Three alternate decisions were offered late Thursday in the case of the omnibus proposed settlement between California Public Utilities Commission (CPUC) staff and Pacific Gas and Electric Co. The utility reacted quickly by reiterating its contention that the only alternate acceptable is the first one approving the proposed deal as submitted.

Commissioners Geoff Brown, Loretta Lynch and Carl Wood offered alternates to the CPUC administrative law judge’s proposed decision. Lynch went the farthest in totally rejecting the proposed settlement as having “legal and financial infirmities” that are counter to the CPUC’s legal and constitutional requirements. All the others purport to be supporting the basic framework of the deal.

Noting that the three additional commissioners have joined CPUC President Michael Peevey, who offered two alternates (one the proposed settlement) when the ALJ released his proposal Nov. 18, the PG&E utility said none of the most recent alternatives “achieve the immediate and substantial rate relief contained in the settlement reached between PG&E the CPUC staff.”

As with the other alternatives and ALJ Robert Barnett’s proposed decision, Wood said his proposal “preserves the basic structure of the proposed settlement,” but shrinks the impact on retail electric utility customers considerably, reducing the size of the so-called regulatory asset from the proposed settlement’s $2.21 billion to $1.2 billion, shortening the amortization period, and eliminating ratepayers having to pay for the utility and its parent company’s litigation expenses for bankruptcy, which are estimated to be nearly $450 million.

“The bottom line is that PG&E does not need as much money as the settlement would give them, given what they have already received through the high rates since early 2001, in order to return to financial stability and capability,” Wood said in a prepared statement on his alternate order. Wood cited Southern California Edison Co., which hammered out a federal court settlement with the CPUC two years ago as a means of avoiding an involuntary bankruptcy, as an example of what was done through “fiscal discipline and paying attention to business.”

Wood noted that Edison paid off all of its energy crisis debts last July and has reduced its rates by 13%, while receiving “investment grade credit ratings from all of the rating agencies, sending an extraordinary dividend to its parent and being poised to bring on a major new power plant (if it gets help from the CPUC).” Wood argued that since the CPUC is “fully committed” to rehabilitating the PG&E utility, it means that the state regulators have to ask ratepayers to do more for PG&E than has been done so far for Edison. Brown agreed on this point.

“In approving a modified settlement agreement,” Brown said, “we recognize that we will have to do more for PG&E, and that PG&E will have to do more for the people of California.”

Similarly, Brown goes into great detail in comparing the different approaches of the Edison and PG&E utilities. “The basic structure of the Edison settlement is one benchmark against which we evaluate the PSA (proposed settlement) and the basis for the modifications to the proposed (PG&E) settlement.” He said that compared to the proposed PG&E deal, the Edison settlement “applied a rigorous cost of service methodology.”

With some harsh words for PG&E Corp. and its utility, Wood also criticized the federal bankruptcy judge who oversaw the settlement discussion for three months last spring for what he called an “injudicious gag order” that prevented Wood and his aides from understanding the talks leading up to the proposed settlement. He said the judge’s action makes the process more difficult in trying to arrive at a “sensible conclusion.” Lynch agreed, calling the judge’s action “unprecedented.”

Lynch said the lack of information, understanding and background analysis hampers the CPUC commissioners from fulfilling their statutory duties. She further said the CPUC proceedings examining the proposed settlement were “rife with procedural infirmities.” She criticized Peevey as “unnecessarily” limiting the evidentiary record in an initial scoping memo outlining the case as its assigned commissioner.

Lynch said her proposed modified settlement was the “simplest, least expensive” way to get PG&E’s utility back to investment grade credit ratings, without “undue and excessive profits locked in for shareholders.”

Finally, Wood said he is prepared to approve the basic framework of the settlement as laid out in Peevey’s second alternate, which adopts some of the ALJ’s proposed environmental modifications to offer something for urban ratepayers.

The utility offered no specific rebuttals any of the new alternatives. It preferred to stress the its claim that the proposed settlement is the only proposal that gives “all the parties” a chance to “put the energy crisis behind us, and move to a more secure future.”

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