23. A WARNING FOR ALL AMERICANS WHO RELY ON MONOPOLY UTILITIES

The 5th “best censored” story of 1978 was titled “Winter Choice: Heat or Eat.” It revealed that there were more than 200 deaths directly linked to the shut-off of gas and electric utility service in the winters of 1975, ^‘76, and ’77.

In December, 1981, a public utility with a monopoly in Northern California arranged a utility rate increase which, if followed by regulatory agencies across the country, could make those figures pale in contrast.

The Pacific Gas & Electric Co. (PG&E), headquartered in San Francisco, was granted a $909 million rate increase by the California Public Utility Commission (PUC).

Almost overnight, the utility bills of PG&E subscribers doubled or even tripled. The resulting protest was extra­ordinary. However the news media told consumers that the rate increase was necessary due to the high cost of fuel which PG&E had to pay.

Plain Speaking, a small tabloid publication in San Francisco, conducted an investigation which revealed otherwise. The pub­lication found that PG&E buys 40% of its natural gas from Canadian companies at twice the price of California gas. Following is how Plain Speaking explained why:

“PG&E buys the gas through Pacific Gas Transmission Co. (PGT), which PG&E controls. PGT in turn gets it from two Canadian companies — Alberta and Southern Gas (which PG&E owns outright) and Alberta Natural Gas (which PGT controls by owning 44.9% of the stock). In other words, PG&E buys this high priced gas from itself, simply moving the money from one part of its operation to another. By buying such quantities of its own Canadian gas at steep prices, PG&E makes it look as though its fuel costs are high, thereby justifying to the PUC its rate increase. ‘Meanwhile, PG&E’s subsidiary, PGT, is making a fortune. Earnings on a common share of PGT stock rose an astounding 97% in the third quarter of.1981, and PGT expects earnings for the last quarter of 1981 to be higher yet. To top it all off, when PG&E goes to the PUC to request a rate increase, it does not report the PGT profits, so that PG&E looks less profitable than it really is. The PUC, of course, lets PG&E get away with it.”

The media’s failure to fully explain the corporate inter­locks which permitted this consumer rip-off and the potential impact on energy bills nationwide qualifies this story for nomination as a “best censored” story of 1981.

SOURCE:

Plain Speaking, 3/1-15/82, “Why Our PG&E Bills are So High.