Taxation, Without Representation

The federal judge presiding over the PG&E bankruptcy trial today ruled against allowing ratepayers to be represented in the case. The decision — which will be contested — is a victory for PG&E, whose lawyers fought to prevent ratepayers from being represented.

The ratepayer committee included the consumer groups Consumers Union and TURN.

The U.S. Bankruptcy Trustee had recommended that the judge approve creation of a special committee to represent the interests of residential and business ratepayers in the proceeding. PG&Es creditors — mostly the large wholesale power generators — are expected to demand that ratepayers be forced to pay off billions of dollars of debts the utility incurred as a result of its support for deregulation. Under the 1996 deregulation law, ratepayers were already required to pay an estimated $10 billion of PG&E‘s debts from the 1970s and 1980s.

“It is unfathomable that the bankruptcy judge would leave ratepayers unrepresented while lawyers for PG&E and the energy companies demand that ratepayers be forced to foot the bill for their greed and incompetence,” said Harvey Rosenfield, consumer advocate with the Foundation for Taxpayer and Consumer Rights. “This is a profound violation of elemental due process rights that is inimical to established notions of justice and fairness.

“Taxpayers and consumers will be asked to pay higher utility rates every month without having the right to be represented in court. This is taxation without representation.

“If the decision is not reversed, the only other option will be for FTCR and other consumer groups to seek to intervene directly in the proceeding. This is, as PG&E and the bankruptcy judge well know, a vastly expensive and onerous burden that will effectively preclude adequate representation. Nevertheless, we will be compelled to pursue that inefficient approach, despite its drawbacks, for limited representation may be better than none at all,” Rosenfield concluded.

###