Energy: Reacting to complaints about soaring costs in San Diego County, they plan to consider amending, delaying or killing deregulation bill
Los Angeles Times
SAN DIEGO–Faced with growing public outrage over soaring utility bills in San Diego and southern Orange County, state legislators Thursday agreed to hold a hearing on whether to amend, delay or even repeal the utility deregulation bill blamed for the increases.
State Senate President Pro Tem John Burton (D-San Francisco) and state Sen. Steve Peace (D-San Diego), author of the deregulation bill, agreed to a hearing after receiving an urgent plea from former San Diego Mayor Maureen O’Connor.
“This is turning into a nightmare for San Diego,” O’Connor said. “It [deregulation] didn’t work, unfortunately. . . . Let’s admit it, fix it and save San Diego.”
O’Connor said she is worried that elderly and low-income residents might risk their lives by turning off air conditioners during the hottest summer months because they cannot afford to pay San Diego Gas & Electric Co. bills that have more than doubled in the past two months.
“God forbid that something should happen to people in this city because we didn’t act fast enough,” said O’Connor, noting that deaths due to hot weather have been reported in other states. She called for a rollback of rates to the May level.
Burton said he wants to find a way to avoid escalating bills from spreading to other parts of the state. San Diego is the first area to experience the full effects of an unregulated energy market because SDG&E was able to divest itself of its energy-producing holdings faster than other utility companies.
“We realize we’ve got a problem and we’re looking for solutions,” Burton said from Sacramento. “Today it’s San Diego, tomorrow Los Angeles, and in two years San Francisco and the Bay Area. We’ve got to look at the entire incident, not just solve San Diego’s problem today and have it crop up somewhere else later.”
The California Public Utilities Commission met Thursday in San Francisco but took no action on an emergency petition by the Utility Consumers Action Network for an electricity rate freeze for SDG&E customers.
The commissioners expressed sympathy for the plight of San Diegans but said legal requirements prevented them from considering the issue until the Aug. 3 meeting.
“There is something approaching a sense of desperation among consumers, especially those that are low-income,” said PUC Commissioner Carl Wood.
State Sen. Dede Alpert (D-Coronado), who endorsed O’Connor’s call for a legislative hearing, said she hopes that a way is found to provide relief for San Diego without scrapping deregulation, which she still believes can provide lower costs in the long run.
“I’m still hopeful we can find a way to make this work,” Alpert said. “But being the guinea pig in this is very painful.”
O’Connor called on her successor, Mayor Susan Golding, to support at least a freeze in rates. But Golding does not believe that a freeze would solve the basic problem of a growing demand and an inadequate supply, said mayoral aide Ric Grenell.
“We’re looking for solutions, not just publicity,” Grenell said.
Alpert said she hopes that the hearing can be held as soon as the Legislature returns Aug. 7.
O’Connor was joined at a news conference Thursday by consumer activist Harvey Rosenfield, who sponsored a 1998 ballot measure, Proposition 9, that would have repealed deregulation. The measure, heavily opposed by the utility and energy industries, was defeated.
Rosenfield blamed what he called “rapaciousness and greed” on the part of energy companies who are able to increase the price they charge the utility companies virtually at will under deregulation. Before the 1996 deregulation bill, the Public Utilities Commission had a tight grip on such prices.
“We warned that deregulation would be a disaster,” Rosenfield said. “The utility companies spent $50 million to defeat [Proposition 9] and here we are.”
Although he was unavailable for comment Thursday, Peace in the past has blamed Rosenfield, Ralph Nader and other Proposition 9 backers for creating a year of political “uncertainty” that kept energy producers from expanding capacity.
Repeal would seem the least likely solution to be endorsed by the Legislature. SDG&E and other utilities have divested themselves of substantial assets as the price of entering the free market, and repealing the 1996 bill probably would lead to lengthy and complex litigation.
San Diego City Atty. Casey Gwinn, blasted by O’Connor for not backing a rate freeze, said that the Legislature should consider a subsidy for San Diegans hit with higher bills.
“The state Legislature is sitting on a $2-billion reserve,” Gwinn said. “They could easily provide some relief to San Diegans.”
With 1.1 million customers in San Diego and 100,000 in southern Orange County, San Diego Gas & Electric Co. has passed on higher prices from its suppliers that have increased the average seasonally adjusted residential bill from $49.50 a month to $100.30 and the average small-business bill from $166 to $334, with more increases to follow.
Chances that the PUC will order a rate freeze dimmed Tuesday when PUC Commissioner Henry Duque issued a draft decision denying the rate freeze, arguing that it would lead to higher winter bills. He instead endorsed SDG&E‘s proposal to rebate $100 million in debt savings to consumers.
Consumer advocates said the PUC is moving too slowly and blasted Duque’s proposal as providing inadequate consumer protection.
“I don’t think this commission has the will to take this on,” said Michael Shames, executive director of UCAN, the San Diego-based consumer group. “Ultimately, it’s going to be the governor’s call.”
Shames estimated that the higher electricity bills are costing the San Diego economy between $75 million and $100 million a month, funds that are flowing to electricity generators in other states now that California’s big investor-owned utilities have sold most of their power plants.
The Utility Reform Network, a San Francisco-based consumer group, complained in a letter to the PUC that the Duque proposal “would assign the burden of the market’s failure entirely and exclusively to consumers, rather than considering spreading that burden among all of the participants in that market.”