PG&E Issues Statement Following CPUC Meeting

Mar 27, 2001

PG&E Issues Statement Following CPUC Meeting

Pacific Gas and Electric Company today issued the following statement after today's California Public Utilities Commission (CPUC) meeting:

"Today's CPUC actions, while providing a welcome dose of realism in the energy policy debate, unfortunately do not resolve any of the key issues facing California's policymakers during the energy crisis," said Gordon R. Smith, president and CEO of Pacific Gas and Electric Company. "The actions do not offer a comprehensive solution, fail to resolve the uncertainty of the crisis, and may even create more instability."

Specifically, the CPUC's actions fail to resolve:

-- The amount the state will collect for the power it is purchasing.

-- Who is responsible for purchasing the "net open position."

-- Who will bear the burden of the CPUC's rate increase and how much they will pay.

-- Prices paid to qualifying facilities for their generation going forward.

-- Resolution of the value of the retained utility generating plants.

-- Determination of the end-of-the-rate-freeze.

-- Recovery of the utilities' uncollected past costs.

These issues -- some of which have been before the Commission for more than six months -- require immediate action by the CPUC and other policymakers to keep California from sliding deeper and deeper into this crisis.

Finally, the Commission has included a number of elements in its decision that are destabilizing to the current financial situation and are, in some cases, illegal attempts to change rules after the fact. For example, the Commission has ordered the company to make payments retroactively to the state for the Department of Water Resources' purchases. This order mandates a payment that upsets the company's efforts to treat all creditors in a non-discriminatory manner.

Most egregious, however, was the attempt by the Commission to completely change the ratemaking rules that are used to determine the end of the rate freeze under AB 1890. Rather than acknowledge utility arguments that the rate freeze conditions have been met, the Commission attempts to order the company to retroactively change the recovery of stranded costs, going back to January 1998, and then to account for those costs in a manner contrary to state law. There is no justification for this action, other than to artificially extend the rate freeze. Pacific Gas and Electric Company will challenge this and other aspects of the decision.