DEBRIS.COMgood for a laugh, or possibly an aneurysm

Local power utility PG&E declared bankruptcy in April, 2001. Now they’ve managed to get a plan approved that sticks ratepayers with over $7 billion dollars in debt. In other words, in addition to paying for (expensive) electric power, everybody in the state will also be making payments towards this enormous suckhole of missing money.

$7 billion divided by the 14 million people in utility’s service area equals $500 per person… if it would be paid off right away. Presumably there will be interest charges because they’ll spread that payback out over nine years.

PG&E doesn’t have 14 million customers, though. Some of those people are spouses and children. So that $7 billion will be divided by just 4.8 million families. Assuming a 5% interest rate over nine years, the per-ratepayer cost is $1800.

PG&E had to come up with a palatable way to sell this ridiculous expense — basically an incompetence charge — without causing uproar. They did: they’re lowering rates.

Err, what? How will a 4.1% rate decrease allow PG&E to pay off $7 billion in debt? It makes no sense, and in my opinion the Chron’s reporters have dropped the ball. That $1800 per customer has to come from somewhere… fees or surcharges, maybe. I think the 4.1% rate reduction was just a distraction, some financial smoke and mirrors to reassure the populace. “Don’t think about the $1800 you owe me. Look over here, rates are going down. It will all be OK.”

Speaking of corruption at PG&E, I am appalled that the utility paid its executives $83 million in retention bonuses over the past three years, an apparent reward for, what, driving the company into bankruptcy?

This is the new math: to make money, lower your fees. To punish employees for doing a crappy job, pay them huge bonuses. This is business as usual for PG&E. Is it any wonder they’re $7 billion in debt?