CPUC Slaps PG&E with $1.68M Fine
In an attempt to deter other utilities in the state, California
regulators Nov. 5 slapped a $1.68 million fine on Pacific Gas and
Electric Co. for allowing an unregulated energy services affiliate
to violate newly created state rules earlier this year governing
the use of the parent company name and logo. The PG&E utility
company expressed disappointment and vowed to appeal the decision,
which requires the penalty be paid out of shareholder funds.
If necessary, the utility indicated it would appeal this in the
state appeals court after first seeking a rehearing by the
regulators. The California Public Utilities Commission cited 90
violations of its so-called utility affiliate transaction rules in
"High Voltage" print advertisements published last march for
PG&E Energy Services.
A PG&E utility spokesperson called the penalty "excessive,"
indicating that the utility took corrective action immediately
pulling the ads once the violation was recognized. The fine was
"far in excess" of what the administrative law judge in the case
recommended ($338,000) and was determined without convening a
hearing, something the utility requested, the spokesperson said.
"Thus, we think our due-process was violated."
The focus of the alleged rules violation is a requirement in
California that all advertising, marketing and promotion by
unregulated affiliates of the major utilities must use a "plain and
legible or audible" disclaimer, stating that it is not the same
company as its utility and is not regulated by the CPUC.
"The disclaimer used in the (PG&E Energy Services) ads was
nearly illegible due to the low contrast of colors and quality of
newsprint, and the small print size," the CPUC said in its news
release on the action. "PG&E stopped further use of the ads
after March 23 and set up a pre-clearance review policy involving
key executives for both firms."
CPUC President Richard Bilas recommended the tougher penalty,
developing the alternative order which was approved by the full
five-member commission of gubernatorial appointees. In taking this
action, the CPUC stressed that future violations would result in
"even higher penalties."
Under California law, the CPUC may impose penalties of not less
than $500 nor more than $20,000 for violations of its orders. Each
violation is considered a separate offense, so in the PG&E
utility's case, 20 violations resulted from four advertisements
being published March 16, and another 70 violations occurred from
16 re-publications of the earlier ads.
Richard Nemec, Los Angeles
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