Customers of Edison, PG&E get rate shock. SDG&E spared for now

The San Diego Union-Tribune

In the preview of a movie SDG&E customers don’t want to see, the state Public Utilities Commission walloped customers of California’s other major utilities with electricity rate increases as high as 50 percent yesterday.

The historic increases follow a PUC decision in March to raise electricity bills for Pacific Gas and Electric and Southern California Edison customers by a total $5.2 billion annually.

That decision, however, did not specify how the increase would be allocated.

Yesterday’s vote ordered rate increases of up to 37 percent for residential customers and up to 49.5 percent for business customers. The 3-2 vote drew howls of protest from demonstrators at the commission’s San Francisco meeting.

Similar increases are expected for San Diego Gas and Electric’s 1.2 million customers in coming months. Public hearings for the SDG&E raises are expected next month.

Although yesterday’s rate increase allocation was stunning, commission President Loretta Lynch warned of worse increases ahead unless the Federal Regulatory Energy Commission caps wholesale power costs.

“Unless and until the FERC decides to enforce the law, even these astronomical new average rates may prove inadequate to cover exorbitant wholesale electricity prices in the California market,” Lynch wrote in the approved rate increase decision.

The PUC was pressed to raise rates in order to cover California’s cost of purchasing electricity. The state took over purchasing power earlier this year as utilities moved toward insolvency.

The utilities said that with customer payments frozen under terms of the state’s deregulation law, they were unable to pay the soaring cost of wholesale power. Critics noted the same utilities transferred billions in payments to parent companies and shareholders during the first years of deregulation.

The new increases for the 9 million customers of PG&E and Edison will begin appearing in June bills but will be retroactive to March, when the rate adjustment was approved.

Consumer groups said yesterday’s vote was delayed by a day because of frantic lobbying by business interests seeking to shift a greater share of the new costs onto residential ratepayers.

Mike Florio, senior attorney for The Utility Reform Network, the San Francisco-based consumer group, calculated that last-minute lobbying by businesses advocates pushed about $105 million more of the increase onto residential customers, compared to an earlier version of the rate increase allocation, which was also written by Lynch.

“This decision shows how desperately we need control over our electric system and how costly deregulation has become for California,” Florio said.

Demonstrators at the PUC session yesterday suggested the commission is failing to protect the public and should henceforth be called the “Private Utilities Commission.” Others issued calls for seizing power plants.

Commissioner Geoffrey Brown shouted back at protesters that rate increases were necessary.

Under the rate design approved yesterday, homeowners able to keep electricity use within 130 percent of the so-called baseline allowance will be spared increases, as will the lowest-income customers and those with certain medical conditions. The baseline is a minimum level of electricity, and it varies by location. The baseline amount, measured in kilowatt-hours, is printed on electricity bills.

The Office of Ratepayer Advocates within the commission estimates these exemptions will shield more than 60 percent of all residential consumers.

Others will pay progressively more as their use rises, with the highest increases of 37 percent for those consuming more than 300 percent of baseline allowances.

Average industrial rates will increase about 49 percent, while agricultural rates could rise as much as 20 percent for customers of PG&E and Edison.

The California Manufacturers and Technology Association warned of layoffs if businesses are forced to pay a disproportionate share. But consumer advocates said it was large-business interests that pressed for deregulation in the first place.

“Once again residential and small-business ratepayers, the innocent victims of deregulation, are being forced to pay for the debacle,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

Gov. Gray Davis, who resisted rate increases through the first months of the power crisis, recently offered a proposal of his own to boost rates.

“While the PUC‘s revised rate increase made some modest improvements, my plan represented a more balanced approach,” Davis said.

All three commissioners appointed by Davis voted for the increase, while the two commissioners appointed by former Gov. Pete Wilson were opposed.

Commissioner Richard Bilas, who voted against the increase, said it would push the state into recession and was a “grave mistake.” Henry Duque, the other dissenter, objected to slapping customers who use more power with higher percentage rate increases and urged more equal treatment. Both said the increases would fail to encourage needed conservation.

But Commissioner Carl Wood said the increases were made necessary by FERC’s failure to cap wholesale power prices.

“Every consumer in California is justified in feeling outraged,” Wood said. “They are facing an unlawful price regime for a fundamental necessity. We continue to look to the federal government to moderate prices.”

Bilas, Duque and Lynch were not present in San Francisco for the vote but participated in the meeting via telephone.