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Regulators Broke Law, Suit Claims

SAN FRANCISCO -- A consumer group asked the California Supreme Court on Thursday to declare that state regulators violated the law when they entered into a settlement with Southern California Edison and proposed a reorganization plan for Pacific Gas & Electric Co.

The Foundation for Taxpayer and Consumer Rights of Santa Monica alleged that the Public Utilities Commission is a "renegade state agency"

that is illegally committing ratepayers of the two financially troubled utilities to pay at least $10 billion--or about $1,150 each--in violation of the 1996 deregulation law that froze retail electricity rates.

"The PUC is out of control ... wheeling and dealing in secret," Harvey Rosenfield, president of the group, said at a news conference here. "It has been behaving like Enron."

After secret negotiations, the commission in October settled a federal lawsuit filed by Edison that would permit the utility to collect more than $3 billion from its customers for power purchases during the energy crisis.

The commission now is working on its own plan for the reorganization of PG&E, which filed for Chapter 11 bankruptcy protection from creditors a year ago.

Like the Edison settlement, the PUC plan would cost ratepayers billions of dollars by artificially extending record rate increases approved by the commission last year.

PUC General Counsel Gary Cohen said the commission's actions not only were legal under laws passed during the energy crisis, but also share the pain of the "deregulation fiasco" among utility shareholders and ratepayers.

The foundation's lawsuit asks the Supreme Court to declare the PUC's actions illegal and to force the agency to heed a state constitutional provision that requires state agencies to obey state laws.

The lawsuit does not specifically attempt to prevent the commission from filing its PG&E reorganization plan as scheduled by Monday. But it asks the high court to declare the PUC's plan unlawful, and that could effectively block the agency from sponsoring a reorganization plan, said attorney Michael Strumwasser, who filed the suit. He said the high court could hear the suit, reject it or send it to a state appellate court.

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