His proposal for a rate hike, weighted toward heavy electricity users, represents a shift from previous position.

The Orange County Register

SACRAMENTO Gov. Gray Davis said Thursday that Californians’ electricity rates must be raised to ease the state’s energy crisis, and that some of the money should help bail out the strapped utilities, which have rung up $14 billion in debt.

Embracing rate increases for the first time, Davis said in a rare, five-minute, statewide television address that he fought tooth and nail against raising rates,” but that some rate increases are needed to keep our lights on and our economy strong.”

The Democratic governor also said that the proposed rate hike — a flexible scheme in which the heaviest users would pay the most — would pay down the huge debt that utilities have rung up buying wholesale electricity.

But to take advantage of that money — Davis didn’t say how much — the utilities would have to agree to three things: sell thousands of miles of transmission lines to the state, provide at least a decade’s worth of low-cost power to the state, and drop all court actions seeking new rate increases. The proposal, which Davis urged the state Public Utilities Commission to adopt, would apply to Southern California Edison, Pacific Gas & Electric Co. and San Diego Gas & Electric Co.

senate leader critical of bailout

That provision to help the utilities drew a sharp response from Senate Leader John Burton, D-San Francisco, a top consumer advocate.

We are not in the business of bailing those guys out, and that’s what he’s doing. So you raise my rates $2, then you say you’re going to give 50 cents to the utilities to pay off back debt. What that means to me is you could have covered the cost of electricity with just $1.50,” Burton said.

Doug Heller of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, was equally critical.

Gov. Davis, if you’re going to pick our pockets, tell us how much you’re really going to take because you can’t pay off the energy cartel and bail out the utilities with the rate increase that (you) talked about tonight,” Heller said.

In Orange County, at least one resident who watched Davis’ speech questioned the state’s handling of the crisis.

Everybody who’s been watching this understands that if you have a decreasing supply and an increasing demand, prices will go up. But the question is, why wasn’t anyone managing this thing a long time ago?” said Henry Eilbirt, president of the Community Association of Leisure World-Laguna Woods, which represents about 3,500 residents. What the governor said is all very nice, but it doesn’t solve the problem. In fact, it seems like the governor is stepping away from a solution.”

PUC, DAVIS PLANS ARE SIMILAR

Two weeks ago, the PUC adopted a plan — in some respects similar to Davis’ — to raise rates through a tiered scheme in which the lightest users of electricity pay the least and the heaviest users the most. It would raise customers’ bills up to 36 percent.

Under the Davis plan, roughly half of all electricity customers would not face increases because their electricity consumption is already low or moderate. But heavier users, nearly a fourth of all customers, would face a 9 percent increase, and those who consume the most face a 48 percent increase, or from $129 to $171 on the average bill of a heavy Edison customer.

It sends the signal, the more you use the more you pay,” said V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies.

But Dave Cox, R-Fair Oaks, the Assembly’s GOP leader and a former utility executive, said the governor provided little hard information to the public about how the electricity crisis will be resolved.

One day he said there wasn’t going to be a rate increase, and now he’s saying it look like we are going to have to. It kind of strains the credibility, doesn’t it?” Cox said the speech was designed to make people feel as good as possible in the crisis.

It was warm and fuzzy. It was a great political speech, but it didn’t provide any specificity on how to solve the problem,” Cox said.