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You may soon pay for PG&E’s negligence

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POSTED September 11, 2009 2:56 a.m.
PG&E is about to make you pay for their negligence.

The San Francisco-based for-profit utility along with their partners in crime at Southern California Edison Company, Southern California Gas Company, and San Diego Gas and Electric Company now want ratepayers to pay for their wrongdoing.

PG&E has an application pending that requests authority from the California Public Utilities Commission to recover uninsured costs associated with wildfires.

PG&E wants the CPUC to create a wildfire expense balancing account to allow it full recovery for all costs of third party claims resulting by wildfires that would have been covered by insurance as well as all costs that would not have been incurred if insurance was available.

What that means is PG&E doesn’t want to tap into its government guaranteed 11.35 percent profit margin regardless of how bad they run the company but instead hit you the ratepayer for costs that including:

•payments to satisfy wildlife claims including any deductibles, co-insurance, and other expenses paid for by utilities.

•outside legal costs incurred in the defense of wildfire claims.

•premium costs they don’t already collect in rate structures.

All of this is included in an Aug. 31 filing to the CPUC.

PG&E routinely ignores rules that require them to clear brush and trees from beneath their transmission lines that have been known on more than one occasion to cause costly wildfires. Instead of keeping appropriate staffing, they eliminated positions to keep their profits up.

PG&E had been given a rate increase in 1987 for tree trimming. Then, in the early 1990s, PG&E started preparing for deregulation by shedding costs including loyal workers who for years kept tree and shrub growth cleared from power transmission line corridors. PG&E essentially pocketed the money from the 1987 rate increase.

A government lawsuit led to an $8 million settlement after a 1990 wildfire. That was followed by a $2 million fine for a 1994 wildfire.

PG&E now – instead of cutting into precious bonuses for its top executives and providing them with a corporate jet – wants to make sure their exposure to their own negligence is covered by ratepayers.

For those who still think PG&E is just a poor, little mom & pop operation being picked on by the South San Joaquin Irrigation District, consider how they escape paying taxes on expensive gifts.

PG&E requires developers to put in all electrical services underground and pay for them and then turn them over at no charge to PG&E so they can run electricity through them and make a profit. It seems reasonable. If developers want to build homes so they can make money, they should put in the entire infrastructure even if it is for a quasi-public agency like PG&E.

PG&E, though, gets an additional bonus that you and I can’t get. They convinced the CPUC to allow them to charge those developers who give them underground systems in order for PG&E to run their business and make money an additional payment of 34 percent to cover PG&E’s taxes on those improvements.

That means a developer spends $100,000 on improvements that they turn over to PG&E for free and then they have to cut them a check for $34,000.

You got it. PG&E doesn’t pay a cent in taxes on those improvements. It gets worse. If the developer overpays the tax payment to PG&E and it isn’t collected by the government, PG&E gets to keep the excess money.

Those underground improvements, by the way, are the same ones that PG&E government relations representative Emily Barnett essentially says South San Joaquin Irrigation District must pay replacement value for if they ever get to the point of taking over the Manteca, Ripon, and Escalon retail distribution system in their bid to lower power costs 15 percent across the board.

Developers spend $100,000 to put the improvements in and then pay $34,000 to PG&E to cover the utility’s tax liability. If they overpay, PG&E pockets the change. And if SSJID prevails, PG&E wants SSJID to pay them full replacement value for the improvements they never paid for in the first place but used for years to squeeze ratepayers for more and more money. All of these costs, by the way, are passed on to you as a homeowner or a ratepayer leaving PG&E free to maximize its government guaranteed profit of 11.35 percent regardless of the economy.

And you thought Guido had a racket going.
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