PG&E granted cash reward, green light on power plant

Pub date December 17, 2010
WriterRebecca Bowe
SectionPolitics Blog

While news surrounding Pacific Gas & Electric Co. has been dominated by a faulty weld and early warnings on the the San Bruno gas pipeline, which ruptured in a fatal explosion Sept. 9, the giant utility company received some good news at the Dec. 16 California Public Utilities Commission (CPUC) meeting.

Not only was PG&E awarded an additional $29 million cash reward for its performance in an energy efficiency program, bringing the total amount it’s received to $104 million, but it was granted commission approval to construct a new, $1.5 billion power plant in Oakley.

Ironically, the energy-efficiency program is designed to reduce the need to construct new power plants, which contribute to greenhouse gas emissions that are blamed for climate change.

The additional bonus was approved with a 3-2 vote on the “final true-up” of the energy-saving program. An independent CPUC evaluation of the utility’s performance in that program found that it fell short of the targets required to receive a cash bonus.

Commission President Michael Peevey justified the additional cash reward by saying utilities could not have known that the numbers they used to estimate energy savings were inflated, and that they would not have been able to adjust their energy-saving tactics in the middle of the program cycle to improve performance.

According to the Division of Ratepayer Advocates (DRA), a consumer-advocacy branch of the regulatory agency, “The CPUC today approved the additional $29.1 million award to PG&E in a 3-2 split vote, despite an Administrative Law Judge’s finding that no further bonuses should be awarded, nor penalties levied. Rather than receiving an additional $29 million bonus, PG&E should repay $74.9 million in bonuses already awarded for energy efficiency programs that failed to meet CPUC-established energy savings goals, and it should pay an additional $1.3 million in penalties, based on the original incentive mechanism.”

Barbara George, executive director of Women’s Energy Matters, blasted the decision. “In this shaky economy, it’s incredible that the Commission would force ratepayers to pay profits for utilities that missed their targets by a mile. This hurts everyone in California. Cities, businesses, and residential ratepayers will all have to pay twice for utilities’ failures — once for these undeserved ‘rewards,’ and again in high monthly utility bills that should have been reduced by these programs, but were not.”

The 4-1 vote to approve PG&E’s Oakley power plant was a reversal of an earlier commission decision rejecting the proposal. DRA weighed in on this item, too, saying data on PG&E power reserves suggests that the new facility is unnecessary.

“PG&E ratepayers are now on the hook for $1.5 billion in costs for energy they don’t need while being shut out of the decision-making process that will leave all PG&E customers with higher utility bills,” said DRA acting director Joe Como.