Consumer group sues PUC

By Karen Gaudette, The Associated Press
Friday April 12, 2002

SAN FRANCISCO — Consumer advocates sued state power regulators in the California Supreme Court on Thursday in hopes of ensuring the public has a say in how much utilities charge for power and gas. 

The Foundation for Taxpayer and Consumer Rights wants to block the Public Utilities Commission from using billions of dollars of ratepayer money to pay the debts of the state’s largest utility — bankrupt Pacific Gas and Electric Co. 

The Santa Monica-based foundation said the commission’s plans for PG&E are just another example of how regulators are negotiating illegal ways to spend ratepayer fees — a charge the PUC flatly denies. 

“The PUC is out of control,” foundation president Harvey Rosenfield said at a news conference outside PUC headquarters. “It has been wheeling and dealing in secret.” 

Last fall, the PUC secretly negotiated a $3.3 billion settlement with Southern California Edison. That settlement allowed Edison to continue charging record-high electric rates through 2003 to help pay debts it accumulated during the state’s power crisis. 

The suit Thursday is the latest in a series in which energy sellers, power plant operators and federal and state energy regulators all are being blamed for California’s energy crisis. The past two years saw power prices soar to record heights, forcing major utilities into debt and plunging the state into rolling blackouts. 

The suit argues that, under state law, it’s illegal to use ratepayer money to pay the utilities’ debts — although that’s what the PUC did with the October settlement. It also points out that record rate increases the PUC approved last spring were earmarked for future power debts. 

Millions of Californians still are paying among the country’s highest power rates even as power prices have plummeted nationally. The state is using the ratepayer money to recoup the $10 billion it spent buying electricity after state utilities lost their creditworthiness. 

The PUC is preparing to file a plan in federal bankruptcy court Monday that would use ratepayer money from PG&E to pay much of the $13.2 billion debt the utility claims. If the state supreme court agrees that the PUC crafted that plan illegally, it would derail the state’s efforts to block PG&E from escaping state oversight — and could stall PG&E’s emergence from bankruptcy.