California PUC Proposes Bailout of PG&E

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State Plan Would Be Offered as Alternative to PG&E’s Maligned Re-organization Plan

The California Public Utilities Commission (PUC), in filings with the United States Bankruptcy Court, indicated that it will offer PG&E a bailout plan as an alternative track to getting out of bankruptcy. This plan would require California ratepayers to overpay for electricity for at least another year, according to documents filed by the PUC today. The plan would likely cost PG&E consumers an estimated $5 billion or more above the actual cost of electricity, according to consumer advocates with the Foundation for Taxpayer and Consumer Rights (FTCR).

The PUC has asked the federal bankruptcy court to allow the state to provide an alternative corporate re-organization plan to that offered in bankruptcy court by PG&E. The PG&E plan, which would wipe away virtually all state regulation over major aspects of the utility system for Northern California consumers, faces strong criticism from consumer groups and state officials, including the Attorney General and the PUC. Consumer advocates argue that, while the objections to the PG&E proposal are sound, the state should not foist a bailout onto consumers as the alternative.

“The PUC plans to have ratepayers, the innocent victims of deregulation, bail out PG&E, despite the fact that the Legislature refused to authorize a utility bailout after nine months of public debate,” said Doug Heller, a consumer advocate with FTCR. “It is unacceptable to exchange the ludicrous and illegal plan of PG&E with the unfair bailout plan offered by the PUC.”

Under the plan consumers would be forced to continue paying the excessive rates for electricity imposed by a March 27, 2001 rate increase, despite the steep decline in energy prices since this past spring. This continued overcharge, which would be used to bailout PG&E of past debts, contradicts the original ruling by the PUC which established that the March rate increase — the largest rate hike in California history — “will be applied only to electric power costs that are incurred after the effective date of this order.” (PUC Decision D.01-03-082, March 27, 2001)

“Californians, facing a recession and a budget crisis, should not be forced to overpay for electricity simply to bail out PG&E, one of the corporations chiefly responsible for the deregulation disaster in the first place,” said Heller.



Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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