PUC Failure to Act Quickly Will Cost Consumers $8 Billion, According to State Treasurer

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While PUC Dallied on Direct Access, Big Businesses Escaped Long-Term Energy Contracts

Chalk up another 5% increase in electricity bills for the state’s beleaguered ratepayers as a result of the latest failure by the Davis-controlled PUC to protect Californians.

Due to a massive exodus from the state power system during the days and weeks prior to the PUC‘s final decision to suspend electricity “direct access,” average residential and small business ratepayers will be forced to absorb the bulk of the high-priced power contracts signed by the Davis Administration. Direct access is the part of energy deregulation that allows consumers (typically industrial customers) to purchase power directly from an energy company rather than through the local utility.

According to a letter sent by California Treasurer Phil Angelides to PUC President Loretta Lynch, “the direct access stampede, which occurred as the PUC failed to act, could result in a cost shift to these consumers of more than $5 billion through 2010.” An additional $3.2 billion will be shifted to small consumers because big businesses will not pay to cover state subsidies of power for all consumers during 2001, according to the Treasurer.

Consumer groups noted that the latest fiasco by the PUC came on top of tens of billions of dollars in rate increases in 2001 alone. “The PUC hung an eight billion dollar noose around the necks of California consumers by failing to take action against the direct access loophole quickly,” said consumer advocate Doug Heller, with the Foundation for Taxpayer and Consumer Rights (FTCR). “The Commission must make the belated suspension of direct access retroactive to ensure that all consumers, including big businesses, pay for the power that the state purchased on their behalf.”

In the time between the announcement that the PUC would likely suspend direct access and the September 20, 2001 meeting at which they finally ended the direct access system, the amount of power purchased from private energy suppliers jumped from 2% (as of July1) to 13%, according to the Treasurer’s letter.

“At the height of the energy crisis, taxpayers shelled out the money to keep the lights on for all energy customers. If the PUC does not make their ruling retroactive, big businesses, just like Edison, will come out ahead as a result of the deregulation fiasco, while the average ratepayer is stuck with the tab,” said Heller.


Consumer Watchdog
Consumer Watchdog
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