Posted at 10:16 p.m. PST Saturday, Dec. 16, 2000

Consumers closer to chipping in to offset energy company debt

SHIFTING COSTS

PG&E TALKING WITH STATE; FEW DETAILS FORTHCOMING FROM OFFICIALS BY STEVE JOHNSON AND MARK GLADSTONE

Mercury News

PG&E and state officials have begun talks about how consumers might shoulder some portion of the $4.6 billion-and-growing debt that the utility has as a result of the stunningly high price it must pay to buy electricity this year, sources said Saturday.

The discussions apparently are taking place with the blessing of Gov. Gray Davis. The Mercury News reported two weeks ago that Davis was considering a plan in which Pacific Gas & Electric Co. shareholders and its customers would split the fast-rising bill.

How much consumers might have to pay isn't clear. But as of October, when PG&E put its debt from buying electricity at $3.4 billion, one consumer group estimated that the average customer's share of that total would have been $190.

State Senate President John Burton, D-San Francisco, said he has heard of the discussions between the state and PG&E, but didn't know where they stood. If a deal is struck, he said, Southern California Edison -- which claims its unanticipated electricity purchase costs total $3.5 billion -- would probably seek a similar agreement.

The proposed deal with PG&E could come up Thursday before the California Public Utilities Commission. But Burton emphasized that if it requires legislative approval, it would be carefully scrutinized before lawmakers vote on it. ``I'm not going for anything until I see it,'' he said.

Another source familiar with the negotiations said the talks began within the last couple of days. He characterized the discussions as highly preliminary and said details were far from resolved.

Loretta Lynch, president of the California Public Utilities Commission, declined to comment on whether such conversations were occurring. But she added, with obvious annoyance, ``I'm quite concerned about all sorts of rumors various people are putting out there'' and suggested that some rumors may be intended to influence utility company stock prices.

Steven Maviglio, the governor's press secretary, said he wasn't aware of any ongoing negotiations between PG&E and state representatives. But he said Davis is still mulling the idea his office disclosed previously of having consumers pay part of PG&E and Southern California Edison's tab.

Maviglio added that the governor is eager to find some financial salvation for the two utility firms. ``He'd like it to be resolved,'' Maviglio said, although he was unable to say when the governor might announce what he intends to do.

In recent days, Davis, U.S. Sen. Dianne Feinstein, D-Calif., and others have voiced deep concern that the companies could go bankrupt if their power debt continues to grow. Under the deregulated energy system enacted by the Legislature in 1996, a state-imposed rate freeze shields customers of PG&E and Southern California Edison from the full impact of skyrocketing wholesale electricity costs. That means the utilities have had to absorb most of those wholesale costs themselves.

Even if a PG&E debt-splitting deal is presented to the Public Utilities Commission on Thursday, officials with the agency said it would be difficult to act quickly on such a proposal. By law, the agency is required to give consumer advocates or other interested parties time to review and comment on plans of that type.

Moreover, they said, saddling consumers with PG&E's and Southern California Edison's debts might require the commission to end the rate freeze sooner than March 31, 2002, when it is due to expire. Despite PG&E's contention that it has satisfied the legal conditions to end the freeze now, they said, the commission needs to undertake a complicated review of PG&E's assets before it can take that action -- a process that could last weeks or even months.

-- (in@energy.news), December 18, 2000

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Consumers closer to chipping in to offset energy company debt

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-- (in@energy.news), December 18, 2000.