PG&E asks court to require DWR to hold a public hearing before charging $13 billion in power contract costs to California consumers

SAN FRANCISCO, Calif., Aug. 21, 2001 – Pacific Gas and Electric Company today announced it is asking the Sacramento Superior Court to require the Department of Water Resources (DWR) to abide by state law and hold a public hearing before determining whether its $13 billion in power purchase contract costs are just and reasonable and should be charged to electric retail ratepayers.

“There is evidence that DWR is attempting to overcharge electric customers in PG&E’s service area by over $1.4 billion in 2001 and 2002 alone, but DWR is refusing to hold a hearing on whether its costs are reasonable and supportable,” said Roger Peters, Pacific Gas and Electric Company’s senior vice president and general counsel. “DWR should not be given a blank check to pay for its high-priced power contracts. The public needs to be able to review DWR’s contracts and hold them accountable for the billions of dollars they are spending.”

Based on limited information provided by DWR, PG&E’s analysis indicates that DWR has padded its revenue requirement for 2001-2002 by more than $3 billion due to overestimating the cost for spot power purchases and natural gas. As a result, PG&E’s customers would overpay over $1.4 billion in the next two years alone.

DWR determined that its revenue requirement was just and reasonable without providing any type of prior notice and without conducting a full and complete public review of its costs or revenue requirement.

Under the California Administrative Procedure Act, Water Code, Public Utilities Code, and the due process clauses of the federal and state constitutions, DWR must hold a hearing to allow utility customers, consumer groups and all other interested parties an opportunity to comment on the justness and reasonableness of their revenue demands. DWR’s determination of its revenue requirement must then be based on those comments and the overall evidence in the record.

Ultimately at stake are $68 billion of costs to utility customers over the next ten years under DWR contracts which have never been reviewed in a public hearing. This works out to an average of $6,800 for each of the 10 million electric customers within the service areas of PG&E, Edison and SDG&E.

Pacific Gas and Electric Company, along with consumer groups and other utility companies, has urged that DWR’s revenue requirement receive the appropriate level of public comment and review prior to adoption and inclusion in rates. DWR has repeatedly refused the requests for additional information and public hearings, saying it is exempt from any review by the public or the California Public Utilities Commission (CPUC) regarding the basis or reasonableness of its request or costs.

The petition filed today requests the court to order DWR to withdraw its determination that its revenue requirement is just and reasonable until it complies with federal and state laws and holds a public hearing to determine if their power costs are “just and reasonable.”

Pacific Gas and Electric Company understands the importance of selling the revenue bonds and continues to want to work with all parties to find a comprehensive solution.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at

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