PG&E pushes to pay for gas before electricity

Published Thursday, Jan. 25, 2001, in the San Jose Mercury News

BY STEVE JOHNSON

Mercury News

Saying its customers are more immediately threatened with natural-gas cutoffs than by the electricity crisis, PG&E is seeking state approval to give its natural gas suppliers priority so the cash-short utility can pay them before paying other companies that sell it power.

The move is essential for customers to continue receiving gas ``pending resolution of the wholesale energy crisis and the related financial Armageddon,'' the utility declared in papers filed Monday with the California Public Utilities Commission.

If approved by the agency, ``we would try to put our gas suppliers at the front of the line to be paid,'' said Pacific Gas & Electric Co. spokeswoman Staci Homrig, so those companies could continue providing gas for heat and other uses.

Because several natural gas suppliers recently refused to sell to PG&E the Bush administration on Tuesday issued an order requiring out-of-state gas companies to continue selling to the utility until 3 a.m. on Feb. 7.

Once that order expires, however, PG&E officials fear that the suppliers will again stop providing gas unless assured that they'll be paid first from whatever cash PG&E has on hand.

It's not clear if electricity suppliers might experience delays in getting paid if gas suppliers get priority, Homrig said. She also wasn't sure what effect such an action would have on how or when the utility pays its employees.

Nonetheless, she said, it makes sense to give gas suppliers first dibs on PG&E's money, since their product fuels many electricity generating plants. If those plants can't get enough gas to continue operating, Homrig said, it is ``just going to make an already bad situation worse.''

Contact Steve Johnson at sjohnson@sjmercury.com or (408) 920-5043.

-- Swissrose (cellier@azstarnet.com), January 25, 2001