Consumers fight back with a Web site and calls for a ballot measure.
The Fresno Bee
As state officials talk about raising electricity rates by 26% to 40% to pay for blundering into a deregulated market, an outrage is building.
There’s a campaign for a ballot initiative to lower electricity prices. There’s a Web site where you can read the “5-cent solution” — a proposal to freeze rates at a nickel per kilowatt hour.
And, if the state this week raises electricity rates, as many have predicted, there may be lawsuits. Some people are incensed about paying for the state’s mistake.
“What about older people and those on fixed incomes?” asks Mindy Spatt, spokeswoman for The Utility Reform Network. “If these rates can just keep going up, it will make their lives like hell.”
The California Public Utilities Commission may vote Thursday to permit rate increases for 24 million people. Residents are already feeling increases in their natural gas bills.
Electricity rate increases would help Pacific Gas & Electric Co. and Southern California Edison deal with credit problems resulting from $9 billion in losses this year.
How did those massive losses happen? The state’s deregulation rules and structure allow the two utilities to collect about 5 cents per kilowatt hour, but power on the deregulated or open market is now going for 30 to 40 cents per kilowatt hour.
“It can’t go on,” said Jon Tremayne, a PG&E spokesman. “We’re borrowing money to keep the lights on. If we go bankrupt, you don’t know what will happen tomorrow.”
You can know, however, what will happen if the rates go up. For a 26% increase, a $55 bill would go to $69.30. A 40% increase would raise the $55 bill to $77.
In its approach to state officials, Edison projected it would need a 76% increase over the next two years. That same $55 bill would climb to $96.80 by 2002 under the proposal.
Don’t be fooled, consumer groups say: The lights won’t go out if the utilities go belly up. If the taxpayers buy out the utilities, it’s a better deal than a bailout, advocate Doug Heller says.
“We need to reregulate the utilities, refund any extra money that people already have paid in and focus on public ownership,” said Heller of the Foundation for Taxpayer and Consumer Rights. “Look at the publicly owned districts that are not being touched by this crisis. They’re not maximizing profits. They’re providing energy at a reasonable cost.”
The Sacramento Municipal Utility District and Los Angeles Department of Water and Power are two examples of public districts that provide their own power to customers. They don’t have to buy electricity from power generators that have cornered California and used its system to haul out 800% and 900% profits.
Publicly owned utilities might be necessary under an idea floated by TURN — the so-called “5-cent solution.” Rates would be set at 5 cents per kilowatt hour, and a new state agency would be formed to carry out the strategy if the utilities can’t or won’t oblige.
The 5-cent solution would require the utilities to keep the power plants they still own — nuclear and hydroelectric facilities. In the deregulation law passed four years ago, utilities were ordered to sell their power production facilities, and they have sold many.
Under the 5-cent solution, the utilities’ power from their nuclear and hydro facilities would be used to serve the state’s residents and small businesses.
The utilities would provide the power at the cost of operation, and large businesses and industry would purchase on the open market. Any additional need for electricity could be purchased in long-term contracts.
The idea would sink like a rock, Edison spokesman Tom Higgins says. There would not be enough power from the utilities’ remaining plants, and the prevailing market prices would cost a lot more than 5 cents per kilowatt hour. He said the state would empty its reserves trying to take over.
“The consequences of the utilities disappearing would be devastating,” Higgins said. “The current prices would get passed right through to the consumer. Look at what happened to San Diego last summer when their prices were passed on to the consumer — 300% and 400% increases in their bills.”
But if the Public Utilities Commission or the Legislature ignores their suggestions, consumer advocates promise a 2002 ballot measure.
“We will roll back the prices to just and reasonable rates,” Heller said. “We can’t let them get away with this.”