SDG&E accused of overcharging ratepayers

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Associated Press

A state consumer agency claimed Wednesday that San Diego Gas & Electric has overcharged ratepayers by more than $100 million, an allegation the utility denies.

In a filing with the California Public Utilities Commission, the state’s Office of Ratepayer Advocates alleged that SDG&E “grossly” overstated its wholesale power costs and has a much smaller amount of uncollected revenue than it reported to regulators.

“The commission must not allow SDG&E to continue gouging its ratepayers,” a lawyer for the consumer agency, Darwin Farrar, wrote in the report.

The president of the utility, Debra Reed, insisted the Office of Ratepayer Advocates has misinterpreted information submitted by SDG&E to regulators in support of a rate increase.

“It’s a very false statement,” Reed said of the claim that the utility overcharged its customers.

SDG&E, which serves 1.2 million customers in San Diego County and southern Orange County, has asked the utilities commission to approve a 2.3 cents per kilowatt hour electric bill surcharge to cover the difference between its wholesale power costs and what it charges consumers.

For a typical residential customer, the surcharge would add about $11.50 to the monthly bill, according to the utility.

The utility’s customers have been covered by a 6.5 cents per kilowatt hour rate cap imposed by the Legislature in September after SDG&E bills doubled and tripled in the deregulated market. Wholesale rates have been in the 25 to 30 cents per kilowatt hour range in recent months.

State regulators are expected to vote on the proposed rate increase as early as next week.

SDG&E has uncollected revenues totaling more than $600 million and must raise rates to avoid the precarious financial situation facing the state’s other two major utilities, Reed said.

Those utilities, Southern California Edison and Pacific Gas and Electric, say they are nearly $13 billion in debt, a condition they say was caused by their inability to raise rates when the coast of energy skyrocketed in a tight market.

But the Office of Ratepayer Advocates argues in its report that SDG&E had long-term wholesale power contracts that allowed it to purchase power at far less than it claimed.

The report also says the overcharges account for more than one-fourth of $437 million in uncollected revenue.

Reed said the contracts mentioned in the report were for power that was never directly sold to customers, but was instead acquired as protection for shareholders.

The energy in the contracts was sold through the state’s power exchange as required and the PUC and Office of Ratepayer Advocates have reviewed the contracts in the past, she said.

“There’s been audit after audit done on these contracts,” Reed said.

Farrar, the author of the report, did not immediately return a phone call seeking comment.

The Office of Ratepayer Advocates is an independent consumer division of the Public Utilities Commission and is “very credible,” according to Douglas Heller of the Foundation for Taxpayer and Consumer Rights, who reviewed the report late Wednesday.

“They would not file this if they didn’t have a serious claim,” Heller said.

Consumer Watchdog
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