Consumer group sues power regulators in state supreme court

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Associated Press

SAN FRANCISCO: Consumer advocates sued state power regulators in the California Supreme Court Thursday in hopes of ensuring the public has a say in how much utilities charge for power and gas.

The Foundation for Taxpayer and Consumer Rights wants to block the Public Utilities Commission from using billions of dollars of ratepayer money to pay the debts of the state’s largest utility – bankrupt Pacific Gas and Electric Co.

The Santa Monica-based foundation said the commission’s plans for PG&E are just another example of how regulators are negotiating illegal ways to spend ratepayer fees – a charge the PUC flatly denies.

“The PUC is out of control,” foundation president Harvey Rosenfield said at a news conference outside PUC headquarters. “It has been wheeling and dealing in secret.”

Last fall, the PUC secretly negotiated a $3.3 billion settlement with Southern California Edison. That settlement allowed Edison to continue charging record-high electric rates through 2003 to help pay debts it accumulated during the state’s power crisis.

The suit Thursday is the latest in a series in which energy sellers, power plant operators and federal and state energy regulators all are being blamed for California’s energy crisis. The past two years saw power prices soar to record heights, forcing major utilities into debt and plunging the state into rolling blackouts.

The suit argues that, under state law, it’s illegal to use ratepayer money to pay the utilities’ debts – although that’s what the PUC did with the October settlement. It also points out that record rate increases the PUC approved last spring were earmarked for future power debts.

PUC General Counsel Gary Cohen denied that the PUC has broken any state laws while setting rates, and said the commission’s goal is to return both PG&E and Edison to financial health so that they can resume buying electricity for their customers.

The Edison settlement and PG&E reorganization plan share the pain among ratepayers and shareholders, he said, and invited members of the public curious about the PG&E plan to attend the commission’s April 22 meeting to discuss it.

“Someone has to decide who will pay the price for the deregulation fiasco,” Cohen said. “No one else, including the Foundation, has come forward with a viable plan to accomplish those goals.”

Millions of Californians still are paying among the country’s highest power rates even as power prices have plummeted nationally. The state is using the ratepayer money to recoup the $10 billion it spent buying electricity after state utilities lost their creditworthiness.

The PUC is preparing to file a plan in federal bankruptcy court Monday that would use ratepayer money from PG&E to pay much of the $13.5 billion debt the utility claims. If the state supreme court agrees that the PUC crafted that plan illegally, it would derail the state’s efforts to block PG&E from escaping state oversight – and could stall PG&E‘s emergence from bankruptcy.

PG&E wants to transfer $8 billion in power plants, transmission lines and thousands of acres of land to federally regulated companies. That would let the utility charge more for the electricity it generates. The PUC doesn’t want to lose regulatory control over PG&E and has spent months trying to thwart PG&E‘s plan, which Cohen said Thursday would leave ratepayers with higher bills.

PG&E spokesman Ron Low said the utility also is reviewing the suit before it comments. An Edison spokesman said the utility had no comment.

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