California Utility Denies Wrongdoing

Troubled California utility Pacific Gas & Electric Co. denies any wrongdoing in transferring cash to its parent company prior to November 2000. The utility, which issued a brief statement in response to an audit report released by the California Public Utilities Commission, has been getting heat from consumers, politicians and press for transferring about $4 billion from Pacific Gas & Electric to its parent corporation, PG&E Corp.

Pacific Gas & Electric says that the transfer was consistent with California Public Utilities Commission directives. “PG&E shareholders invested their money to build the utility’s power plants, and, under California law, when those plants were sold under deregulation, shareholders were entitled to recover their investments,” the company says in its statement.

Pacific Gas & Electric says that its power purchases were made in accordance with commission requirements. As a result of those purchases, Pacific Gas & Electric has been unable to collect $6.7 billion as of Dec. 31, 2000.

The utility also says that the report’s suggestion that the company’s current financial situation could have been avoided through the use of affiliate earnings and greater cash conservation efforts are untrue.

“Even if the $117 million of NEG earnings that the report attributes to California were used to purchase power and the utility implemented the Draconian cash conservation measure…the total savings would amount to less than one month’s worth of power at current prices,” the report says.