AECA Calls Hydroelectric Proposal `Historic Opportunity' for Customers and California's Environment.

Business Editors/Energy & Environmental Writers

SACRAMENTO, Calif.--(BUSINESS WIRE)--Aug. 10, 2000

The Agricultural Energy Consumers Association today reiterated its support for the plan filed yesterday with the California Public Utilities Commission 

that would transfer Pacific Gas and Electric Company's hydroelectric system to a newly created PG&E affiliate.

Michael Boccadoro, AECA director, called the settlement agreement "an historic opportunity to guarantee that these resources are operated in a reliable, environmentally sound manner and to provide electric customers with significant economic benefits."

The cornerstone of the proposal, according to AECA, is the revenue-sharing mechanism that would effectively provide customers with lower electric bills over the 40-year life of the agreement. Under the proposal, PG&E Corporation shareholders -- not utility ratepayers -- would absorb the cost of "purchasing" the system from Pacific Gas and Electric Company. The deal would then allow PG&E to earn a return on its investment in the system, but would ensure that the vast majority of the profits are returned to ratepayers.

"The valuation and revenue sharing agreement is an equitable way to ensure that PG&E gets a fair return on its investment, while customers reap a significant share of future profits," Boccadoro continued. He stressed that California electric customers would not pay for the transfer. "If you are looking for the definition of a `win-win' scenario, it's hard to get any closer than this proposal."

And that goes for California's environment as well. The agreement would provide nearly $70 million in funds dedicated to environmental improvement projects to the hydroelectric system. These projects would be used to boost water quality, habitat improvement, and recreational access associated with projects that go well beyond measures required by regulators.

"It was critical that this agreement strikes the right balance between environmental quality and the interests of California electric customers" said Boccadoro. "This proposal achieves that goal, keeping the system within PG&E and ensuring that further improvements are going to be made well into the future."

AECA also praised the settlement agreement for protecting current water users, including the state's farmers and ranchers, as well as local communities that rely on agreements with PG&E for consumptive water.

"The bottom line is that this proposal is an opportunity for California to take a positive step that benefits consumers, betters our environment, and helps our economy," said Boccadoro. "We urge the state's authorities to embrace it."