PUC stalls decision on rate boost

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Consumer group says big business to benefit

The San Francisco Chronicle

State regulators yesterday delayed until this afternoon a vote on the most sweeping electricity rate increase in California history so they could reduce the effect on heavyweight corporate customers.

That means residential users could end up paying an even greater share of the $5 billion to be raised by higher power prices.

Consumer activists were outraged. “It would be a travesty if the Public Utilities Commission caved in to pressure from big business,” said Mike Florio, senior attorney for The Utility Reform Network in San Francisco.

Under a new electricity rate formula announced last week by PUC President Loretta Lynch, residential power customers would pay as much as 40 percent more while industrial customers would face increases of more than 50 percent — in some cases, as much as 75 percent during periods of peak demand.

The PUC needs to adopt the new rate formula before Thursday if, as intended, Pacific Gas and Electric Co. and Southern California Edison are to impose the higher rates in time for customers’ June bills.

State officials said representatives of industrial power users lobbied aggressively over the weekend to convince Gov. Gray Davis that they would bear a disproportionately large burden from the proposed rate increases.

The governor’s office in turn spoke with Davis’ most recent appointee to the PUC, Jeff Brown, who told The Chronicle yesterday that he could not support Lynch’s rate increase unless the effect on corporate customers is lessened.

“The question is whether these rates will have a deleterious effect on business in California,” he said. “I think they will.”

Lynch scrambled last night to revise her proposal in a way that would regain Brown’s support. The third Democratic appointee on the five-member commission, Carl Wood, said he would support Lynch’s current rate-increase plan.

Although PUC members have been struggling for days to comprehend the highly complex changes envisioned by Lynch’s proposal for tiered rates among residential and industrial power users, they gave no indication before yesterday’s meeting that a vote on the matter could be postponed.

The PUC‘s San Francisco meeting hall was packed for yesterday’s scheduled vote, and members of the public spent nearly two hours telling the commissioners in no uncertain terms how they felt about rate increases.

“You are calling on consumers to bail out greedy, mismanaged companies,” said Medea Benjamin, head of Global Exchange, a San Francisco consumer group.


She and more than a dozen other activists were dressed in white coveralls identifying them as “Ratebusters,” and they repeatedly interrupted the meeting to sing to the tune of the “Ghostbusters” theme song.

“While the PUC gives our money away, who you gonna call?” they sang.

Benjamin was escorted from the hall by a California Highway Patrol officer after going well past her allotted three minutes of public-comment time. “Shame on you,” protesters shouted at the commissioners.

Other speakers asked the commissioners how they could purport to represent the public interest while at the same time raising electricity rates for the second time since January.

“You’ve been appointed to represent the public,” said Juliette Beck of San Francisco. “If you disregard the public’s will, this is a total sham.”

PUC members have held several public hearings on the rate increase in recent days. Dozens of consumers rose at each occasion to criticize higher rates and call for public ownership of generating facilities in the state.


Lynch waited until all comments had been made yesterday before announcing that a vote would be postponed until today. She blamed the delay on “procedural issues” and said extra time was needed “so the commissioners can fully evaluate revisions.”

Outside the meeting hall, consumer activists derided the PUC for what they said was an attempt to take up the question of rate increases behind closed doors.

“They don’t have the nerve to say all this in front of a room full of people,” said TURN’s Florio.

But business leaders were hopeful that the delayed vote means their pleas for rate relief were heard by California officials.

Opposition to the rate plan has been voiced by nearly a dozen business groups, including the Small Business Association and the Agricultural Energy Consumers Association.

Carl Guardino, president of the Silicon Valley Manufacturing Group, said in an interview that commercial and industrial power users believe they were being asked to shoulder about 80 percent of the rate increase, although they account for 65 percent of statewide power usage.


“We need a rate increase,” he said. “We are willing to pay our share. But let’s make it an increase that’s fair and proportional to use.”

Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights in Santa Monica, scoffed at this reasoning.

“It was the large industrial users who demanded deregulation in the first place,” he said. “They should be forced to bear the burden of it, not innocent ratepayers.”

In any case, if the PUC bows to pressure for lower industrial rate increases, it will be residential customers who will make up the difference.

Steve Maviglio, a spokesman for the governor, said Davis is “adamantly opposed” to expanding the number of residential customers who would be exposed to higher rates.

Under the current plan, residential customers who can stay within 130 percent of predetermined limits — about half of all consumers — would be exempt from rate increases.

Maviglio said the governor instead would favor raising even higher the increases for residential customers if business users succeed in avoiding large-scale rate increases.

This means the average residential power bill could rise by more than 20 percent today — on top of an average 10 percent increase adopted in January.

Because of scheduling conflicts, three of the five PUC members will be forced to vote today by telephone. Only Brown and Wood are expected to be in the meeting hall.

Consumer Watchdog
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