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Fraud Claims Against PG&E Headed for Federal Trial

Claims that utility giant Pacific Gas & Electric used fraudulent billing to steal millions of dollars from a competitor must go to trial, a federal judge ruled Monday.

SAN FRANCISCO (CN) — Claims that utility giant Pacific Gas & Electric used fraudulent billing to steal millions of dollars from a competitor must go to trial, a federal judge ruled Monday.

United Energy Trading, a third-party gas provider, sued PG&E in June 2015, claiming the utility behemoth abused its position as a billing and collections agent to deceive UET into canceling accounts of “overdue” customers that had actually paid their bills.

U.S. District Judge Richard Seeborg on Monday dismissed racketeering claims against PG&E, but rejected its argument that it had been absolved of wrongdoing by the California Public Utilities Commission, the state’s utility regulator.

“The CPUC has not conclusively adjudicated whether PG&E’s past and present practices with regard to payment allocation and confidentiality comply with its tariffs,” Seeborg wrote in partly denying and partly granting summary judgment to PG&E, and denying partial summary judgment to UET.

PG&E is required by state law to offer third-party providers such as UET the option of bill consolidation, in which PG&E bills customers for gas from both providers on one bill.

UET says PG&E fails to remit payments or disclose how much money its customers actually paid. It also claims that PG&E tells its customers to ignore UET’s billings and that as a result, hundreds of customers have dumped UET for PG&E.

PG&E argues that confidentiality requirements bar it from disclosing billing information to third-party providers such as UET.

However, the CPUC ruled in 2016 that third-party gas providers have the right to obtain billing information from PG&E. The commission also found then that customer consent forms should be revised to disclose more clearly what information will be shared with third-party gas providers.

Seeborg rejected PG&E’s argument that the state’s directive to revise customer consent forms justifies PG&E’s refusal not to share billing information with UET.

“It is not clear the CPUC reached so far,” Seeborg wrote.

But the judge refused to grant summary judgment to UET on its claims of breach of fiduciary duty and intentional interference with contract.

PG&E cited multiple CPUC decisions that it claims forbid it from sharing account information without clear consent by customers.

“UET may eventually convince a jury PG&E’s reliance on these decisions was misplaced and that its conduct was tortious,” Seeborg wrote. “It has not debunked PG&E’s position so conclusively that it is entitled to summary judgment.”

In dismissing UET’s RICO claims, Seeborg found the company failed to offer concrete evidence that PG&E employees Albert Torres and Bill Chen conspired to defraud the Colorado-based utility.

“UET points to no phone calls between Torres and Chen, no emails sent directly between them, and no in-person meetings,” Seeborg wrote.

PG&E, the second-largest provider of natural gas in California, serves more than 4 million accounts in 70,000 square miles of the Golden State. In 2015, it was slapped with a record $1.6 billion fine for the 2010 San Bruno pipeline explosion that killed eight people and leveled a neighborhood. A federal jury later convicted the company of pipeline safety violations and obstruction of justice related to the explosion.

UET attorney Charles Coleman III, of Holland & Knight in San Francisco, said his client has demanded a jury trial, but he declined further comment.

PG&E did not immediately return a phone call seeking comment Monday afternoon.

Categories: Business Energy

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