Governor, Legislature Fail to Address Heart of Problem: Deregulation
In an effort to subdue San Diego ratepayer anger and stave off criticism of California’s failed deregulation scheme, Governor Davis signed legislation today that will likely cost consumers hundreds of millions of dollars, while ensuring that SDG&E, and its parent company Sempra Energy, will be protected against lost profits that are the result of the legislation. The bill (AB 265-Davis), developed in meetings closed to the public, without the input of consumers or local San Diego leaders and representatives, does not reflect the need of San Diego consumers to be “held harmless” for the extraordinary rise in electricity rates this summer.
According to advocates, the bill enacts a phony rate relief program that will result in future payments for the utility’s lost profits by San Diego ratepayers beginning in January 2003. The bills do not mandate that ratepayers are “held harmless,” that is, relieved of any financial liability for the lost profits of SDG&E, or its parent company Sempra. Also, the law’s rate ceiling of 6.5 cents/kilowatt-hour (still higher than the rate in effect in San Diego last summer) can be increased by the Public Utilities Commission.
“Governor Davis signed a promissory note to SDG&E, payable by San Diego consumers to the giant utility two months after the next gubernatorial election,” said Douglas Heller, consumer advocate with the Foundation for Taxpayer and Consumer Rights. “This plan not only sets rates at twice the level of the regulated era, it allows SDG&E to take even more from consumers to make up for diminished corporate profits.”
In addition to failing to provide a real solution to the current crisis in San Diego, the bill does nothing to address the imminent statewide crisis, which will force most other Californians to pay exorbitant rates once SoCal Edison and PG&E enter the deregulated marketplace in 2002. Advocates suggest that a special Legislative session is necessary to re-regulate the electricity industry in California and protect Californians from utility company price gouging.
“This does nothing to address the heart of the problem: electricity deregulation is bad for consumers,” said Heller. “The Legislature and Governor Davis must commit to a more sensible energy policy than the original deregulation scheme of 1996 and the phony ‘rate relief’ program of 2000. If they are unwilling to acknowledge past mistakes and correct them, there may be a ratepayer rebellion at the ballot box in 2002.”
Governor Davis has not yet signed AB 1156 (Ducheny), which consumer advocates consider an outrageous corporate welfare plan. This bill, if enacted, would set aside a $150 million taxpayer account to pay SDG&E for some of the company’s lost profits. The remainder of the lost profits would still be passed onto consumers according to the provisions of AB 265 signed today. AB 265 requires a portion of the “rate relief” to be paid from the utility company’s energy generation sales, but will force ratepayers to pay for the bulk of this so-called “rate relief.”
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