With a relative whimper, not a bang, a major rate case forPacific Gas and Electric Co. ended last Thursday with Californiaregulators on a 3-2 vote giving the utility about one-third of whatit originally requested. The raise still is quite large, however,at $229 million/annually, including a 6% hike in gas rates. Thehike amounts to about another $20/year for the typical residentialcustomer. Electric rates were hiked by $136 million/year, but therewill be no change in those rates because of the ongoing rate freezethat’s been in effect since 1996 as part of the state’s electricindustry restructuring.

The decision was a compromise sponsored by one of the two newestmembers of the California Public Utilities Commission, Carl Wood,who expressed criticism of PG&E’s original request for anincrease totaling more than $1 billion and for the utility’sapparent under-spending of past funds designated for itsreliability and customer service programs.

Concluding almost three years of regulatory processing, the CPUCordered PG&E to implement a quality assurance program toimprove its responsiveness to customers, emergencies, billingaccuracy and service restoration. If it doesn’t meet agreed-tohigher standards, it will be subject to pay penalties to customersharmed by any sub-standard performance.

“Over the past several years, a whole series of incidents hascalled the basic quality of PG&E’s service into question,” Woodsaid. “This decision will provide PG&E with the funding toreturn to better service quality, and will provide mechanisms forfinancial and regulatory accountability to assure the public thatPG&E is spending authorized funds appropriately.”

CPUC President Richard Bilas sponsored a competing alternativethat would have slashed PG&E’s request even further. Bilascontended that PG&E’s request failed to prove that it hadoperated as efficiently and cost-effectively as other utilities,and it failed to prove that in recent years its reliability haddeclined due to inadequate rate coverage. PG&E had argued thatadopting Bilas’ approach would have jeopardized levels of serviceand safety for customers, requiring work force downsizing. Bilaswas one of the two commissioners voting against the alternativeapproach.

While acknowledging that the long-sought rate increases didn’tprovide what it asked for, PG&E’s prepared reaction statementsaid the company was “pleased” to finally get a decision, which itsaid “does recognize the need for additional support to maintainthe 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 withSouthern California Edison, assured that revenue increases in thefinal decision “avoid any further [staff and program] cutbacks thathave frustrated consumers.” The decision further orders an audit ofPG&E’s 1999 capital expenditures for gas and electricitydistribution system spending by the commission’s energy division.

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