Creative Commons/Peat Bakke

Electricity and natural gas customers could provide Pacific Gas & Electric Corp. shareholders with $40 million in new bonuses for energy savings despite a legal ruling that such payments are unwarranted.

Under a program designed to reduce energy use and greenhouse gas emissions, California's investor-owned utilities, including PG&E, receive incentive payments when their customers cut back on energy consumption.

The companies received $143.7 million in ratepayer-funded bonuses under the incentive program for energy savings achieved from 2006 to 2008. Of those bonuses, which are funded by customers' bills, PG&E received $75 million.

The bonus amounts were determined by staff at the California Public Utilities Commission, following a detailed analysis of energy trends.

But the utility companies appealed the payout figures, which they said were based on flawed calculations, and argued that they were entitled to $77.3 million in extra bonuses for the 2006 to 2008 period.

PG&E's share of the additional proposed bonus payments would be $40.3 million.

Administrative Law Judge Thomas Pulsifer ruled last month that the CPUC calculated the bonus amounts correctly. The ruling serves as advice for utilities commissioners.

"The [investor-owned utilities'] 2006-2008 energy savings achievements are sufficient to qualify for retention of previously awarded incentive amounts, but not outstanding enough to qualify for further incentive earnings increases," Pulsifer wrote.

Despite the ruling, Commissioner John Bohn has proposed granting the utility companies the full amount of bonuses that they are seeking.

In a proposal due to be considered Oct. 28 by Bohn and his colleagues, the former banker and petrochemicals trader said that failing to provide the additional bonus payments would "undermine our goal of encouraging utility support" of energy efficiency goals.

"The primary purpose of the incentive mechanism is to spur utility management and investors to support and expand energy efficiency programs and savings by providing a reasonable level of profits related to their efforts," Bohn wrote in the proposal. 

The proposed additional bonus payments are strongly opposed by utility customer groups.

The Utility Reform Network's executive director, Mark Toney, said it will be "outrageous" if PG&E customers were forced to reward the company for ineffective energy-savings programs.

"Energy efficiency has become a gravy train for the utility companies,” Toney said in a statement. “They already collect billions from customers to run these programs, but are not delivering enough bang for customers’ bucks."

PG&E spokeswoman Katie Romans said the company deserves to be rewarded for helping its customers reduce energy consumption.

"While there does remain controversy over how much energy savings can be directly attributed to PG&E's efforts, we're optimistic that the CPUC will reward PG&E's success," Romans said.