[California] PUC RESPONDS TO LAWSUIT BY FTCR

The California Public Utilities Commission (PUC) today issued this response by its General Counsel, Gary Cohen, to the Petition for Writ of Mandamus filed today with the California Supreme Court by The Foundation for Taxpayer and Consumer Rights:

"The Foundation's petition for writ of mandamus lacks merit and I am confident it will be denied. First, the Foundation's argument that the PUC's settlement with Southern California Edison violated state law is wrong. When the legislature adopted AB 1X and AB 6X during the energy crisis, it returned the utilities to cost of service regulation, thus requiring the Commission to adopt rates that enable the utilities to recover their costs of generation. It is both ironic and sad that a group purportedly representing California consumers - the people most harmed by California's disastrous deregulation experiment - are now defending AB 1890, now that the state has abandoned it and is trying to find solutions to the crisis it made possible.

The California Public Utilities Commission has been clear that its goals are to restore the utilities to financial health, enable them to resume purchasing power for their customers, and get the State out of the power procurement business by the end of 2002, as is required by AB 1 X. The Commission's settlement with Edison, and its bankruptcy plan for PG&E, which will be filed on April 15, accomplishes those goals while sharing the pain among utility shareholders and ratepayers. Someone has to decide who will pay the price for the deregulation fiasco; no one else, including the Foundation, has come forward with a viable plan to accomplish those goals.

Fortunately, it is extremely unlikely that the Foundation's lawsuit will succeed, because the California Supreme Court rarely grants such extraordinary relief. If the Foundation's lawsuit were to succeed, the inevitable result would be that PG&E's deregulation plan would be approved. The result would be greatly higher costs to consumers, because PG&E would become a merchant generator and trader just like Enron, Williams, Duke and Dynegy, who last year charged Californians more than $3,000/MWh for power that costs 1/100 of that to produce. In addition, PG&E's plan creates the risk of significant environmental harm, as has been pointed out by every environmental group that has commented on it. It is hard to understand why the Foundation wants to help PG&E carry out its plan, given all the terrible consequences it would have.

Finally, the Foundation complains that the PUC has developed its litigation strategy in closed session, as state law allows. In fact, the rate increases adopted by the Commission last year were the result of open hearings at which all parties had the opportunity to be heard. There is nothing in the settlement with Edison, and there will be nothing in the plan of reorganization for PG&E, that causes rates to increase. In order to give interested parties the opportunity to comment, the Commission will have on its agenda for its April 22 meeting an item to open a proceeding to consider the rate impacts of its plan of reorganization for PG&E, as it planned to do before this suit was filed."

Foundation for Taxpayer and Consumer Rights

FTCR Sues CPUC in California Supreme Court

Asks High Court to Block Secret Proceedings, Illegal Rate Increases to Pay for Utility Bailouts

San Francisco, Ca. -- Calling the state Public Utilities Commission (PUC) an "agency out-of-control," a California citizen group today sued the PUC in the California Supreme Court. The extraordinary suit, brought on behalf of the state's taxpayers and ratepayers, asks the high court to order the members and the staff of the PUC to obey the state constitution and laws which prohibit rate increases to pay off utilities' deregulation debts and require the agency to conduct public hearings on rate increases.

Read the petition [in .pdf].

The suit -- filed directly before the state Supreme Court because of the urgent and profound nature of the PUC's violation of state laws -- was brought by The Foundation for Taxpayer and Consumer Rights, which has fought to protect the public against the deregulation debacle, the ensuing energy crisis and the proposed bailouts of Edison and PG&E in the Legislature.

At issue are rate increases that will cost residential and business ratepayers of PG&E and Edison an average of $1,150. The suit comes as the PUC prepares to order utility consumers to pay as much as $6.6 billion in excessive electricity rates to pay off Pacific Gas & Electric's (PG&E) self-inflicted losses from deregulation. Just six months ago, the PUC entered into a similar $3.3 billion bailout deal with Southern California Edison, which has been appealed to the 9th Circuit.

The FTCR lawsuit points out that California law -- both the deregulation law which was written by Edison and PG&E and laws passed last year at the height of the energy crisis -- specifically forbid ratepayers from being forced to bear the utilities' deregulation losses. The California Constitution forbids the PUC from unilaterally nullifying state laws. The PUC's actions, taken in secret, also violate state laws requiring public notice and public hearings before rates may be increased.

"What we have here is a renegade state agency, its appointed members and staff acting in secret, deliberately violating the California Constitution and state laws which protect consumers and taxpayers against unfair and illegal rate increases and which require due process," said Harvey Rosenfield, president of the organization. "The PUC is out-of-control and must be forced to obey the law."

"Tens of billions of dollars of taxpayers' and ratepayers' money is at stake here as a result of the complicated maneuverings of the PUC, but the legal issue is simple: does a state agency have to obey the state constitution and state law? The answer is that under our form of government, the Legislature makes the laws, and the Executive Branch -- of which the PUC is a part -- must obey and enforce those laws."

Summary of PUC Actions Challenged by Suit

Bailouts Violate Deregulation Law. California's 1996 deregulation law -- drafted by the utilities -- required ratepayers to pay over $20 billion in surcharges through March, 2002 to pay off the utilities' pre-1996 debts. In exchange, it put a freeze on rates and specifically stated that ratepayers would not be responsible for covering any losses by the utilities during that period. Prior PUC decisions had enforced these rules. But when the Legislature refused to pass Gov. Davis's Edison bailout legislation, the PUC approved the Edison bailout in violation of the law, and the PUC is preparing a similar bailout for PG&E.
Evading State Law Through Deals in Federal Court is Illegal. Article III, Sec. 3.5 of the California Constitution forbids state agencies from agreeing to a settlement in federal courts that violates California law. That is precisely what the PUC did in Edison, and is in the process of arranging for PG&E.
Secret Deals Violate California's Public Process Laws. Public Utilities code §454 requires public notice and public hearings on rate increases. The PUC agreed to inappropriately maintain massive rate increases in secret sessions, without notifying the public and without holding hearings in which those who will pay for the bailout may participate. Evading this required process also prevented the public from appealing the PUC's unlawful actions to the state court system.

The lawsuit asks the Supreme Court to issue a writ of mandate declaring that the PUC lacks the authority to agree not to enforce state laws; declaring that the PUC cannot spend taxpayer money to propose or agree to a PG&E bankruptcy plan that violates state laws; and prohibiting the PUC from violating due process requirements applicable to electricity rate increases.

I've got a copy of Uncle Remus packed away here somewhere. It's written in ebonics, as you know, which became very popular in California a few years back.

"Name er goodness! w'at kinder pass dish yer we comin' ter w'en a great big grow'd up young un axin' bout Brer Rabbit? Bless yo' soul, honey! dey wa'n't no chune gwine dat Brer Rabbit can't pat. Let 'lone dat, w'en dey wuz some un else fer ter do de pattin'. Brer Rabbit kin jump out inter de middle er de flo' en des nat'ally shake de eyel'ds off'en dem yuther creeturs. En 't wa'n't none er dish yer bowin' en scrapin', en slippin' en slidin', en han's all 'roun', w'at folks does deze days. Hit uz dish yer up en down kinder dancin', whar dey des lips up in de a'r fer ter cut de pidjin-wing, en lights on de flo' right in de middle er de double-shuffle. _Shoo!_ Dey ain't no dancin' deze days; folks' shoes too tight, en dey ain't got dat limbersomness in de hips w'at dey uster is. Dat dey ain't."

Ya know, that language is very similar to the one that you, the Waspman and Angelique post in sometimes...

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