Herrera Urges State PUC to Better Protect Consumers in PG&E Bankruptcy Financing Plan
San Francisco City Attorney Testifies That Dedicated Rate Component Plan Would Save California Ratepayers $5 Billion Over Next Decade
SAN FRANCISCO (April 2, 2003) -- City Attorney Dennis Herrera today urged the California Public Utilities Commission to modify its plan for resolving the Pacific Gas and Electric Company bankruptcy in order to save billions of dollars for consumers. At a hearing called by the CPUC in San Francisco today, Herrera explained how a Dedicated Rate Component earmarked for the specific purpose of paying off securities issued to get PG&E out of debt would provide substantial and immediate benefits for PG&E ratepayers and the California economy. A principal benefit of the DRC plan is that it would save ratepayers more than $5 billion over the next ten years. The DRC proposal was presented to the Commission through financial testimony submitted by The Utility Reform Network (TURN). The DRC saves money by financing a large part of PG&E's reorganization with a long-term debt financing rather than PG&E's much higher cost of capital.
"As the state commission responsible for protecting the interests California ratepayers, the PUC has a golden opportunity and important obligation to minimize the burden that consumers face in paying-off PG&E's debt," Herrera said. "Long-term debt financing would save consumers money now, when it can do the most good. The DRC plan avoids the stifling impact of artificially high electricity rates on California's economy, while liberating the dollars necessary to pull our region and state from the depths of its current recession. It's good economics, it's a sound plan, and it's a better deal for consumers."
Herrera further noted that ratepayers have no standing in the bankruptcy case and are completely dependent on the CPUC to protect their interests.
"As PG&E's bankruptcy makes its way through the courts, literally hundreds of banks and corporate creditors enjoy the legal standing to ensure that their interests are represented. But for the millions of ratepayers in California who'll pay the tab in this bankruptcy, there is no such legal standing. Responsibility for their interests rests solely with this commission, and they have no voice other than yours," Herrera testified.
At the hearing, TURN presented the CPUC with financial charts based upon evidence received in the proceeding showing that the present CPUC plan is only marginally better for ratepayers over the next five years. By contrast, the DRC-modified plan would save ratepayers more than $3 billion over the next five years.
San Francisco, together with the Counties of Alameda, Fresno, San Luis Obispo and Sonoma, has been an active participant in the PG&E bankruptcy court proceedings before U.S. Bankruptcy Court Judge Dennis Montali and has lodged formal objections to the PG&E Plan.
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