PG&E; to Freeze Rates, Consider Rollback : Utilities: Competition forces Bay-Area behemoth to trim profit.

SAN FRANCISCO —  Pacific Gas & Electric Co., threatened by competition and criticized by consumer and business groups for its high electric rates, said Tuesday that it plans to freeze those rates for all residential, commercial and industrial customers through 1994.

As a result, customers’ electric rates next year will be nearly $400 million less than they would have been if the giant San Francisco-based utility had pursued planned increases. The utility serves 8 million customers in Northern and Central California.

For the average residential customer, who pays about $62 a month for electricity, the rate increases that PG&E; had planned would have tacked on an additional $3.10 a month.

Moreover, the utility said it plans to file requests with the California Public Utilities Commission to reduce rates for its 2,000 biggest business customers by about $100 million. It added that the action will not result in any increases to other customers.

The rate strategy was driven in large part by changes in PG&E;’s industry, where onetime monopolistic utilities now face competition and the loss of big, lucrative clients. Faced by mounting utility bills, large industrial customers have indicated that they will build their own power plants or shop around for other electricity sources outside the state.

Such motivations have also resulted in changes in the Los Angeles area. In January, Southern California Edison reduced its rate levels by $217 million, or 2.9%. Socal Edison’s rates are about 5% lower than PG&E;’s.

“We are threatened with a loss of big customers,” said Tony Ledwell, a PG&E; spokesman. “Obviously, we’ll fight to keep those.” He noted that PG&E;’s largest 2,000 customers account for 30% of its rate base.

The decision to seek reductions for big customers won quick praise from the California Manufacturers Assn., a Sacramento trade group that has lobbied for improvements in the state’s business climate.

“This step demonstrates that PG&E; recognizes that the state’s manufacturers are really hurting and need all the help they can get on controlling costs,” William Campbell, president of the group, said in a statement. “Lower costs can help spur recovery and help our manufacturers create jobs.”

Richard A. Clarke, PG&E;’s chairman and chief executive, noted that cost savings from job reductions and other actions will help the utility make up the loss of revenue, cover higher costs from inflation and absorb an expected $100 million in increased taxes this year and next if President Clinton’s corporate income tax and energy tax proposals are enacted.

However, if cost savings are not sufficient, he said, “the difference will come from earnings, not from higher rates or reduced service.”

In February, PG&E; said it planned to slash 3,000 jobs over the next three years through attrition, voluntary retirement and voluntary severance arrangements. It imposed a hiring freeze last fall.