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Jun 19, 2003
CONTACT: Doug Heller - 310-392-0522 x309
PUC and PG&E Negotiate $12 Billion Bailout
Plan "Will Be Financed Through Rates"; Group Calls for Rejection of PlanSanta Monica, CA -- California Public Utilities Commission and PG&E announced today that ratepayers will finance a massive bailout of PG&E so that company can emerge from bankruptcy. The deal, announced this afternoon, was developed entirely behind closed doors. Based on the initial description of the plan, consumer advocates believe the deal should be rejected by Public Utilities Commissioners.
Douglas Heller of the Foundation for Taxpayer and Consumer Rights issued the following statement regarding the deal announced today:
"Behind closed doors, the PUC and PG&E have negotiated a $12 billion bailout of Pacific Gas and Electric, most of which will apparently be paid for by PG&E ratepayers. This may be a great deal for PG&E and its creditors but it is funded out of the pockets of California consumers. The proposed settlement steals billions of dollars from ratepayers in order to get PG&E out of a bankruptcy that it chose to enter as a result of a deregulation disaster that it helped create.
"This a classic case of blaming the victim, in which the ratepayers, particularly the residential and small business consumers who never asked for deregulation, are forced to pay for the mistakes and losses of PG&E. In the meantime PG&E has continued to reward its executives with massive bonuses since the company filed for bankruptcy. PG&E's mismanagement leading up to and during the energy crisis are only overshadowed by its greed.
"Additionally, it is our belief that PUC President Michael Peevey, working with Governor Davis, authorized PUC attorneys to negotiate a settlement, which would make consumers cover this massive bailout. This plan is a total sellout of PG&E customers and the other Commissioners should reject the proposed settlement to ensure that consumers are not forced to pay for PG&E's deregulation disaster. Consumer groups will fight this plan."
FTCR noted that the half-cent rate reduction proposed for January 2004 is a small fraction of the massive rate increases imposed on consumers during the energy crisis. Those rate hikes would be maintained in this agreement, despite the dramatically reduced price of power in the current market. FTCR will review the legality of this settlement.
In April 2002, the Foundation for Taxpayer and Consumer Rights filed a petition in the California Supreme Court to block the PUC from secretly negotiating a settlement such as the one announced today. The Supreme Court denied the petition; however, that court is currently reviewing the propriety of a PUC settlement with Southern California Edison, to which the PG&E settlement appears to have many similarities.
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