Herrera Backs TURN’s Recipe for Rate Reductions in PG&E Bankruptcy Bailout

Coalition of Ratepayer Advocates Agree: ‘Trim the Fat From the CPUC/PG&E Settlement’

An agreement between the CPUC and PG&E to overcharge customers $9 billion over the next 9 years has been rejected by a broad coalition of PG&E customers. The agreement is a proposed settlement between the CPUC and PG&E in the utility’s bankruptcy case. Members of the coalition object to the agreement as “too rich.” They support an alternative plan developed by TURN, The Utility Reform Network, which will permit PG&E to emerge from bankruptcy at substantially less cost to consumers while still accomplishing all of the stated goals of the CPUC/PG&E plan.

“TURN trimmed the fat from the proposed settlement,” said executive director Nettie Hoge. “Consumers should not be forced to bail PG&E out. But if the CPUC and courts are going to demand a bailout, it should be as lean as possible. TURN’s plan saves consumers $2.8 billion, and allows larger rate reductions than the CPUC plan.”

Rate reductions are possible under the proposed settlement but not guaranteed. TURN’s plan provides an immediate decrease of .62 cents /kWh, and larger reductions than the proposed settlement over the next nine years. The savings are the result of substitution of “energy recovery bonds” for the “regulatory asset” proposed by PG&E and the CPUC.

“The regulatory asset inflates PG&E’s worth while forcing customers to pay billions extra in interest and taxes,” said Mark Savage of Consumers’ Union. “TURN’s alternative shows that even a bailout can be made more palatable. There is no excuse for the CPUC to approve the settlement when a cheaper option is available.”

“The PG&E proposal is a sweetheart deal that gives the company more money than it needs to pay creditors, enabling PG&E Corporation to collect substantially higher dividends than it did before the deregulation disaster,” said San Francisco City Attorney Dennis Herrera. “If San Franciscans are going to have to tighten their belts to pay for the energy crisis, PG&E should do the same. Why should they come out of bankruptcy in better shape than when they went in?”

Commercial customers also oppose the deal. ___ of CLECA said businesses already hard hit by the energy crisis can’t afford more subsidies for PG&E. “This settlement doesn’t just restore the company to creditworthiness, it rewards it for voluntarily filing for bankruptcy while many businesses in California are struggling to pay their own bills.”

“No other utility in the country would have the nerve to ask for a deal this rich, and no other CPUC in the country would lack the nerve to say no to it,” said James Weil of Aglet. “In other utility bankruptcies stock is diluted and dividends suspended. In contrast, this settlement makes customers pay more than $5 billion to send $7 billion extra into the coffers of PG&E’s parent corporation, money that will go to enrich shareholders rather than pay energy crisis debts.”

TURN will present its’ plan to the CPUC in a hearing on the proposed settlement being held today.