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CA Regulators Grant PG&E Belated, Scaled-Down Rate Hike

CA Regulators Grant PG&E Belated, Scaled-Down Rate Hike

With a relative whimper, not a bang, a major rate case for Pacific Gas and Electric Co. ended last Thursday with California regulators on a 3-2 vote giving the utility about one-third what it originally requested. The raise still is quite large, however, at $229 million/annually, including a 6% hike in gas rates. The hike amounts to about another $20/year for the typical residential customer. Electric rates were hiked by $136 million/year, but there will be no change in those rates because of the ongoing rate freeze that's been in effect since 1996 as part of the state's electric industry restructuring.

The decision was a compromise sponsored by one of the two newest members of the California Public Utilities Commission, Carl Wood, who expressed criticism of PG&E's original request for an increase totaling more than $1 billion and for the utility's apparent under-spending of past funds designated for its reliability and customer service programs.

Concluding almost three years of regulatory processing, the CPUC ordered PG&E to implement a quality assurance program to improve its responsiveness to customers, emergencies, billing accuracy and service restoration. If it doesn't meet agreed-to higher standards, it will be subject to pay penalties to customers harmed by any sub-standard performance.

"Over the past several years, a whole series of incidents has called the basic quality of PG&E's service into question," Wood said. "This decision will provide PG&E with the funding to return to better service quality, and will provide mechanisms for financial and regulatory accountability to assure the public that PG&E is spending authorized funds appropriately."

CPUC President Richard Bilas sponsored a competing alternative that would have slashed PG&E's request even further. Bilas contended that PG&E's request failed to prove that it had operated as efficiently and cost-effectively as other utilities, and it failed to prove that in recent years its reliability had declined due to inadequate rate coverage. PG&E had argued that adopting Bilas' approach would have jeopardized levels of service and safety for customers, requiring work force downsizing. Bilas was one of the two commissioners voting against the alternative approach.

While acknowledging that the long-sought rate increases didn't provide what it asked for, PG&E's prepared reaction statement said the company was "pleased" to finally get a decision, which it said "does recognize the need for additional support to maintain the high level of service our customers expect and to invest in [California's] energy infrastructure."

Wood, a labor leader and one-time electric utility worker with Southern California Edison, assured that revenue increases in the final decision "avoid any further [staff and program] cutbacks that have frustrated consumers." The decision further orders an audit of PG&E's 1999 capital expenditures for gas and electricity distribution system spending by the commission's energy division.

Richard Nemec

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