State still not sure if electric rate increase is needed

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The Associated Press

California consumer’s electric rates won’t climb any higher, according to officials from the agency that has spent more than $9 billion buying power on behalf of millions of utility customers.

The state Department of Water Resources, however, did raise by roughly $5 million its estimate of how much money it would need to keep buying electricity and recoup its debts, said department spokesman Don Strickland.

The department says it will need about $13 billion to buy electricity for the customers of three financially ailing utilities and pay its administrative costs through December 2002.

It has bought power for customers of Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co. since January and uses the rates collected by those utilities to fund its power buys.

“The combined effect is a slight increase in the total DWR revenue requirement but this does not effect rates in any way,” Strickland said. The water department said current rates are high enough to cover the new total.

Wednesday was the third time the department had revised its so-called revenue requirement, months after state regulators, consumer advocates and the utilities had begun asking how much the agency was spending.

It took a lawsuit from lawmakers and media groups earlier this year, including The Associated Press, to force Gov. Gray Davis to release details of contracts for future electricity that will be paid with billions of dollars of taxpayer money.

Officials from California’s largest utility and consumer advocates say repeated errors in the department’s own estimates of its financial needs leaves them distrustful of the agency’s forecasts.

“Everybody sees the problem with this agency which has been operating behind closed doors,” said Doug Heller, spokesman for the Santa Monica-based Foundation for Taxpayer and Consumer Rights. “But everyone is prepared to give them more authority despite their Buster Keaton-like trips and falls.”

The utilities, which lose more ratepayer money the higher the department’s funding estimate climbs, say the agency’s tightlipped track record has them worried about a proposed agreement that exempts its spending from review by the PUC.

“Despite repeated requests for information as to how DWR came up with its numbers, requests which have been echoed by all parties – the utilities, the CPUC, and consumer groups alike – the department continues to refuse to make public the information needed to understand and analyze its revenue demand,” PG&E said in a written statement.

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