While Pacific Gas & Electric has emerged from bankruptcy, the savings to ratepayers from refinancing the utility?s $2.2 billion regulatory asset keep shrinking because the bill that would set it in motion has yet to pass. Not only is the cost of refinancing increasing by about $300,000 for each day the Legislature fails to pass legislation authorizing new bonds, costs will increase if the US Internal Revenue Service puts off deciding when PG&E should pay taxes on the rate-reduction bond revenue. ?The biggest wild card with respect to timing? is a ruling by the IRS as to whether taxes on the rate-reduction bond revenue are due when the proceeds are received or over time, according to Mike Florio, The Utility Reform Network senior attorney. PG&E and TURN are assuming the taxes will be spread out and not due in a lump sum. ?If it went the other way, a lot of the benefit of [refinancing] would be lost,? Florio said. PG&E said the ruling would be made after the legislation is enacted, if that indeed occurs. The bill authorizing a dedicated rate component (DRC) was projected to save ratepayers $1 billion (see <i>Circuit<\/i>, Feb. 13, 2004). The savings in refinancing?whatever the amount ultimately is?would be taken off the top of the ratepayer tab, now estimated at $7.2 billion by the California Public Utilities Commission. PG&E maintains the utility has not calculated ratepayers? bankruptcy bill and does not disagree with the CPUC?s number. In contrast, the city and county of San Francisco put the figure at $5.8 billion. Just when the utility customer savings began to shrink?the start of the year or when PG&E put the Chapter 11 proceedings behind it on April 12?is also a matter of debate. ?I would measure delay in terms of the time between their exit from bankruptcy and the passage of the bill,? said Florio. TURN reached a last-minute bankruptcy deal with PG&E to replace the regulatory asset with rate-reduction bonds to reduce the burden on ratepayers. The savings were not affected until last week because the utility focused ?more or less exclusively? on getting beyond bankruptcy, he said. Under the settlement with the CPUC, the $2.2 billion fictitious asset begins amortizing in retail rates on a mortgage-style basis January 1, which some interpret as meaning when the tab for ratepayers started climbing. By the end of April, the lost savings could be as high as $36.3 million if the loss is calculated from the start of the year or $5.4 million if the savings clock started ticking April 12. The CPUC has not estimated the cost of a bill delay but relies on TURN?s and PG&E?s estimates, according to Paul Clanon, commission Energy Division director. PG&E spokesperson John Nelson said the utility will not make any savings estimates until the legislation is enacted. Many expect lawmakers to pass the DRC bill, SB 772 by Senator Debra Bowen (D-Redondo Beach). The Assembly Appropriations Committee approved it on an 18-0 vote April 21. Assuming the measure becomes law, ratepayer savings will not necessarily be locked in when the regulatory asset is converted to municipal bonds with lower rates but could indeed dwindle further.