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CPUC Slaps PG&E with $1.68M Fine

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&ampE 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&ampE Energy Services.

A PG&ampE 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&ampE 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&ampE 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&ampE 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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