2001, the company filed for bankruptcy during an energy crisis in California that sent the company into $9 billion of debt thanks to soaring wholesale energy prices. The filing ended up costing each customer an estimated $1,300 to $1,700 over 10 years. In that case, the crisis was not caused by climate change; rather, it was the result of a poorly planned deregulation effort to switch to private energy companies in California—an effort that the three major utility companies, including PG&E, had supported.

When something as vital as a utility goes bankrupt, there's often no other choice but to bail them out—leaving ordinary citizens more or less at these companies' mercy. From the CPUC's perspective, to serve the public, the commission must "preserve the utility's ability to be able to provide safe and reliable services," O'Donnell says.

It's in everyone's best interest to keep the utility from shuttering—so when PG&E faces liability for wildfire damages again and again, the CPUC has no choice but to approve rate raises—even though the utility already charges some of the highest rates in the country, and the public, in need of gas and electricity, has no choice but to pay those rates. At the same time, ratepayers won't shoulder all the debt: PG&E will probably restructure contracts with energy providers, and shareholders will likely give up dividends. In 2001, "everybody split the difference," O'Donnell says. It seems probable that the same will happen with this bankruptcy.

It is an inevitability that ratepayers will continue feeling the pain as the effects of climate change intensify. We'll never know what the 2018 fires would have been like without climate change, but it's clear that summers in California have been increasingly hot and arid as the world continues to heat, and both of those factors at least exacerbated the intensity of the fires. Still, there are ways that a company like PG&E can plan for the risks posed by climate change and thereby offset unnecessary losses in the future. A study published in Nature Climate Change last year found that companies are still vastly underestimating the risk of climate change, with "significant blind spots in companies' assessments of climate change impacts." According to a report by the Economist Intelligence Unit, up to "30 percent of the entire stock of manageable assets" in the world are at risk thanks to warming, some of which could be recouped with better planning and adaptation.

Interestingly, PG&E is a rarity in that it has already begun to plan for climate change, thanks to prodding from the state.

"When we first started talking about it, what they were talking about was a 75- to 100-year outlook, and we successfully got them down to a five- to 25-year outlook" for climate change planning, O'Donnell says. In addition, "PG&E has done perhaps more than any other U.S. utility company to decarbonize its energy supply," according to the Washington Post.

But planning for the future doesn't amount to planning for today, and even a five-year outlook can't combat the effects of climate change that we're feeling right now.

Though PG&E is ostensibly preparing for climate change, the bankruptcy filing shows the company will likely be unable to outlive the consequences of the massive Camp Fire—however prepared PG&E was, it wasn't enough. And no matter how much PG&E adapts, it's still vulnerable while other companies are playing catch-up.

"While proactive steps addressing climate risk can demonstrate leadership, isolated activities will ultimately be insufficient," according to the Economist Intelligence Unit report. "This is a collective action problem that must be addressed if carbon emissions, and thus climate risks, are to be reduced." If corporations put their minds together, they may be able to save themselves a lot of money, and ensure their own survival.

Until then, costs will still rise, and the public will still end up paying out of pocket against the depredations of an ever-more hostile environment. As wildfires and other natural disasters grow only more calamitous under climate change, these problems will beset larger and larger populations, with the costs increasingly born by everyday people. The difference is that it won't always be this obvious; PG&E's bankruptcy just happens to be one of the more tangible examples of the public paying for the consequences of climate change.

Usually, environmental externalities—that is, actions taken by an entity that affect others, but that the entity doesn't pay for—are more subtle, and often aren't direct monetary costs. In the case of the Camp Fire, victims have already had to pay for the fire in other ways, whether with their physical health, mental health, or their homes. Many of the victims have filed lawsuits against PG&E, but there's no telling this early on how those will turn out; after all, the state is still investigating PG&E's role in the fire. (Last week, investigators cleared the company of blame for the 2017 Tubbs Fire.) But even if the company is found liable for the Camp Fire, it's unlikely that payouts would encompass the entirety of these people's environmental losses.

Julie Fox Gorte, vice president of sustainable investing at Impax Asset Management Group, suggests ambitious reform: "We need to rewrite the law that says what a corporation is," Gorte says, so that companies don't have the shield of limited liability to protect them while they spill greenhouse gases in the atmosphere. Unless we dramatically change the way we hold corporations liable for their emissions and the resulting costs from climate change, members of the public will continue to pay the price—with their health and their money.