Bankruptcy Court, PUC Should Require PG&E Parent Company — Not Customers – To Pay Off Corporate Debt
A lawsuit filed by California Attorney General Bill Lockyer today charges PG&E with illegal business practices that forced the company’s utility subsidiary to declare bankruptcy as the holding company absconded with billions of dollars from ratepayers. (Click here to learn more about the lawsuit.) Consumer advocates argue that these allegations should stop the California Public Utilities Commission (PUC) from offering to bailout PG&E.
“The Attorney General’s lawsuit could save consumers billions of dollars that the PUC wants to hand over to PG&E in the form of a bailout,” said Doug Heller, a consumer advocate with the Foundation for Taxpayer and Consumer rights (FTCR). “PG&E siphoned nearly five billion dollars from its customers, yet the PUC recently proposed a deal with PG&E that would force utility customers to pay approximately five billion dollars more to cover the utility’s debt. A ratepayer bailout should be off the table, and, instead, the state should focus its efforts on holding PG&E accountable for its behavior.”
A Similar Suit Should Be Filed Against Edison
The AG’s lawsuit documents four years of corporate transgressions by PG&E, the state’s largest utility company. Much of this information was revealed in an audit conducted in January 2001 by an outside consulting firm hired by the PUC. A similar review of Edison‘s corporate ledger resulted in analogous findings. The Edison audit, by KPMG LLP, found that Edison had siphoned $4.8 billion from its utility to the parent holding company — $200 million more than in the PG&E case. As a result of a legal settlement between Edison and the PUC, however, ratepayers are currently being held responsible for much of Edison‘s deregulation related debts.
“Both PG&E and Edison pushed for the deregulation law that is integral to their respective financial disasters, and both companies used a holding company structure to move billions of dollars into unregulated affiliates. Attorney General Lockyer should file suit to hold Edison accountable and stop the PUC from bailing out Edison with ratepayer money,” said Heller.
The Attorney General should open a criminal investigation in addition to the civil action to determine whether the executives at the utility companies engaged in any criminal activities, said FTCR.