A vocal mix of local business owners, nonprofit reps, and P.R. people faced off against outraged residents and activists at a meeting by the state regulatory agency considering Pacific Gas & Electric’s requested rate hike, revealing a community polarized about the utility giant.

The June 15 town hall-style gathering at the Meadow Park Building in San Luis Obispo had some testifying to the reliability and philanthropy of the corporation, and others crying foul over PG&E’s record of spending money on political campaigns and rewarding management with multi-million-dollar salaries.

California Public Utilities Commission (CPUC) Administrative Law Judge John Wong instructed attendees to limit their comments to the rate increase, not issues regarding PG&E’s pending application with the Nuclear Regulatory Commission to relicense Diablo Canyon, or the question over the effectiveness of the controversial “Smart Meters,” which he said the CPUC will consider in a separate proceeding.

Wong explained PG&E’s proposal would increase electric and gas rates by 6.7 percent beginning in 2011, which the utility expects will generate an additional $4.2 billion in revenue over the next three years.

Local business owners plugged their support for the company. Tim Williams of the San Luis Obispo-based firm Digital West said PG&E has always been able to keep up with his company’s demand for energy. “To me it’s a reasonable increase,” he said.

Charlene Rosales, chief operating officer for the local nonprofit United Way, pointed out the good the company does in the community: “PG&E has become of critical value for groups like ours. And yes, their contributions to our social fabric are indeed relevant [to the rate increase proceedings].”

But a majority of attendees were livid over the $46 million PG&E spent funding the advertising blitz for the failed Proposition 16, which many called an attempt by the utility to stamp out emerging municipal energy programs.

Even those opposing the increase acknowledged the good PG&E does for worthy causes, but many also pointed out it does so with profits from ratepayer money.

“It’s time to cut the fluff about all the good they do and the power they supply. It’s their job to supply power. Do they deserve a raise?” asked local resident Pete Evans.

Asked why PG&E needs the rate increase at this time, David Eisenhauer, PG&E’s senior manager of media relations, put it to New Times this way: “The vast majority of what we’re asking [is] for replacement and upgrade of our electric and gas infrastructures, the distribution systems ... Some of our equipment is reaching the end of its useful life—some of it even dates back a century. So we really need to invest in that infrastructure so we can keep providing safe and reliable service.”

Members from the consumer watchdog organization TURN disagree: “PG&E already has some of the highest rates in the nation—certainly in the state,” said Kori Chen, a community organizer with the group. “I think that if you look at other utilities in the state, they’re able to do it at lower prices. If you look at S.M.U.D. in Sacramento, their rates are much lower than PG&E and they’re using a lot more green energy. Even [Sun] Edison, the next largest corporate utility in the state, charges lower rates than PG&E.

“What you have here is the big dog on the block asking for more money and not really giving any justification other than the fact that things wear out,” Chen said.