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.
HYDROELECTRIC POWER TO HELP STABILIZE ENERGY PRICES
As state swelters through
long hot summers, cheap hydroelectric power will ensure consumers
pay less for electricity
(San Francisco, CA)- Citing
broad support from a coalition representing consumer advocates,
business, labor, agriculture and water interests, Pacific Gas and
Electric Company jointly filed an agreement with the California
Public Utilities Commission (CPUC) today to commit the utility's
hydroelectric generating plants to the effort to help provide needed
stability in California's fragile electricity market.
If approved by the CPUC,
this settlement agreement creates a compact between customer groups
and Pacific Gas and Electric Company that would enhance the economic
and environmental benefits of the hydroelectric system for the public.
The agreement would supersede current plans for auctioning the hydroelectric
plants to third parties which were filed late last year. The agreement
calls for PG&E Corporation to retain the hydroelectric generation
system within a California-based affiliate. The other signatories
to the agreement include The Utility Reform Network (TURN), the
Coalition of California Utility Employees (CUE), Agricultural Energy
Consumers Association (AECA), California Retailers Association,
Sonoma County Water Agency, and Tuolumne Utility District.
"Parties came together to
develop this proposal that will moderate prices, and combined with
the strong leadership steps taken by Governor Davis last week, will
help ensure consumers are protected from the volatility of the market."
said Gordon Smith, President and CEO of Pacific Gas and Electric
Company. "We are gratified to have the support of large and small
consumer groups for this settlement."
The power produced by these
hydroelectric facilities will now be committed to the market during
the periods when the market needs it the most, thereby reducing
price volatility caused by supply shortages. Additionally, the agreement
returns 90 percent of any profits from hydroelectric operations
to customers. This sharing of revenues will act as a natural "hedge"
for customers against rising energy prices since, as market prices
increase, so will payments back to customers under the agreement.
"A key component of the
settlement is a proposed agreement with the California Independent
System Operator (CAISO) that assures that power from the hydroelectric
assets will not be bid into the energy market in a way that can
raise power prices." said Nettie Hoge, executive director of TURN,
and strong supporter of the proposal.
The agreement's key components:
Provides a revenue-sharing
mechanism that returns 90 percent of profits from the hydroelectric
operations to customers
Establishes a market
value of $2.8 billion for the hydroelectric system that can
be used immediately to pay down ratepayer cost obligations
Commits PG&E Corporation
to establish a $70 million fund to enhance environmental quality,
water quality, and recreational opportunities
Commits PG&E Corporation
to donate or protect through conservation easements approximately
140,000 acres of watershed lands for public use
Honors all existing
water agreements with downstream users
uses of the water
Ensures the facilities
will continue to be operated by a highly qualified union workforce
"This settlement benefits
both California consumers and PG&E's employees," said Jack McNally,
Business Manager of IBEW 1245. "Consumers will be assured that hydroelectric
plants will continue to be operated by the same dedicated employees,
will continue to provide low cost reliable energy to California
consumers, and will continue to be owned by a California company.
IBEW 1245 represents the union members who operate and maintain
the hydroelectric system.
"This agreement represents
a fair valuation of the hydroelectric system," said Michael Boccadoro,
director, Agricultural Energy Consumers Association, "this agreement
also protects the long-standing beneficial relationship between
the hydro operations and the agricultural users in the state."
The settlement agreement
filed at the CPUC will be subject to public hearings and review
under the California Environmental Quality Act (CEQA). Interested
parties will be able to provide comment prior to any CPUC decision.
Also, the hydroelectric system transfer requires approval from the
Federal Energy Regulatory Commission (FERC).
"The CEQA review process
itself will ensure that there are no significant environmental impacts
as a result of this transfer," said Gordon Smith. "In addition,
keeping the hydroelectric facilities and associated watershed lands
together protects the public interest in these assets."
The system includes 174
dams, 68 powerhouses, 360 miles of canals, tunnels, and flumes,
and approximately 140,000 acres of watershed land. The hydroelectric
system has a capacity of 3,896 megawatts, and provides a clean,
renewable, low-cost source of electricity particularly during periods
of high demand. The system currently delivers about 5 percent of
California's yearly electricity needs, and up to 10% of the State's
electricity demand during hot, summer days.
"We have enjoyed a positive
working relationship with the folks at PG&E for many years," said
Tim McCullough, manager of the Tuolumne Utilities District. "This
agreement ensures the water resource will continue to be managed
in a way that protects the interests of Tuolumne County residents."
This agreement differs substantially
from the transfer contemplated through legislation at the end of
August last year. The 1999 Legislative proposal did not include
the price stabilizing revenue sharing mechanism. Although the 1999
legislative package ultimately failed to achieve consensus because
of the immense complexities of balancing interests through legislative
compromise, this year's regulatory filing fulfills the directives
of the 1996 restructuring legislation and provides the kind of public
and state environmental review that will forge consensus.
PG&E Corporation, with 1999
operating revenues of almost $21 billion and operations in 21 states,
markets energy services and products throughout North America through
its National Energy Group. PG&E Corporation's businesses also include
Pacific Gas and Electric Company, the Northern and Central California
utility that deliver natural gas and electricity to one in every