CPUC Draft Decision on PG&E Rate Recovery Slams Bonuses

By Published On: April 17, 2004

Pacific Gas & Electric has once again been taken to task for its controversial executive bonus program, this time in a California Public Utilities Commission draft decision dealing with the utility?s general rate case. The decision would grant PG&E $4.3 billion per year for its gas and electricity services. The draft plan found that ratepayers did not foot the bill for bonus payouts and put safeguards in place to close off that option. ?We are appalled at the size of the award? and encourage senior executives to voluntarily return any amounts not needed to meet the program?s purpose?or that are ?unreasonable or inequitable,? wrote CPUC administrative law judge Julie Halligan. Her tentative plan would largely adopt two settlements supported by the utility and a range of other stakeholders. One addresses PG&E?s electric and gas revenue requirements for 2003-05 and attrition requests for 2006. The other focuses on forecast generation requirements for 2003. Together, the settlements would approve the following for 2003: $2.493 billion for electric distribution, $927 million for gas distribution, and $912 million for generation. Excluding revenues related to procurement, the total increase in PG&E?s revenues amounts to $236 million for electric distribution, $52 million for gas distribution, and $38 million for generation. ?The proposed decision largely reflects the broad-based September 16, 2003, settlement agreement among its most active intervenors, including The Utility Reform Network and the Aglet Consumer Alliance,? said Jon Tremayne, PG&E spokesperson. Rate hikes resulting from the decision will be applied retroactively to January 2003 but will be offset by the $799 million rate decreases approved in February as part of PG&E?s bankruptcy settlement. The proposed decision found that PG&E?s bonus program was funded by shareholders, not ratepayers, and would adopt additional accounting and reporting mechanisms to ?ensure that this remains the case.? Halligan noted that the bonuses, totaling $84.5 million and meant to encourage executives to stay with the utility, vested only days after PG&E, its parent company, and the CPUC entered into a bankruptcy settlement agreement (see <i>Circuit</i>, Jan. 9, 2004).

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