Utility Commission Boosts San Diego Rates, Recoups State Money SACRAMENTO (AP) 8.28.01, 9:20a --

California regulators moved Monday to recoup the state's electricity purchases, boosting rates for San Diego customers an average of 12 percent and blocking big businesses from bypassing utilities to buy power.

The California Public Utilities Commission also delegated much of its future ratemaking authority to the California Department of Water Resources. Critics said that gives Gov. Gray Davis' administration too much freedom to raise rates to buy power on behalf of three struggling utilities.

San Diego Gas & Electric residential customers who use less than 130 percent of a basic amount of electricity would see no increase under rates that could be adopted Sept. 6. The higher rates could kick by Sept. 15.

SDG&E spokesman Art Larson said 130 percent of baseline equals about 328 kilowatts per month. While about 40 percent of the utility's residential customers fall below that baseline, the typical residential consumer uses about 500 kilowatts a month.

Residents who use more than 130 percent of that baseline amount would see an average increase of 12.49 percent under a tiered rate structure designed to promote conservation.

San Diego residents using up to twice the baseline would see a 6.04 percent increase; up to three times the baseline would see would see an average 12 percent increase; and those using more than three times the baseline would see a 22.29 percent rate boost.

Small commercial customers would pay 18 percent more; industrial users face a 19 percent increase; and agriculture a 14 percent increase. There is no baseline for other than residential customers.

Larson said the company is reviewing the decision, but SDG&E gets none of the rate increase. It all goes to repay the state for buying electricity for the utility's 1.2 million customers.

No one outside the SDG&E territory would have their rates increased under Monday's proposals, and rates could drop if natural gas prices keep falling, said commission President Loretta Lynch.

However, other commission orders affect how much of existing rate increases go to utilities instead of DWR to repay $13 billion worth of state bonds ready for sale.

The commission's proposal shifts about $500 million a year from Southern California Edison to Pacific Gas and Electric Co. to cover what the commission says are higher costs of providing electricity in Northern California.

That amount is subject to ongoing lawsuits, although Lynch maintained the division proposed by the commission should cover the reasonable costs of both the utilities and DWR.

PG&E said the proposed shift "discriminates against PG&E's customers."

The proposed division would cost PG&E customers 40 percent to 55 percent more to pay back DWR over the next 10 years than it would cost Edison or SDG&E customers, said spokesman Ron Low. He said it was unclear if PG&E rates would have to increase. An Edison spokesman had no immediate comment.

Lynch said the commission is shortening its usual monthlong comment period to just one week so the state's bond sale can proceed quickly this fall.

She said the commission had little choice but to delegate much of its future ratemaking authority to the department, under legislation approved earlier this year that enabled the state to buy power on behalf of the three cash-strapped utilities. The state will be repaid by the $13 billion raised by the bond sale, which requires a revenue guarantee before it goes ahead.

Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights, called the decision a "devastating and costly dereliction of the PUC's duty.

"They're abdicating their responsibility under the state constitution to monitor and scrutinize the purchases of power," Rosenfield said.

Lenny Goldberg of The Utility Reform Network agreed but did laud the commission's decision to cut off utility customers' ability to buy electricity outside utilities after July 1 as "absolutely necessary." Legislators earlier ordered an end to what is known as direct access, but left it to the commission to set a termination date.

Customers who contracted for power with private companies before then will be allowed to complete those contracts, said commissioner Carl Wood. But the retroactive date was included to block other customers from unfairly anticipating the commission's action and signing late contracts to avoid higher rates necessary to repay the state bond, he said.

That decision primarily affects large industrial users, as well as Houston-based Enron Corp.'s burgeoning retail sales in the state, Wood said. Enron's wholesale sales to utilities would not be affected. An Enron spokesman had no immediate comment.

The decision to block outside electricity purchases for as many as 15 years, until the bond is repaid, marks another retreat from California's flawed 1996 deregulation law.

But Lynch argued the $13 billion is already being spent to keep California's lights on. Now that debt must be repaid by those who already used the electricity.

About 16 percent of California's electricity load had been direct access last year, but that dropped to less than 1 percent once the electricity crisis hit, Lynch said.

-- PHO (owennos@bigfoot.com), August 28, 2001