Biggest Users Face Huge Rate Hikes Under PUC Plan (AP) -- Customers of California's two largest utilities who use the most electricity will pay much more to run canneries, tumble laundry or water crops under a tiered rate plan implementing record hikes approved in March.

The rate plan proposed Wednesday by Loretta Lynch, president of the state Public Utilities Commission, suggests how the rate hikes should be allocated among residential, industrial, commerical and agricultural customers.

Residential customers of Pacific Gas and Electric Co. and Southern California Edison Co. who use the most electricity would face average rate hikes of 35-40 percent.

And industrial users, such as factories and food processors, could face hikes of 50 percent or more as the state desperately tries to start recouping the $5.2 billion it already has paid to buy power for customers of those financially ailing utilities.

But, under Lynch's plan, as many as half of the 9 million customers of PG&E and SoCal Edison would not see their bills rise at all.

Lynch's plan is the culmination of weeks of discussion among customers, state officials, consumer activists and the utilities about how best to allocate the record rate hikes approved in late March by the PUC.

Those rate hikes will affect all classes of customers, from small families to the huge Silicon Valley facilities powering the Internet, but not all will face the same magnitude of rate increases.

And, even within those classes, customers will pay more depending on when they use the electricity. Those who use power during times of highest demand -- generally, during daylight hours -- will pay the most.

Lynch said her plan "recognizes that energy is expensive at every hour of every day by every customer," but penalizes those who do not cut back on energy use or try to shift to different times of the day.

Under Lynch's proposal, agricultural customers could face rate hikes ranging from 23-30 percent, with increases capped at 30 percent. Industrial users face average increases of 50 percent or more, and commerical users average 34-45 percent hikes.

Her proposal, Lynch said, designs rates to encourage conservation and provides $5 billion over the next year to help pay the state Department of Water Resources for the billions it has spent providing electricity for customers of PG&E and Edison.

Lynch left the door open for future rate hikes, noting that the state provides its electricity-buying expenses to the commission only on a monthly basis, while wholesale electricity prices continue to soar.

Lynch's proposal, and a largely similar proposal from PUC administrative law judge Christine Walwyn, will be reviewed in public hearings throughout the state the rest of this week.

Parties to the distribution plan -- including large industrial power users, consumer watchdog groups and the California Energy Commission -- will have the chance to speak about the two proposals Friday in San Francisco.

The PUC then will meet Monday to approve a rate design that will start appearing on customers' bills as early as June 1. The PUC intially approved the rate increases March 27, and power used during the six-week interim period will be subject to the new rate design and charged to customers over the next 12 months.

Since late March, the PUC has reviewed dozens of proposals for how it should allocate those record rate hikes. Lynch's system divides California utility customers into five different tiers based on how much electricity they use. Under state law, customers face no rate increase for electricity they use that is up to 130 percent of their baseline amount.

Baseline is an average amount of usage based on climate, geography and season. Utilities use this average, set by the PUC, to fairly bill customers so that customers are not penalized for living in the desert rather than in more temperate climes.

Low-income customers within 175 percent of federal poverty levels also are exempt from rate hikes. Those are the first two tiers. Each of the three higher tiers for residential customers are based on how much power is used, with higher rates charged as usage increases.

-- PHO (owennos@bigfoot.com), May 09, 2001