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Oct 30, 1998

Days Before Election PG&E Admits 10% Rate Reduction Is A Fraud

"The rate reduction does work out to be about 2%," says PG&E spokesman

In a television interview Tuesday, PG&E spokesman Cory Warren confirmed what Prop. 9 advocates have been saying all along: the 10% rate reduction on electric bills -- required as part of the 1996 deregulation of electric utilities -- does not add up. "The rate reduction does work out to be about two percent," Warren admitted on KGO-TV in San Francisco. During a news segment about Proposition 9, the utility rate reduction initiative, Warren acknowledged that utility ratepayers do not receive the promised reduction. Proposition 9 replaces the so-called 10% rate reduction with a real 20% rate reduction.

"PG&E and Edison are guilty of false advertising," said Prop. 9 co-author, Harvey Rosenfield. "They have lied to the public about Prop. 9, and now it is on the record that they have lied to all of us about the rate reduction. With Prop. 9, voters can hold these swindlers accountable."

Under the 1996 deregulation law, PG&E, Edison and San Diego Gas & Electric were required to lower electric rates for residential and small business consumers by 10%. The utilities employed a bond financing scheme to create the appearance of a rate reduction for four years while allowing the utilities to recoup the "rate reduction" from consumers over ten years. Called a bait-and-switch scheme by consumer advocates, the phony reduction has been a key element of the debate around Proposition 9. Until Warren's statement, the utility companies continued to insist that the 10% rate reduction was real.

Consumer Advocate Calls Anti-9 Campaign Halloween Trickery

"The 10% reduction is a fraud and the $40 million anti-9 campaign is a hoax," said Rosenfield. "The phony reduction is the skeleton in the utility closet and it has come out for Halloween. This whole campaign has been like a Halloween horror movie with the utilities scaring voters to protect their insidious bailout. But voters are tired of this corporate trickery. We don't want phony rate reductions and we don't want high electric rates. We need a $300 a year rate cut, we need real competition and that is what Prop. 9 will deliver."

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