Executives at PG&E hoping to fly in style
Friday, May 5, 2006
PG&E wants a new plane for its execs to fly around in. And the San Francisco utility wants you to pay for it.
The $25 million purchase is buried deep within mounds of paperwork submitted by Pacific Gas and Electric Co. to state regulators for what it intends to charge customers over the next few years.
PG&E says it needs a new aircraft by early next year because its current plane, a Dornier 328 turboprop, is becoming more difficult to maintain. At $25 million, the new aircraft will almost certainly be a jet, but the utility hasn't yet specified.
"The primary purpose of the aircraft is to provide transportation for personnel within the PG&E service area and such other destinations as necessary to meet utility objectives," PG&E informed regulators.
It also said the new plane will help meet federal requirements for officials of PG&E's Diablo Canyon nuclear power plant to be where they're supposed to be in the event of an emergency.
"The aircraft must be replaced for reasons of safety, reliability and increasing cost of parts and service," the utility explained.
It said the plane's manufacturer "is no longer in business," and that this means "the ability to procure spare parts and required maintenance services is declining, becoming costly, and will not exist in the future."
The California Public Utilities Commission was scheduled to hold hearings in San Luis Obispo on Thursday to hear reactions to PG&E's proposed rate increase, which would raise the typical residential customer's monthly bill by about a dollar. A final decision on the increase is expected by the end of the year.
John Nelson, a PG&E spokesman, said the utility's 32-seat Dornier 328, which is based in Oakland, is far from the epitome of a plush corporate aircraft -- not least because it has propellers rather than jets.
"Comfort is not a word that leaps to mind," he said of flying in PG&E's plane.
What word does?
The Dornier 328 was originally manufactured in Germany by Fairchild Dornier. The aircraft, designed for regional flights, has been in use worldwide since 1991.
PG&E is technically correct when it says the manufacturer of the Dornier 328 is no longer in business. Fairchild Dornier filed for bankruptcy in 2002 and subsequently sold its 328 program to AvCraft Aviation of Virginia.
Responsibility for servicing the aircraft was given to AvCraft Aerospace, a German subsidiary of the Virginia company. It filed for bankruptcy last year.
But service for Dornier 328s is still readily available. A European company, 328 Support Services, has acquired AvCraft Aerospace's resources and continues to provide both maintenance and spare parts.
In the United States, a South Carolina company called AvCraft Support Services, which was formerly affiliated with AvCraft Aviation, also offers support and maintenance for the estimated 125 Dornier planes still in use around the world.
Mike Hill, general manager of AvCraft Support Services, described PG&E's regulatory filing as "not the entire truth."
"I've got six 328s undergoing repairs right now," he told me. "I see plenty of people who are buying these planes and putting them back in service.
"To say that there's no support for this aircraft and no spare parts, that's stretching it a bit," Hill said. "I've got a hangar full of activity."
He said the vast majority of parts for the Dornier 328 are nonproprietary and can be obtained from a variety of manufacturers. He also said service for the aircraft likely will be offered for many years to come.
"These aircraft were designed to fly well in excess of 50,000 hours," Hill said. "If you take care of them, the 328s can have long lives. These things can last 30 or 40 years, no problem."
PG&E's Nelson said the utility's Dornier has flown just 5,280 hours and made 6,843 landings since it was manufactured in 1994. Federal Aviation Administration records show that the plane went into service in November of that year.
Nelson said the utility didn't intend to mislead regulators by depicting its plane as being all but unable to secure parts and service.
"The language isn't meant to imply that there's no parts or service at any price," he said. "We just believe it makes more business sense to replace the aircraft."
In its filing, PG&E broadly described its need for an aircraft that can fly "within PG&E's service area and (to) such other destinations as necessary to meet utility objectives."
What might such other destinations be? One example was offered on Jan. 26, 2003. On that day, a Sunday, PG&E used its Dornier 328 to fly some of its top execs and a dozen business partners to the Super Bowl in San Diego.
A utility spokesman told me at the time that this was an example of "customer-relationship management." PG&E says shareholders reimburse the utility any time the plane is used for such purposes.
In any case, it's clear that PG&E wants its execs and business partners to travel in greater style and comfort. So what kind of ride will $25 million get you?
Jay Mesinger, whose Colorado firm is one of the nation's leading brokers of corporate aircraft sales, said PG&E obviously didn't just pull that figure out of the air. He said $25 million is the going price for several of the most common corporate jets on the market.
Most likely, Mesinger speculated, PG&E is looking at the Bombardier Challenger 605, which seats five to 12 passengers; the Dassault Falcon 2000EX, which seats eight; or the Embraer Legacy 600, which seats 10.
The Web sites for each of these planes show spacious cabins with wide leather seats, thick carpets and wood trim.
"You're going to be very comfortable," Mesinger said. "You're going to be in the most comfortable, safe and efficient ride that there is."
Would a chief exec ever go back to flying commercial once he gets a taste of a private jet?
Mesinger laughed. "Not if he can help it."