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PG&E, which last year plunked down more than $13 million on services from women- and minority-owned law firms, may be spending more in coming years. When the utility filed its latest rate-hike request, a local minority advocacy group took the occasion to get the company to commit to an increase in its diversity spending. In the nonbinding document, which company CEO Tom King signed last summer, PG&E pledged to the Berkeley, Calif.-based Greenlining Institute that it will do its best to aspire to higher diversity and philanthropic goals. Those goals could mean more money for the company’s business partners that are owned by ethnic minorities & including law firms. The California Public Utility Commission took note in a recent public hearing, when commissioners unanimously approved PG&E’s request for a $213 million revenue requirement increase in 2007, and a hike of $125 million annually in each of the next three years through 2010. The average consumer will see a 33-cent-per-month increase in gas rates as a result, according to company spokesman Brian Hertzog. PG&E has agreed with the Greenlining Institute to increase spending on suppliers run by ethnic minorities, to diversify its board of directors and to increase its philanthropic giving. The company will attempt in good faith to meet a minority contract goal of 20% by 2010 and a goal of 27% by 2015. Commissioner John Bohn read to the assembled public the highlights of PG&E’s commitments. President Michael Peevey and Commissioner Rachelle Chong also expressed support for the company’s efforts. “These voluntary commitments show PG&E’s leadership on this very important social issue,” Chong said. PG&E spends about $35.7 million on outside counsel, of which $13.4 million goes to minority law firms, including those owned by white women, Hertzog said. That comes out to 37.5% of the legal budget. But the agreement with the Greenlining Institute does not cover businesses owned by women, and it is those law firms that make up the majority of PG&E’s diverse legal spending. Thus, the agreement will benefit only minority-owned law firms and not those owned by white women. The California Public Utility Commission, which has been setting diversity goals and tracking progress for the public utilities and communications sector since the mid-1980s, recently discovered that spending on diverse legal and financial services providers lagged far behind spending on other vendors. The commission has been working with companies to address the issue. New this year, for example, is recognition of money spent on work done by women and minorities employed by majority-owned firms and for work from minority-owned firms that are in the certification process. PG&E will take into consideration achievement of these goals in performance evaluations and compensation for its personnel, and create a technical assistance program slated to launch in 2008 that will focus on minority-owned businesses. It is the first time that a utility has incorporated its diversity goals into its general rate case, said Peter Arth, the president’s chief of staff. Douglas Chan, partner at San Francisco minority-owned firm Chan Doi Leal and outside counsel to PG&E since 2002, said the utility’s move is a reaffirmation of its long-term effort to work closely with minority-owned businesses. Chan’s firm has handled information technology-related contracts and environmental matters for PG&E. “It’s great news, but it’s also a culmination of a consistent course of dealings that PG&E has had with minority- and women-owned businesses since the mid-1990s,” Chan said. The Council of Asian American Business Associations, which monitors use of minority vendors by California’s utilities, reported in 1996 that 22% of its budget went to women, minority or disabled veteran businesses, he said. Greenlining raised the diversity question in late 2005 when PG&E first opened its general rate case requesting that the commission increase its base revenue by $213 million per year through 2010.

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