Why PG&E Is Willing To Offer Special 35% Off Electric Rate To Counties With High Unemployment

Posted on April 16th, 2012 by

Jonathan Marshall, a spokesperon for PG&E, discusses his company’s efforts to get approved a special economic development electricity rate that would offer California counties who are suffering from high unemployment lower energy bills.

Full transcript:

Ben Lack: PG&E is currently applying for a special economic development rate with the California Public Utility Commission. What is the genesis for applying for the special rate?
Jonathan Marshall: At a high level, it reflects the fact that the state of California for several years now has suffered disproportionately from the nation’s economic recession. We have a very high unemployment rate of just over 11%.  Many of our counties have much higher unemployment than that. They’re really in a state that you could almost call depressed.PG&E has been a member of these communities for, in many cases, over a hundred years. The health of the communities that we serve in Northern and Central California is really intimately bound up, not only with our business, but with our 20,000 employees. The power that we provide to people in Northern and Central California is integral to their community just as those communities are essentially the customer base for our business.We were looking for an opportunity to help do what we could to jump start a recovery throughout our service area and above all, in these really heavily impacted counties, of which Fresno is one, but certainly not the only one in our service area.
Ben Lack: Give us a little bit of information on PG&E’s operating footprint.
Jonathan Marshall: We operate and we serve natural gas and electricity, we’re a combined utility, operating in a 70,000 square mile footprint of Northern and Central California. Our service territory extends from Humboldt County down to Kern County with some occasional pockets served by other utilities. That gives you a sense of the magnitude of the area we serve. Included in that is much of the Central Valley. But, it’s a very diverse area geographically including major parts of the Sierra, coastal areas, northern forests down to the Central Valley.
Ben Lack: The economic development rate that PG&E is applying for, talk us through why this rate is necessary to tackle the problem of major unemployment.
Jonathan Marshall: We know that for a number of industries, the cost of power is a very important factor in their overall cost of doing business. One of our goals for all of our customers is to make our service as affordable as we can within the limits of the resources we have available. We do this in a variety of ways through competitive purchasing of power, through very aggressive energy efficiency programs designed to help reduce customer bills. This program was targeted at larger businesses; those with loads over two hundred kilowatts which might be for example a small or large manufacturing facility or others. Because of the cost of power, businesses are considering leaving the state together or expanding their business outside of the state.

We thought that if we could keep those jobs and that business back into the state to keep it where it is, to help it grow where it is, in the state, in our service area, it could be a win for the communities and preserve our broader customer base. By keeping more customers in our service area, they spread the cost, and help us as a utility by keeping our customers here in California.This is a time limited proposal. It would provide rate reductions for this special class of businesses that would otherwise be leaving in effect. It provides this discount for a total of five years as I’ve mentioned. The base discount that applies would be 12%. In counties that have high unemployment rate, at least a 125% of the state’s average, in those counties we would offer a much bigger rate reduction of 35%. And again, the hope is that it would keep businesses here and help them grow. And thus, help sustain the community’s reserve and make them prosper.

Ben Lack: What’s the process for getting something like this approved. What does PG&E have to do in order to make this a reality because you are regulated?
Jonathan Marshall: We are one of the state’s investor owned utilities, one of three. We are regulated by the California Public Utilities Commission. Any change in rates must be approved by the Commission which has its own staff of experts, its own voting Commission Members and it allows and even encourages third parties to intervene in cases and provide informed opinion to help the Commission make up its mind on the merits of every proposal.This is a very structured process and one that can take some time. We are hoping to get a ruling on our proposal roughly a year from when we filed it which is in early March. So we would hope that sometime in early next year to get a ruling from the commission and hopefully allow us to go forward with this proposal.
Ben Lack: Is there anything you could do in the meantime while you wait on the ruling?
Jonathan Marshall: We will be answering questions, responding to comments and criticisms if any is mounted against this proposal. We will be going through the process of informing the commission, responding to interveners and so forth to try to convince the commission that this is good for all of our customers and good for the communities we serve.
Ben Lack: There will be some naysayers who will say that something like this shouldn’t happen. What do you say to them?
Jonathan Marshall: I think in this case, it really should be a win-win. I would hope that groups that pay close scrutiny to PG&E would realize that this would be helpful to customers, to workers in the state, to communities, to the tax base that cities and counties depend on to provide public services. There are a lot of important interests at stake who I think stand a benefit from this.
Ben Lack: Let’s say that the rate gets approved by the Commission, what are the steps that PG&E will take to make sure that business that do work in counties that are applicable to this new development rate can actually take advantage of it? What does that number would look like at the end of the day?
Jonathan Marshall: I don’t have a detailed blueprint. But, we do have dedicated teams of people who reach out to customer accounts, in this case business customers. It’s a limited number. We would be reaching out to customers who are potentially eligible for this. Bear in mind that this would be a small subset of our customers. There are quite a few customers in this size class who have no intention of leaving the state. Some who really aren’t even in a position if they wanted to. They may be a local service business or rely on local raw materials. They just can’t up and leave. So many businesses would not really qualify to this. Some may be healthy and not need this. But I’m sure that our dedicated customer representatives will be seeking out those who might be in a position to use it.

I know that the City of Fresno has been very actively involved in discussions with us and certainly active in championing this. They’re very creative and involved in trying to support economic development, not only locally, but share the benefits of their thinking more broadly throughout the state which I think really is a forward-looking attitude.

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