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Industry News

PG&E Says More Rate Hikes Probable

LCG, July 25, 2001Pacific Gas & Electric Co. said yesterday that claims over the weekend by California officials of no need for additional electric rate hikes were based on possibly inaccurate figures that may even call for a rate hike.

The utility said it sent a letter on Monday to the California Department of Water Resources requesting a public hearing on its revised revenue requirement it filed with the California Public Utilities Commission.

Over the weekend, top aides to California Gov. Gray Davis announced triumphantly that new California Department of Water Resources estimates show there is no need for new rate hikes and that rates might actually drop in two years.

PG&E in a statement issued yesterday noted that "dramatic changes appear to have been made in the filing between Sunday night, when it was presented to the media, and Monday morning, when it was available on the CDWR website. These changes include a $600 million increase in revenue recovery from PG&E customers during 2002, at a time when rates should be falling because of increased competition and lower gas prices."

John Nelson, a spokesman for the utility, said "How that isn't a rate increase is a question they need to answer."

When CDWR representatives briefed the media on Sunday, they said the water agency currently receives about 9.5 cents per kilowatt-hour for power purchased on behalf of PG&E customers. The new filing, according to PG&E, "makes clear that the department is seeking to charge PG&E customers a much higher rate, especially in 2002. In that year alone, the department is seeking to charge our customers an average rate of 13.7 cents per kilowatt-hour."

State officials conceded the discrepancies. Joseph Fichera, a financial adviser to Davis, said the $600 million figure was contained within an "inadvertently released" document. "It was an unfortunate error and now somebody is trying to exploit it," he complained.

"PG&E would like to have (as much money as they can get)," Fichera said. "Probably if you drive through their district, they want to charge you."

PG&E would agree that it wants to collect full value for power generated in facilities it still owns, which include hydroelectric facilities and the 2,200 megawatt Diablo Canyon nuclear power plant.

The California Public Utilities Commission is considering how much PG&E, Southern California Edison Co. and San Diego Gas & Electric Co. should be able to charge for power from their owned assets. If the utility is allowed to charge the 9.5 cents per kilowatt-hour charged by the water agency, and subsequently the 13.7 cents the agency intends to charge, ratepayers would see a substantial increase in their bills.

"That's why they went to such tremendous lengths to say on Sunday that if there's any reason for a rate increase it would be the call of the CPUC," PG&E's Nelson said.

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