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CPUC Consumer Unit Says PG&E Utility Should Refund $117M

As the result of a year-long investigation of a five-year period dating back to 2000, the consumer protection branch of the California Public Utilities Commission (CPUC) earlier this month issued a recommendation that Pacific Gas and Electric Co. be required to refund $117 million to its customers and pay a $6.75 million fine for mishandling the delayed and/or estimated billing of tens of thousands of residential and business customers. The staff concluded that the PG&E utility "collected monies from customers in violation of two CPUC rules."

More than 290,000 either delayed or estimated bills over the five-year period are part of the investigation, and in addition to the proposed refunds and fine, the CPUC consumer staff is recommending that the PG&E utility be required to recalculate all estimated bills back to the year 2000 and credit customers with any overcharges in cases where the bills were incorrectly calculated because they didn't use historic average daily usage numbers.

The latest action was prompted initially by CPUC Executive Director Steve Larson and the consumer protection staff, and later by a utility consumer watchdog group, The Utility Reform Network (TURN), which in November 2004 filed a motion requesting an investigation of the PG&E utility's billing and collection practices for both natural gas and electric retail customers.

In the midst of these activities, the utility filed separately with the CPUC asking to change the two rules it has been found to be violating. In January 2005, the five-member CPUC granted PG&E's request in part and denied other parts of it. Later last winter, the CPUC authorized TURN's request for the investigation.

In its filing to the CPUC Feb. 3, TURN urged a utility refund of $53.2 million for delayed-bill funds and estimated bills, along with shutoff and reconnection fees that have been assessed. The consumer group also suggested that PG&E's utility be required to make a $1 million contribution to an organization called Relief for Energy Assistance Through Community Health (REACH).

The utility countered in its filing with the contention that for a number of years the CPUC staff supported the billing practices that are now being criticized. PG&E argued that the proposed fines are four years after the major problems and at a time when the new billing/collection system is working well.

Problems allegedly developed when PG&E's utility changed its billing system in December 2002, installing CorDaptix, and data from the old system was transferred to the new one. TURN said that the database systems were totally different and the change led to numerous billing errors. The new system ran into problems integrating meter reads into its database, TURN alleged in its filing.

The utility changed its approach to using estimated and delayed bills in the fall of 2004 in response to the CPUC initial inquiry from Larson, and the staff probe concluded it has had some effect in reducing the number of estimated bills used, going from an average of 18,000 estimated bills monthly before adopting its change in January 2005 to an average of 725 estimated bills each month in the first half of 2005, the CPUC consumer staff report noted.

Similarly, with delayed bills issued as back-billing for three previous months, the PG&E utility's average monthly totals dropped 31% after it made the changes.

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