PUC Plan Illegal Under State Law

Santa Monica, CA — The California Public Utilities Commission (PUC) illegally proposed to maintain excessive electricity rates through January 31, 2003 to bailout Pacific Gas & Electric (PG&E). The PUC plan, filed today as an alternative to PG&E‘s bankruptcy reorganization plan, was file. Last week, the Foundation for Taxpayer and Consumer Rights (FTCR) filed suit in the California Supreme Court to block the CPUC from breaking state law.

“The PUC has proposed to illegally require PG&E customers to pay $4.7 billion above the cost of electricity to bailout PG&E,” said Doug Heller, consumer advocate with FTCR. “Once again Governor Davis’s PUC is breaking the law to shift the burden of the deregulation disaster from the utility and energy culprits to the California ratepayers, who are its innocent victims.”

According to FTCR the plan is illegal in these respects:

• It violates state law that bars the use of ratepayer money to pay off deregulation-related debts incurred by PG&E;
• It violates the PUC‘s decision last year barring the use of the four-cent rate increase to pay for prior energy purchases;
• It violates the state’s open-hearing laws by using closed session meetings to develop utility consumers’ rates;
• It contravenes California’s Constitutional restriction on settlements in federal court that violate state law.

“Without public hearings, the PUC has decided that PG&E and the energy and banking firms that executed and financed the California energy crisis take precedence over consumers and California laws,” said Heller. “That the PG&E plan is outrageous is no excuse for the PUC to break state law.”

If wholesale energy prices increase, consumer rates could increase again

FTCR also noted that this plan might require additional rate increases beyond the excessive rate hikes imposed last year. If the price of electricity on the wholesale market increases between now and January 31, 2003, or a natural gas price spike raises the cost of the state’s long term energy contracts, the PUC would have to increase prices again in order to cover electricity costs and still bail out PG&E.

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