State’s debt for electricity must be repaid

San Francisco Chronicle

Utility customers in Northern California may have to pay $500 million more than those to the south to cover the state’s costs of purchasing electricity for debt-ridden utilities, it was announced yesterday.

The additional burden on customers of Pacific Gas and Electric Co. is part of a package of proposals under consideration by the state Public Utilities Commission.

If adopted, it would not cause an immediate rate increase for PG&E customers, said PUC spokesman Paul Clanon.

But it may make future rate increases more likely in PG&E‘s territory than in areas served by Southern California Edison, he said.

PG&E customers would pay a greater share because contracts serving Northern California are more expensive, and transmission bottlenecks make it hard to ship Southern California’s cheaper power north, said PUC President Loretta Lynch.

So far, the state has spent billions on purchases of electricity for the major utilities, including PG&E and Southern California Edison. Of those costs,

$12.6 billion must be repaid by consumers by the end of next year.

PG&E spokesman Ron Low said the $500 million cost shift “discriminates against PG&E‘s customers” and was not requested by the state water department, which wanted to spread the costs evenly among PG&E, Edison and San Diego Gas and Electric. PG&E officials said they could not yet tell whether rate increases would be required beyond the record ones passed by the PUC in June.

The cost allocation plan, immediately denounced by PG&E, is part of a controversial package of proposals set for a PUC vote next week. Other proposals would allow state power buyers to pass their costs for energy purchases straight to utility customers without PUC scrutiny; forbid utility customers from seeking better rates for electricity by dealing directly with power generators; and impose a rate increase on customers of San Diego Gas and Electric.

The PUC decisions, which could dictate the shape of California’s electricity market for a decade or more, come in the aftermath of an energy crisis that forced the state Department of Water Resources to pinch-hit as power buyer for the debt-ridden utilities. Now, the money for those state purchases must be collected from utility rates.

Consumer advocates joined PG&E in a chorus of dismay over a proposed PUC decision that would require the commission to rubber-stamp state energy expenditures without the detailed review imposed on utility transactions. The PUC can refuse to reimburse the utilities from consumer revenues for costs it deems unreasonable.

“The PUC is going to surrender its constitutional authority to protect the public against price gouging,” said Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights.