CPUC Boosts PG&E Pension Fund $500 Million

By Published On: September 11, 2009

In move to bolster Pacific Gas & Electric’s pension system, the California Public Utilities Commission without comment approved more than a half billion dollars in new utility funding September 9. Commissioners unanimously approved a settlement agreement that authorizes $533 million in additional revenue for PG&E’s pension fund between 2011 and 2013. More money is possible down the road. PG&E said it needed the additional money because last year’s financial market crisis battered its pension fund. The utility said the downturn would leave it funded at the 95 percent level at the end of this year with further deterioration to an 88 percent funded level expected next year. Commissioners authorized the new revenue after they upped the ante for the company’s pension fund in 2006, allowing PG&E to recover money needed to fully fund its retirement account by the end of this year. Losses in financial markets set back that effort, however. The Division of Ratepayer Advocates opposed PG&E’s initial request to fully fund its pension over a seven-year period, ending in 2017. DRA favored extending the process out over nine years to shield ratepayers. However, the settlement approved by the commission sets no specific timeline for reaching the 100 percent funded level. Instead, it calls for maintaining contributions to the fund after 2013 at a level to be determined in a new general rate case. In the interim, PG&E can seek additional money for its retirement account under an advice letter process should it fall below an 85 percent funded level. In a separate vote, the commission approved new streamlined procedures for utilities that obtain federal money for smart grid projects under the American Recovery & Reinvestment Act of 2009. The act makes available $4.5 billion nationwide to help utilities modernize the power grid. The new procedures--which allow utilities to obtain commission approval to spend matching funds needed to obtain the federal money through an advice letter process--are intended to lower costs to ratepayers by helping California companies win federal money to cover part of their smart grid project costs. “This is an exception to the processes of this commission,” noted commissioner John Bohn. “It’s designed . . . to maximize the benefits for California ratepayers.” However, Bohn said that in approving the streamlined process the commission would maintain its “requisite oversight” over how the state’s investor-owned utilities spend their money. The commission also approved a plan by PG&E to transfer an unused $41 million held in an energy efficiency balancing account covering 1998-2008 into its energy efficiency fund for this year.

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