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.
AND ELECTRIC COMPANY FILES BREACH OF CONTRACT CLAIM AGAINST THE
STATE OF CALIFORNIA
SAN FRANCISCO - Pacific
Gas and Electric Company today filed a claim with the State Victim
Compensation and Government Claims Board for damages resulting from
the State of California breaching its contractual obligations under
AB 1890 by not allowing the utility to sell its retained generation
in the market under federal jurisdiction. In the claim, PG&E notes
that the State's actions denied the company certain rights that
have a value of not less than $4.1 billion.
Under AB 1890, which was
enacted into law in 1996, California's utility companies sold off
a majority of their generating facilities, turned operating control
of their transmission system over to the California Independent
System Operator, opened their transmission and distribution lines
to competition from third party providers, and agreed to limit their
recovery of stranded investment costs.
In exchange for the utilities'
actions, AB 1890 required that their remaining generation assets
be market valued by December 31, 2001, allowing the utilities to
credit that amount to their stranded costs and sell the power from
their facilities under federal regulation.
One year ago today, on January
17, 2001, the state Legislature passed AB X6, which nullified the
provision of AB 1890 requiring that the output of the utilities'
generating facilities become federally regulated.
This legislation broke the
State's agreement with PG&E established in AB 1890 by denying the
utility's ability to sell the power from its generating facilities
at rates determined by the Federal Energy Regulatory Commission.
"PG&E has worked diligently
to uphold its end of the regulatory agreement, but the State violated
that agreement when it changed the rules late in the game," said
Roger J. Peters, senior vice president and general counsel for Pacific
Gas and Electric Company. "By ignoring and altering the principles
of AB 1890 after the fact, the State breached its obligations and
prevented the company from recovering billions of dollars of value
from the generating facilities.
"PG&E has followed the rules
established under AB 1890 including, selling a majority of its power
plants and opening its system to use and competition by others.
By passing AB X6, the State failed to uphold its end of the bargain
when it prevented the company from selling the power from its generating
facilities under FERC regulation as required by AB 1890."
The State Victim Compensation
and Government Claims Board has 45 days to review and act on the