April 11, 2002

Media Contact: PUC Press Office - 415.703.1366 - news@cpuc.ca.gov

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."

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