PG&E GAS RATE REQUEST: NEW STANDARD FOR CHUTZPAH

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, MARCH 21, 2014, OR THEREAFTER


BY THOMAS D. ELIAS
    “PG&E GAS RATE REQUEST: NEW STANDARD FOR CHUTZPAH”

          At the very moment that California’s largest utility company was being assessed a $14 million fine for failing to report discovery of flawed records on its gas pipelines in the San Francisco Peninsula town of San Carlos, the same company was asking for well over $1 billion in rate increases to pay for repairs to that very same pipeline system.

          That alone would demonstrate remarkable chutzpah, the Yiddish word for sheer audacity and gall in overstepping the bounds of accepted behavior. But at the same time late last year, the company, Pacific Gas & Electric Co., was also asking the state Public Utilities Commission for a 12 percent increase in its ordinary rates.

          If PG&E gets away with much of what it now seeks, you can bet on similar breaks for the other big California gas utilities, Southern California Gas Co. and San Diego Gas & Electric, both owned by Sempra Energy, which has annual revenues of more than $10 billion.

          It’s certainly not the first time PG&E, the San Francisco-based outfit whose pipeline exploded in 2010, killing eight persons and destroying 38 homes in San Bruno, has shown chutzpah, sometimes interpreted as insolence. “Negligent” was the word employed by the National Transportation Safety Board to describe PG&E’s conduct (along with a finding of lax enforcement by the PUC).

          This, after all, is the same company that got away with using obscure rules to declare bankruptcy while sitting on plenty of resources during the energy crunch of 2000-2001, a move that allowed it to restructure itself for greater future profit.

          But bankruptcy did not have a direct adverse effect on the consumers – residential and commercial – who finance PG&E. The requested new rates would.

          For much of the repair and maintenance work PG&E (like the other gas companies) wants customers to pay for now should have been done years ago with billions of dollars in maintenance money consumers have paid via their monthly bills since the 1950s. It’s still unclear just what PG&E and the others did with the cash earmarked for maintenance, but plainly, not all was spent on that.

          All of which means PG&E has not deviated from its long-stated goal of having its customers put up new funds for it to bring its system up to the level of safety it should have had all along.

          The $14 million fine utility commissioners assessed against PG&E for its San Carlos misbehavior may signal some change in the attitude of the PUC, which has long given its obligation to keep the utilities financially sound a higher priority than its other big mission, keeping prices in line for customers.

          “This penalty is to serve as a deterrent against similar future behavior,” said Commissioner Mark Ferron.

          But only time and the PUC’s final decisions on both PG&E rate increase requests will determine whether the commission’s kabuki dance of the last six decades will continue. This dance has long seen utility companies make large rate increase requests only to see the commission cut them down.

          Of course, no one but company executives ever has known how much they really needed to remain solvent – all we know is that no California utility has ever gone under, despite PG&E’s highly questionable 2000s-era venture into bankruptcy, a trip to financial purgatory that somehow did not cause even one of the firm’s top executives to lose his job.

          What we do know is that consumers who paid billions in maintenance money over many, many years would have every reason for righteous indignation if asked to pay for upgrading the pipeline systems of any of the utilities.

          The same, of course, would be true if Southern California Edison and SDG&E customers who have paid for years into a fund for use in the eventual decommissioning of the San Onofre Nuclear Generating Station, were forced to pay extra because now it really is closed. In both cases, the blunders leading to the problems were done by the companies, not their customers. Which means they and their stockholders, not the customers, should be paying the price of failure, whatever it might be.

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    Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It,” now available in an updated third edition. His email address is tdelias@aol.com. For more Elias columns, go to www.californiafocus.net