Pacific Gas & Electric returns to court to collect billions

By the OGJ Online Staff

HOUSTON, Aug. 7, 2001 – Pacific Gas & Electric Co. refiled a lawsuit against the California Public Utilities Commission Monday to recoup billions of dollars from ratepayers for money used to buy wholesale electricity during the state electricity crisis.

A San Francisco federal judge dismissed a similar claim in May. He ruled a PUC-ordered rate increase was not yet final. Now operating under Chapter 11 bankruptcy protection, the utility unit of PG&E Corp. returned to court to challenge the now final order.

The company said wholesale power costs incurred between January 2000 and January 2001 were included in filed rates authorized by the Federal Energy Regulatory Commission and asked for a finding the federally-approved costs are recoverable in retail rates.

The PUC has wrongfully interpreted and applied state law as prohibiting PG&E from recovering its expenses, to the extent they exceed retail revenues collected at frozen rates, the utility said. Furthermore, the PUC has interpreted state law as prohibiting PG&E from recovering wholesale costs which remain uncollected after the end of its rate freeze period.

Consumer advocates and the city of Francisco argued PG&E should be prohibited from recovering the costs because the utility received billions of dollars in so-called “stranded-costs” under California’s 1996 deregulation law which froze retail rates. Stranded costs is the term used to describe the value of assets such as nuclear power plants that were expected to be too expensive to make it in a competitive market. Utilities were allowed to collect money from ratepayers to help pay for them.

The state’s biggest utility, Pacific Gas & Electric Co. filed for bankruptcy protection in April when it couldn’t pay for billions of dollars in wholesale power cost bills or pass the costs on to consumers.

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