Ratepayer Protection Pledge

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Pledge in Support of California Utility Consumers

September, 2000


Whereas the California State Legislature deregulated the electricity industry in California in 1996 with the promise that deregulation would benefit California consumers by providing lower electric bills, and

Whereas the utilities were the chief architects of California’s deregulation plan, and

Whereas the deregulation legislation froze rates at historically high levels in order to permit utilities to collect billions of dollars in so-called stranded investments, and

Whereas the express intent of the legislation was to provide 20% rate reductions for homeowners, renters, and small business customers at the end of the rate freeze, and

Whereas customers will be subjected to a surcharge on their bills for ten years to pay for a self-financed 10% rate reduction that was funded by the issuance of bonds, and

Whereas the deregulation legislation (AB 1890) specifically requires rates to be frozen for a period of time before they go to market levels, and does not allow the utilities to recover additional charges after the rate freeze to make up for alleged shortfalls in revenue during the rate freeze period, and

Whereas for the first three and a half years of deregulation utilities collected and kept approximately 14 billion dollars in customer payments above their cost of wholesale electricity purchases to pay for so-called stranded investments, and

Whereas during May, June, and July of 2000 PG&E and Edison collected more than $1.6 billion in excess revenue from the sale of energy at high wholesale costs produced by generation assets retained by the utilities and deemed to be stranded investments, and

Whereas the utilities knew when rates were frozen that there was a risk that wholesale energy prices could increase, understood that such increases could render them unable to collect all of their “stranded investments” during the prescribed time period, and publicly accepted that risk in no uncertain terms, and

Whereas the CPUC has correctly held in numerous decisions that no costs incurred during the rate freeze could be carried forward into the post rate freeze period, and

Whereas without any legal authority, contrary to rulings of the CPUC, and contrary to their own previous representations about the intent of deregulation legislation, PG&E and Edison continue to seek authorization to charge customers after the rate freeze for the wholesale cost of energy incurred during the rate freeze, and

Whereas customers in San Diego, the first region of the state where rate caps have been lifted, have experienced drastic increases, causing electricity bills to more than double in recent months, and

Whereas consumers are the innocent victims of a deregulation experiment enacted by the legislature which has failed miserably, and

Whereas Sempra, the parent corporation of San Diego Gas & Electric, saw year 2000 second quarter earnings increase by 34%, PG&E Corporation saw second quarter earnings increases of 38%, and Edison International saw a 28% increase.

Therefore, as a candidate for elected office, I do hereby pledge to the people of California:

1. That I will protect consumers from the failures of deregulation.

2. That I will not allow rate increases for PG&E or Edison ratepayers during the rate freeze period and beyond until such time as rates are just and reasonable.

3. That I will vote against any measure that would declare an end to the rate freeze retroactively and/or require consumers to pay anything more for electricity costs allegedly incurred by either PG&E or Edison during the rate freeze period, and

4. That I will not support any legislative attempts by San Diego Gas & Electric to charge additional or increased rates in the future to make up for current reductions guaranteed by emergency rate stabilization which was passed by the California legislature in the most recent legislative session.

I further pledge that I will work diligently to address all the problems created by subjecting electricity, an essential service, to a market system, and that in so doing I will make consumers’ right to reliable and reasonably priced electricity my first priority.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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