In a case settled months ago, the California Public Utilities Commission in a rare unanimous decision last Thursday approved a $326 million 2003 general rate case for Pacific Gas and Electric Co., whose increased rates have been in effect subject to change once the state regulators acted.

A second phase to the case will decide how the increases in retail electric generation and distribution and natural gas distribution charges will be spread to various customer groups.

The bulk of the increase — $236 million — covers increased annual electricity rates, with a $52 million natural gas increase and another $38 million for utility-operated generation charges. It amounts to about $300 million less than the utility’s last request and $84 million more than the regulatory commission’s consumer unit, the Office of Ratepayer Advocates (ORA), recommended.

Increases in the electric charges represent a 10.44% hike; in gas, 5.9%; and for generation, 4.35%.

Both commissioners authoring the compromise decision — CPUC President Michael Peevey and Commissioner Geoffrey Brown — used the opportunity to chastise the utility and its holding company, PG&E Corp., for granting 17 top executives, some of whom are no longer with the company, $84.5 million in retention bonuses, collectively, for steering the utility through Chapter 11 bankruptcy.

“Preliminarily, with some confidence, I can report that PG&E’s executive bonuses to 17 officers are not in the Test Year 2003 rates and they do not reduce headroom (difference between costs and retail rates),” Peevey said. “However, I have asked staff to clarify these points and report back to the commission.”

As what he called a “point of good corporate governance,” the CPUC rate decision specifically calls for PG&E to “voluntarily return some or all” of the retention bonuses. Otherwise, he said, this is an issue that PG&E directors and shareholders will have to deal with longer term.

Peevey supported two modifications made by Brown dealing with establishing a so-called “floor” for the annual attrition allowance provisions regarding the utility’s future cost-of-capital rate adjustments, and requiring the utility to report all aspects of executive compensation even before they are distributed.

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