PG&E Corp. accused of gouging in East

Boston company wants federal energy regulators to intervene

David Lazarus, Chronicle Staff Writer

Thursday, May 17, 2001, ©2001 San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/17/MN235086.DTL&type=news

San Francisco -- San Francisco's PG&E Corp., which complains about being gouged by out-of- state power generators, is itself gouging consumers in the Boston area, Massachusetts' largest investor-owned utility has charged.

Nstar, owner of Boston Edison Co. and Cambridge Electric Co., asked federal regulators this week to prevent PG&E Corp. and Sithe Energies Inc. from increasing electricity prices during power shortages.

"With two local companies controlling almost 90 percent of supply, they have the ability to corner the market and dictate excessive prices that we and our customers believe are unjust and unreasonable," said Paul Vaitkus, Nstar's vice president of energy supply.

Peter Meier, associate general counsel for PG&E Corp.'s National Energy Group, denied yesterday that his company's plants have overcharged Boston consumers. "We're not exercising market power," he said. "We charge rates that bring us a fair and reasonable return."

PG&E Corp. owns 21 power plants in the New England area, mostly hydroelectric facilities. Sithe Energies, based in New York, holds stakes in 27 North American plants, primarily in New York and Massachusetts.

Nstar's Vaitkus said power prices routinely soar whenever regional transmission lines become overburdened and local utilities are forced to buy power from PG&E Corp.'s and Sithe's generating facilities.

'CONGESTION CHARGES'

He said Boston area consumers were forced to pay about $70 million in "transmission congestion charges" last year, and he called upon the Federal Energy Regulatory Commission to limit PG&E Corp.'s and Sithe's prices to "out of pocket expenses."

"We are asking FERC to do what they have recently done in California and prevent generators from charging excessive prices to energy companies and their customers when the market is not workably competitive," Vaitkus said. In fact, the regulatory commission has provided only limited relief to California and has steadfastly refused to place a limits on runaway wholesale power rates, which drove PG&E Corp.'s utility subsidiary, Pacific Gas and Electric Co., into bankruptcy.

PG&E Corp.'s Meier said there is no reason for the regulatory commission to act against his company in New England. "We don't increase our prices above fair return during periods of congestion," he said.

PG&E CORP. AND POLLUTION

But Lori Ehrlich, a Boston environmental activist, countered that it is impossible for Massachusetts residents to take PG&E Corp. at its word. "They've polluted our local environment, lied to us and played every trick in the book," she said. "There is arrogance at the heart of this company."

Emissions from two of PG&E Corp.'s coal-fired plants were linked by the Harvard School of Public Health last year to illnesses and premature deaths in the region. Ehrlich's organization, HealthLink, began a statewide campaign in Massachusetts yesterday to educate citizens about toxic emissions from coal- fired power plants. "Eighty dump trucks of coal waste per day are currently carted away from PG&E Corp.'s two coal-burning power plants in Salem and Somerset," she said.

In Nstar's case, the company asked federal authorities to order PG&E Corp. and Sithe to refund customers for past overcharges and to limit what the two companies can charge during shortages. "We have an obligation to our customers to monitor the market and bring to the attention of regulators market inefficiencies and imperfections," Vaitkus said.

E-mail David Lazarus at dlazarus@sfchronicle.com.

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-- Swissrose (cellier3@mindspring.com), May 17, 2001