The California Public Utilities Commission blew it. The commission has ruled that irrigation district electricity customers living in parts of Riverbank, Escalon, Oakdale, Ripon and Merced County must pay a monthly fee to PG&E stemming from charges incurred during the 2000-2001 energy crisis. As part of its justification for those fees, the commission has relied on Assembly Bill 1x, written in 2001, which authorizes the state to "recover costs incurred in connection with electric power purchases, transmission scheduling and other related expenses."
So who says the CPUC blew it?
The man who wrote the law -- Fred Keeley.
"As the author of AB1x, it was never my intent that a ratepayer who was not going to receive their electricity from PG&E, who didn't receive their electricity from PG&E, who doesn't and won't in the future get their electricity from PG&E ... should ever pay anything to PG&E," said Keeley.
Keeley is now the treasurer-tax collector of Santa Cruz County. But in 2001, he was California's Legislator of the Year after serving as the Assembly's speaker pro tem -- essentially, the body's top policy-maker. He has since frequently lectured at Stanford, UC Berkeley, USC, UC Santa Cruz and elsewhere. This guy knows his stuff.
And he knew exactly what he was doing with AB1x, which authorized the state to sell bonds to raise money to pay outrageously inflated prices for electricity in a market fixed by Enron. AB1x kept the power flowing and saved the state from economic catastrophe. The people who benefitted from those bonds would be asked to cover its costs.
But Keeley never intended it to provide a loophole through which PG&E could later bill people who never used its services.
"If their provider has always been understood to be an irrigation district, they should be exempt from any charges from PG&E," said Keeley. "We did the right thing in regards to AB1x in general. ... (But) to have this as one of the consequences was certainly not my legislative intent."
Having Keeley available to answer questions of "intent" is like having a Founding Father around to answer questions on constitutional law. But instead of asking him, the appointed commissioners established their own rules -- requiring about 8,000 homes and businesses in three counties to pay a minimum of $9 a month. Most of that will go back to the state to pay off the bonds that kept PG&E and other investor-owned utilities afloat during the crisis.
Another big part of PG&E's justification for requesting the fees was that it had been planning to serve those customers for years, even decades, before the homes were built. Never mind that PG&E was notified well in advance that it would never need to serve these customers; the CPUC agreed with PG&E that it was owed "departing load" fees totaling more than $2.7 million over three years.
While PG&E got to make its case before the CPUC, the folks who were being asked to pay weren't invited to any meetings. When the bills arrived, most were outraged. After all, they never bought PG&E's power, never agreed to buy PG&E's power, and never wanted to buy PG&E's power. In fact, not having to buy PG&E's more expensive electricity was considered a bonus for them.
The CPUC won't reconsider its faulty ruling. So the people of Ripon, Riverbank, Oakdale, Escalon and Merced County are asking the Legislature to fix the problem. Last week, three of them met with Sen. Jeff Denham, Assemblywoman Cathleen Galgiani, and various company and CPUC reps.
The legislators demanded a better resolution -- though no one had any suggestions. In the meantime, PG&E promised that no action would be taken against those who refused to pay -- at least not yet.
In trying to shift the cost onto people who didn't benefit from it, the Public Utilities Commission blew it. Perhaps we need the wisdom of a Fred Keeley to figure this out. He's not hard to find.