PG&E bankruptcy plan threatened by consumer suit: Calif. PUC

Published on

Megawatt Daily

A California consumer group’s lawsuit challenging the state Public Utilities Commission‘s authority to reach court-sanctioned wholesale power-debt recovery deals with utilities may jeopardize the commission’s plans to submit an alternative restructuring plan for bankrupt Pacific Gas and Electric, a PUC official warned.

The April 11 lawsuit filed with the California Supreme Court by The Foundation for Taxpayer and Consumer Rights seeks to prevent the PUC from entering into ”secret” deals with utilities that the group claims could cost ratepayers $ 10-billion. The suit argued that the PUC‘s alternative reorganization plan would cost PG&E ratepayers as much as $ 6.6-billion and charged that the PUC broke state law in October when it asked a U.S. district court to approve a $ 3.3-billion settlement that would use ratepayer money to prevent Southern California Edison from a bankruptcy filing.

The group said California’s utility restructuring law forbids ratepayers from being held responsible for losses utilities incur buying high-priced wholesale power. FTCR asked the court to declare that PUC cannot ignore the law and to bar the commission from using taxpayer money to develop an alternative restructuring plan for PG&E.

”Either finding itself or inserting itself in federal forums, the PUC makes multi-billion-dollar rate decisions in secret meetings purportedly called to ‘confer with’ its litigation counsel — decisions that violate state law in substance and procedure — and then ‘consents’ to the entry of judgment against it sanctifying those transgressions,” the lawsuit said. ”The result is a practice that undermines democratic governance, popular sovereignty and constitutional and regulatory law in California. Unless it is restrained from doing so, the PUC will continue to conspire with [those it] regulates to overrule state laws it disdains.”

PUC General Counsel Gary Cohen said the FTCR lawsuit lacks merit and predicted that the court would deny the group’s request because the Legislature last year adopted bills that returned utilities to cost-of-service regulation, requiring the PUC ”to adopt rates that enable the utilities to recover their costs of generation.”

In a statement, Cohen said ”it is both ironic and sad that a group purportedly representing California consumers — the people most harmed by California’s disastrous deregulation experiment — are now defending [the state’s deregulation law], now that the state has abandoned it and is trying to find solutions to the crisis it made possible.”

Cohen said he was concerned that the FCTR’s suit could have the unintended consequence of paving the way for court approval of PG&E‘s reorganization plan that would entail even higher costs to ratepayers.

An FTCR spokesman, however, said the group does not want to see the PUC alternative scrapped in favor of PG&E‘s proposal. The commission’s plan ”is bad, but [PG&E‘s] is worse,” he said.


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