CRISIS HAS MANY IN STATE FEELING POWERLESS
The Daily News of Los Angeles
An immediate power-rate hike of 40 percent proposed by California’s top energy regulator Monday should force conservation, officials said, but financially threatens residents and businesses across the state.
The planned increase, combined with other hikes, would nearly double ratepayers’ electric bills. It comes on top of the 9 percent to 15 percent rate increase the PUC approved in January, and ratepayers will see a 10 percent bump next year.
Ratepayers wilted at the prospect of another price hike.
“It would kill me,” said Daniel Rhee, owner of Las Brisas, a small Mexican-Asian and American restaurant in the city of San Fernando, powered by SoCal Edison.
“To be honest with you, to hell with them. If they raise (rates), I have no choice – but the whole economy is going to go to hell.”
The plan by Loretta Lynch, president of the state Public Utilities Commission, could be approved by the PUC as soon as today. But Gov. Gray Davis, who appointed Lynch and two other members of the five-member PUC, said Monday in a Glendale press conference that he opposes Lynch’s plan.
“I am not in favor of a rate hike,” said Davis, in Glendale to promote school funding. “I have not seen enough information to persuade me of a rate hike.”
In the past, however, the governor has directed PUC appointees to toe the line on major policy shifts.
Residents and businesses served by city utilities that opted out of the state’s deregulation plan, like Los Angeles, Burbank and Glendale, will not be affected under Lynch’s plan.
Consumer advocates said the PUC, Davis and the Federal Energy Regulatory Commission are not doing enough to bring down exorbitant rates charged by out-of-state power generators.
“The generators should be forced to take lower prices,” said Michel Florio, a senior attorney for The Utility Reform Network. He added that the state should use its powers of eminent domain to seize the power plants and run them itself.
“If the governor isn’t willing to seize the power plants, then maybe we will,” Florio said, adding that TURN and other consumer groups have been considering statewide initiatives to remedy the state’s failed attempt at deregulation.
Harvey Rosenfield, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, agreed. With a projected $23 billion spent by California to buy power within the next two years, Edison would have to raise rates 160 percent, he said.
“The ratepayer revolt is officially under way,” he said. “If those price increases go into effect, the voters will take matters into their own hands at the ballot box.”
In a statement, Southern California Edison said Lynch’s decision “recognizes the absolute necessity of addressing the disparity between very high wholesale power costs and frozen retail rates,” but said more will be needed to restore the utility’s “creditworthiness.”
Lynch, who repeatedly refused to characterize the hike as a 40 percent increase, said the increase was needed to avoid significant power problems this summer.
“That number should be all that is needed going forward,” she said at a news conference, “to keep utilities solvent and ensure that the treasurer of the state can issue bonds.”
Lynch said rates should increase by an average of 3 cents per kilowatt hour. The current residential rate for electricity alone averages 7.5 cents per kilowatt hour – though when bundled with transportation costs, transmission costs and conservation programs, it’s closer to 12.5 cents.
The proposed increase would raise the average Southern California Edison Co. residential bill by $28 a month – from about $70 to $98, according to the company’s residential rates.
Lynch’s proposal is at odds with that of administrative law judge Christine Walwyn, who recently advised the PUC that rate increases were not necessary.
Lynch – as well as Davis – supports a “tiered” rate system that would charge residential and businesses customers more if they’re large users and fail to cut back, a move aimed at encouraging conservation.
The governor repeatedly has said he is confident the state’s power crisis can be resolved without further rate hikes. But Davis aides have concluded that rates must rise, given that wholesale power costs remain high. Several lawmakers, including Assembly Speaker Bob Hertzberg, D-Van Nuys, have said a rate increase is inevitable.
“It’s obvious to me that unless you rob a bank or win a lottery you are not going to be able to do this without raising rates,” Senate President Pro Tem John Burton, D-San Francisco, said Monday.
That can only hurt low-income residents in such cities as San Fernando. Residents in Los Angeles, Burbank and Glendale, whose utilities are independent of the state’s power grid, would not be affected by the increase.
“I’m scared,” said newly elected San Fernando Councilwoman Maribel De La Torre, whose constituents are 85 percent Latino of low to moderate income.
“A lot of people live check to check. Now they’ll have to cut necessities. … It means cutting back on food, and maybe that trip to see mom in Los Angeles. It’s a juggling game for a lot of people in the area.”
Jim Lynch, president of Rydell Co., which owns five car dealerships in the San Fernando Valley, four of which are served by Edison, said a rate increase must be absorbed by conservation, wages and worker numbers, and ultimately, customers.
But the real cost, he said, will be to the economy.
“In essence, it stifles growth,” said Lynch, whose company owns Rydell Chevrolet and Buick in San Fernando. “It is an onerous stifling and detrimental event to business in California and Los Angeles.”
Administration officials have been negotiating with PG&E, Edison and San Diego Gas & Electric about purchasing the utilities’ transmission lines to give the companies cash to pay their bills.
PG&E and Edison say they’ve lost more than $13 billion since last summer due to high wholesale electricity costs that California’s 1996 deregulation law prevents them from collecting from their customers.
Rhee, who now pays about $500 a month to power his restaurant, says he can’t pass on the increase to his mostly Latino customers.
“Profit to a point, but this is ridiculous,” he said. “They have no heart, they have no soul, they don’t give a damn about people.”