Consumer rights group sues PUC

Published on


San Jose Mercury News

A consumer rights group is suing the California Public Utilities Commission, saying the agency is “out of control” and illegally trying to force ratepayers to foot PG&E‘s huge bankruptcy bill.

The lawsuit, filed by the Foundation for Taxpayer and Consumer Rights, goes to the heart of the commission’s rival plan for bailing out the bankrupt utility. The only other reorganization plan is the utility’s own, which calls for breaking the company into four parts, shifting major assets out from under state control and using those units to raise money from Wall Street investors to pay off its debts.

The taxpayer group says that as much as it dislikes PG&E‘s plan, the PUC‘s plan isn’t any better.

The commission has illegally allowed Pacific Gas & Electric Co. to charge excessive gas and electricity rates although the energy crisis has ended, and has been meeting secretly to maintain those high rates until the utility exits bankruptcy, according to a 49-page lawsuit the consumer group filed Thursday in California Supreme Court.

Commissioner Carl Wood said he hadn’t had a chance to read the complaint, but said the PUC wasn’t breaking any laws.

“All of our dealings in regard to PG&E‘s bankruptcy are fully within our authority and within the law,” Wood said.

PUC general counsel Gary Cohen issued a statement saying the lawsuit had no merit and would be tossed out.

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

Much of the more than $6 billion in cash Pacific Gas & Electric will have accumulated by next January was generated by the rate hike imposed last year during the height of the energy crisis. The cash forms the cornerstone of the PUC‘s plan for getting the company out of bankruptcy and paying off creditors.

Doug Heller, consumer advocate for the Foundation for Taxpayer and Consumer Rights, said the excessive rates mean an average of $1,150 a customer of Southern California Edison and Pacific Gas & Electric.

The lawsuit could cast shadows on the PUC‘s rival plan, but Heller said that couldn’t be helped.

“We hold absolutely firm to the belief that the outrageousness of the PG&E plan does not justify a state agency breaking state law,” Heller said.

Specifically, Heller’s group charges that the PUC‘s plan violates the state Constitution as well as two state laws. The state’s 1996 power deregulation law bars the utilities from using customer rate money to pay off debts resulting from high energy prices on the wholesale market, Heller said. PUC law requires public notices of rate-making activity. The state constitution prohibits nullifying state laws.

The lawsuit is similar to one filed by the Utility Reform Network in the bailout of Southern California Edison. That $3.3 billion bailout went ahead and that case remains on appeal in federal court.

Separately Thursday, a federal bankruptcy judge in San Francisco gave PG&E a green light to submit a third version of its plan to reorganize by breaking into four parts. Both PG&E and the PUC are preparing to mail ballots and copies of their plans and ballots to thousands of utility creditors who must vote on the plans. That vote is scheduled for this summer.

Contact Jennifer Bjorhus at [email protected] or (408)920-5660.

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.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases