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Palo Alto Online

Publication Date: Friday, April 06, 2001

PG&E wants to break contract with utility alliance PG&E wants to break contract with utility alliance (April 06, 2001)

Proposal could cost Palo Alto millions

by Marv Snow

A PG&E request to not honor its contracts with the Western Area Power Association may have a $125-million impact on Palo Alto ratepayers, the Utilities Advisory Committee learned Wednesday night.

Utilities Director John Ulrich told the committee, "PG&E is saying it cannot provide thermal rates as provided in the contract. They say the price should go up to market (rates)."

Ulrich was referring to rates for power generated by steam plants.

Ulrich said he did not know what impact that decision, if it were granted by federal regulators, would have on the city, "but we will become vigorous interveners in the filing" with the federal Energy Regulatory Commission.

"The impact on rates will be very dramatic," Ulrich said. "We estimate it will cost the city of Palo Alto $125 million a year. That will be our share of the $1.5 billion cost to Western (Western Area Power Association)."

The Palo Alto Utilities Department is part of the Western Area Power Association.

Ulrich also reported PG&E wants to increase its transmission rates. If approved, the rate hike could cost the city an additional $1.8 million per year.

"We have to have by April 18 to prepare a protest filing," Ulrich told the committee. "We're putting together our plans now with Western and other customers.

Committee member Richard Carlson asked Ulrich how quickly the increased costs would go into effect.

"As early as May 18," Ulrich said. "The key thing is to put our plans together and have a joint filing."

Ulrich said the city would be better off "going alone" in buying power and gas, but doing so "we would have to abandon our hydro-energy" that comes from Western.

"We do not take this lightly," Ulrich said. <@$p>

E-mail Marv Snow at


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