Consumer Groups Seek Rate Protection

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Electricity: Activists push legislators to promise that customers won’t be forced to cover rising wholesale costs

Los Angeles Times

Consumer activists on Tuesday blasted increasingly aggressive strategies by Southern California Edison and the state’s other big utilities to recover their mounting wholesale electricity costs and called for lawmakers to promise that ratepayers won’t bear the brunt of such costs.


Three consumer groups unveiled a “ratepayer protection pledge” at news conferences in Santa Monica, San Diego and San Francisco that will be sent to all California lawmakers and candidates for the Legislature.


 “The politicians and utilities got us into this mess by promising lower rates with a plan that has failed miserably,” said Harvey Rosenfield, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. “Californians do not want any more lip service about consumer protection and lower rates. This time we want it in writing.”


Edison International unit SCE, meanwhile, said it wants to develop measures to help customers manage the higher costs that have zapped the California electricity world this summer.


Currently, residential and small-business customers of SCE and PG&E Corp.’s Pacific Gas & Electric utility are paying rates that were frozen by the 1996 law that deregulated the state’s electricity industry. Those rates will remain frozen until March 31, 2002, or until the utilities pay off their “stranded assets”–investments such as nuclear plants that became uneconomical under deregulation.


Customers of San Diego Gas & Electric, a Sempra Energy subsidiary that paid off its stranded assets more than a year ago, had their rates capped by the state Legislature in August after record wholesale electricity prices caused bills for the utility’s 1.2 million customers to double and triple.

 The utilities are running up a huge tab of wholesale electricity costs–$5 billion and growing–that they can’t pass on to customers because of these freezes. Who will pay these costs–consumers, utilities and their shareholders, or a mixture of both–has not been determined.


SCE on Tuesday, in a filing with the Securities and Exchange Commission, said it has amassed enough credits through the pending sale of generating assets and the valuation of its hydroelectric properties to pay off its remaining $1.3 billion in stranded assets and thus qualify to have its rate freeze lifted. PG&E made a similar filing two weeks ago.


SCE also said that the utility and its shareholders should not be on the hook for costs of delivering electricity to customers, currently totaling $2 billion and growing, and that it soon will file with the California Public Utilities Commission for authority to recover these electricity “undercollections” from customers when the rate freeze is lifted.


The Rosemead-based utility will file a plan in the next few months detailing a “rate stabilization” plan for customers so that they won’t be exposed to wild market fluctuations in electricity prices, said Jim Scilacci, SCE’s chief financial officer. The utility would expect to establish new rates and expand an existing level-pay plan to smooth out any electricity charges it would be allowed to pass on to customers.


But three consumer groups–Rosenfield’s Foundation for Taxpayer and Consumer Rights, the Utility Reform Network and Consumers Union–criticized the utilities for wanting to back out of a deal that has allowed them to collect $14 billion so far in extra electricity and other transition costs since deregulation began in 1998.


The groups said they will mail to all lawmakers and legislative candidates a pledge to oppose any legislation or other efforts to require ratepayers to pay the electricity costs that have built up during the rate freeze. The groups intend to keep a list of each politician’s position on the pledge on the Internet at and

Consumer Watchdog
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