With Strong Action From Governor, No Rate Hikes Are Necessary, Says FTCR

Santa Monica, CA.– The California Public Utilities Commission (PUC) should protect residential and small business ratepayers from proposed rate hikes, according to consumer advocates with the Foundation for Taxpayer and Consumer Rights (FTCR). The non-profit, non-partisan organization suggests that no rate hikes would be needed at all if Governor Davis stood up to the out-of-state energy generators who have gouged the California market.

“The energy companies are profiteering in California and Governor Davis has refused to stand up against them, instead, foisting the failure of deregulation on average Californians,” said Douglas Heller, consumer advocate with FTCR. “The Governor is running ads that tell us to ‘Flex Our Power.’ When Is Governor Davis going to flex his power and stop these energy companies from laying waste to our state budget and our consumers’ pocketbooks?”

With nearly $6 billion of state money already spent to purchase high-priced power since mid-January, the PUC hearings are an attempt to develop a method of allocating rate increases to pay back the state for the power consumption. Consumer advocates say that rate protection for residential consumers and small businesses should be the first priority of the PUC. FTCR points out that the deregulation fiasco is the result of a massive lobbying effort by the state’s utilities and the industrial companies that consume approximately 30% of the state’s power.

As a result of deregulation, consumers have already paid more than $20 billion above market price to help “transition” the three major utilities into the deregulated marketplace. Edison alone received approximately $10 billion in excess payments from customers between March 1998 and Summer 2000. Smaller consumers paid a disproportionate share of this early deregulation bailout. In exchange for those above market “competition transition charges,” consumers were promised a 20% rate reduction by March of 2002. Instead, under the current plan consumers will pay approximately 50% more for power than rates prior to deregulation.

“Small consumers never asked for deregulation and never benefited from it. The innocent victims of this public policy nightmare should not bear the burden of the energy industry’s greed and the Governor’s failure to confront it,” said Heller.

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