EDITORS: Please do not use
"Pacific Gas and Electric" or "PG&E" when
referring to PG&E Corporation or its National Energy Group.
The PG&E National Energy Group is not the same company as Pacific
Gas and Electric Company, the utility, and is not regulated by the
California Public Utilities Commission. Customers of Pacific Gas
and Electric Company do not have to buy products or services from
the National Energy Group in order to continue to receive quality
regulated services from Pacific Gas and Electric Company.
RATE STABILIZATION PLAN TO PROTECT CUSTOMERS FROM HIGH PRICE OF
Fulfills Promise to Protect
Customers From Dramatic Price Spikes; Without Proposal, Customers
Could Face 100% Increases
SAN FRANCISCO - Pacific
Gas and Electric Company today filed a proposal with the California
Public Utilities Commission (CPUC) to stabilize electricity rates
and protect its 4.6 million customers from the record-high wholesale
prices being charged for electricity in California.
"From the beginning of this
energy crisis, we promised to shield our customers from the rate
shock experienced by San Diego residents this summer," said Gordon
R. Smith, president and chief executive officer of Pacific Gas and
Electric Company. "This proposal delivers on that promise, by holding
the line on power costs our customers must pay, until state and
federal officials can fix the broken wholesale electricity markets
and start to repair the current supply and demand imbalance."
The utility is voluntarily
proposing a five-year rate stabilization plan which will hold power
costs much lower than current wholesale prices, and protect customers
from very volatile wholesale prices. Beginning on January 1, 2001,
residential and small business customers' wholesale power cost would
be set at just under 6.5 cents per kilowatt-hour (cents/kWh), compared
to the wholesale cost of 15.2 cents/kWh during November 2000. Under
the plan, residential electric bills will average $63.50 per month,
compared to more than $108.00 per month if the CPUC lifted the rate
freeze without this plan in place. Current residential electric
bills average $54.50 per month, under the rate freeze.
Without this rate stabilization
plan, customers would be exposed to volatile wholesale electric
prices that are currently more than 200 percent what they were just
one year ago, and which skyrocketed to more than 450 percent above
their previous levels during the past summer. The company estimates
that once the rate freeze is lifted, customers will face an immediate
average increase of about 100 percent, which could easily climb
to more than 200 percent higher next summer, if wholesale prices
are similar to their 2000 levels. Given the continued short supply
and high demand, electricity prices are expected to continue to
remain high for the foreseeable future.
"We are doing all that we
can to reduce the unfair, unreasonably high electricity prices charged
by out-of-state power generators. We are also working with regulators,
policy makers, and our customers to find long-term solutions to
this crisis," said Smith. "While those solutions are being developed,
we are committed to shielding our customers, and the economy, from
the dramatically high cost of electricity. Our rate stabilization
plan offers reasonable rates now, and protection from dramatic price
increases in the future."
Pacific Gas and Electric
Company has not increased its customers' electric rates since 1993,
and in fact, there have been two decreases during this period.
Nearly all of the increase
in customer bills will go toward trying to keep up with the record-setting
high wholesale cost of electricity. The portion going toward subsidizing
energy conservation and low-income discount programs will increase
as well, accounting for 10 cents of the overall bill increase.
Under the rate stabilization
plan, Pacific Gas and Electric Company will offer its low-income
customers a 25 percent discount off their electric bill, compared
to the 15 percent discount they currently receive.
"If consumers were exposed
to the full cost of power at this time, it would cause needless
suffering, especially for low-income families and people on fixed
incomes," added Smith. "We are doing everything we can to protect
those who are least able to afford these high prices, by proposing
they receive a 25 percent discount off their bill."
Since May 2000, the utility
has amassed about $3.4 billion in uncollected electricity costs
it incurred from buying power in the wholesale market for its customers.
It has been able to borrow money to cover this cost, but is reaching
the limit of its credit capacity. To keep prices down and help stabilize
rates, the company will continue to act like a bank for its customers
by financing the under collected amount, to the best of its ability.
The proposed rate stabilization plan will very gradually begin to
pay off these uncollected costs. The portion of the new rate that
goes toward paying for the summer's high prices amounts to less
than 20 percent of the total increases.
The company will also postpone
receiving most of its share of profits from its generation facilities,
and allow those funds to go toward easing the burden on customers
for the first two years of the plan, until electric prices come
back in line.
Under state law and CPUC
regulations, the company is required to file end-of-rate-freeze
tariffs with the CPUC once it collected its stranded costs, which
occurred as early as August 2000, if not sooner. With this rate
stabilization plan, the company is asking the CPUC to shield its
customers, and California's economy, from the full damage of the
high wholesale price of electricity.
Pacific Gas and Electric
Company is working with regulators, policy makers, and its customers
to develop solutions to the current wholesale energy crisis. The
company has offered the following solutions to address the critical
energy crisis facing the state:
to identify any that could accommodate small generation plants
that could be used in times of very high demand.
Advocating for successful
legislation that will allow the state to cut through bureaucratic
red tape and site power plants more quickly, as long as they
meet all environmental and local permitting requirements.
Spending more than $125
million in 2001 on programs that emphasize the peak reduction
benefits of energy efficiency.
In addition to new energy
efficiency programs and services to both residential and business
customers, the company has also made changes to several programs
to capture more megawatt savings during times of peak energy
Repair the broken wholesale
Asking the Federal Energy
Regulatory Commission to provide regulatory relief from the
unjust and unreasonable power prices charged by independent
power generators, including price caps, as well as refunds of
Asking the California
Independent System Operator (CAISO) to adopt price caps and
market restructuring mechanisms to try to repair - at least
on a temporary basis - the broken wholesale power markets in
Supporting a successful
legislative measure that asks the CPUC to investigate high prices
and find equitable solutions to the crisis.
Fight for fair, reasonable
rates for our customers
Using the limited authority
granted by the California Public Utilities Commission to "hedge"
against higher prices.
Locking in the lowest
prices available for future electricity needs through the use
of bilateral contracts with power generators.