PG&E?s General Rate Case Tinged by Bonus Critique

The California Public Utilities Commission unanimously approved Pacific Gas & Electric?s long-percolating general rate case?but only after rebuking the utility again for awarding hefty executive retention bonuses. PG&E was told May 27 to prepare for an audit of the $84.5 million in perks the utility awarded just days after emerging from bankruptcy. The commission also pushed voluntary return of the bounty. PG&E doled out ?outrageous executive bonuses,? said commissioner Geoffrey Brown, whose alternate decision was adopted. Though bonus costs were not folded into 2003 rates, the plan calls for a commission audit to ensure that this remains the case. In addition, PG&E will need to give advance public notice of all forms of executive compensation, including bonuses. Under the decision, PG&E was granted $2.493 billion for electric distribution, $927 million for gas distribution, and $912 million for generation for 2003. Excluding revenues related to procurement, the total increases under this rate case break out to $236 million for electric distribution, $52 million for gas distribution, and $38 million for generation (see Circuit , May 21, 2004). The rates were agreed to by PG&E and consumer groups in settlements that address the utility?s electric and gas revenue requirements for 2003-05, inflation-related increases (attrition), and forecast generation requirements for 2003. The Greenlining Institute?s idea to tie executive compensation to philanthropic contributions was rejected. This recommendation ?goes beyond the law,? Brown said. In February, Greenlining, a Bay Area?based minority advocacy group, admitted it had dropped its motion asking the CPUC to investigate allegations that PG&E hid bonus costs in exchange for PG&E?s pledge to boost charitable donations (see Circuit , Feb. 13, 2004). ?Though the company?s revenues will increase, there will be no overall increase in retail customer electric rates this year as a result of the decision, because those estimated changes...were offset by decrease in other areas,? PG&E said in a statement. The difference between revenues PG&E initially sought and what it would be granted through the settlements is reflected in a $799 million rate reduction in February as part of postbankruptcy rate design. PG&E will be able to collect increases for inflation, but not at minimum levels the plan initially proposed. The draft decision, which endorsed no attrition adjustment floor, was withdrawn with little comment after the other plan incorporated this provision. General rate cases set allowable revenues for utilities. PG&E?s proceeding was put on hold while the commission dealt with aftershocks from the energy crisis.

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PG&E?s General Rate Case Tinged by Bonus Critique

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