Utility bills may charge up election

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Stockton Record

SACRAMENTO — A second major utility has announced its intention to bill customers for costs associated with this summer’s skyrocketing power prices, but consumer advocates tried to throw up a roadblock Tuesday by injecting the issue into state political races.

The Utility Reform Network and the Foundation for Taxpayer and Consumer Rights asked candidates for the Legislature and California congressional seats to sign a pledge that they will oppose efforts by Pacific Gas and Electric Co. and Southern California Edison Co. to pass along uncollected wholesale power costs to their customers through future rate increases.

“We don’t want any more lip service. We want it in writing,” said Doug Heller, a consumer advocate for the foundation. “For those who refuse to sign this, we think the public ought to know and be educated.”

There were no takers among San Joaquin County candidates and lawmakers as of late Tuesday. None had yet seen the proposed pledge, which was sent to them in the mail.

Assemblyman Anthony Pescetti, a Rancho Cordova Republican who represents northern San Joaquin County, said he supports the utilities’ attempts to recover their losses as long as payments are stretched out over time to avoid a sudden, sharp rate increase.

PG&E and Southern California Edison have been paying three to four times more for power than they have charged customers, because of a transitional rate freeze imposed by the Legislature while the investor-owned utilities prepared to enter the state’s newly deregulated electricity marketplace.

Southern California Edison announced in a report filed Monday with the Securities and Exchange Commission that it intends to recover $2 billion — the difference between what it paid for power this summer and what it billed its customers — through future rate increases. PG&E has said previously that it plans to recover from customers $2.2 billion in uncollected power costs.

In its report, Edison argued that lawmakers already had laid the groundwork for the utility to recover its costs through a joint resolution approved a day before the end of this year’s legislative session. That resolution, among other things, directs the California Public Utilities Commission to study “cost recovery and allocation of costs” associated with this summer’s spiraling energy prices.

“I think it is clear legislative intent that it is good for the state of California to have strong, healthy, vibrant utilities, because we are the basis of the infrastructure of the state,” said Jim Scilacci, Edison‘s chief financial officer.

But Edison isn’t depending on lawmakers to do what it considers the right thing. The utility said in its report that it is considering filing a lawsuit, if necessary, to collect the $2 billion from customers.

The utilities and the Public Utilities Commission disagree on whether the 1996 rate freeze allows the utilities to recover from customers the cost of power that was purchased in excess of the 5.4-cents-per-kilowatt-hour rate cap imposed by the Legislature’s 1996 deregulation law. That rate was set far above wholesale power costs at the time, but lately the utilities have been paying as much as 25 cents per kilowatt-hour during periods of peak demand.

However, the utilities have also been charging customers a “competitive transition charge” designed to reimburse them for previous investments, called stranded assets, that might not be profitable in a deregulated market.

Consumer advocates say the utilities supported deregulation because they were able to add that charge, and now they are trying to change the rules because wholesale power costs are erasing income on the other side of their ledgers.

Edison and PG&E are grasping at straws here,” said Nettie Hoge, executive director of The Utility Reform Network. “They’ve been on a concerted campaign to convince people that they are entitled to this money and they need a solution immediately. I think that’s because they’re worrying that deregulation is as bad as it looks.”

Pescetti, on the other hand, said the Legislature will send a message that it’s unfriendly to business if it refuses to allow the utilities to recover costs caused by a deregulation scheme imposed on them by the Legislature. He said he plans to introduce a bill next year that would allow the utilities to recover their costs over a long period of time and fix their rates through December 2003 so consumers aren’t shocked by a sudden jump in energy costs.

Pescetti was the only local candidate for state office who took a position on the consumer advocates’ proposed pledge. Democrat Debra Gravert, Pescetti’s opponent in the November election, could not be reached for comment Tuesday. Assemblyman Rico Oller, R-San Andreas, also could not be reached.

An aide to Assemblyman Michael Machado, D-Linden, said Machado had not seen the pledge and could not comment. Republican Alan Nakanishi of Lodi, Machado’s opponent in the 5th Senate District race, also declined to comment.

Consumer Watchdog
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