Regulators End Consumer Choice, Raise San Diego Power Rates (AP) 9.20.01, 1:05p --

The state Public Utilities Commission approved a request Thursday from the state Department of Water Resources for an average rate hike of 12 percent for residential customers of San Diego Gas and Electric Co.

The PUC also voted Thursday to end the process of direct access, which gave Californians the chance to choose their electricity provider and was one of the key elements of the failed deregulation system passed in the late 1990s.

But the PUC again delayed action on whether to pass along any electric rate increases requested by the state's power-buying agency to millions of other ratepayers without reviewing the hikes to ensure they are necessary and reasonable.

The rubber stamp agreement is necessary to encourage Wall Street to buy $12.5 billion in bonds the state is issuing to recoup the $9.5 billion and counting it has spent buying power for three financially ailing utilities, according to DWR officials and Gov. Gray Davis.

Critics, including the utilities, consumer advocates and even some PUC members, say following the Legislature's orders to surrender the commission's authority only will hurt consumers.

"The traditional authority of the PUC is to protect the ratepayers' unjust and unreasonable costs, bills, rates," Commissioner Jeff Brown said Wednesday, objected to the possible loss of review. "They're being lost."

The end of direct access will impact customers around the state. For nearly two decades, more than 170 California school districts have trimmed their utility bills by pooling together to buy discounted natural gas.

So when the state tried to open its electricity market to competitors in the late 1990s, it was sensible to try to cut electric bills as well, said Michael Rochman, managing director of the School Project for Utility Rate Reduction.

"Everybody has to live within a budget but school districts can't raise prices if their costs go up," Rochman said. "They don't have the ability to pass it on to their customers."

Though the schools never were able to land a contract with a new electricity provider, they are among thousands of California ratepayers that will lose the option to switch from their utility to a competitor.

The Legislature enlisted the water department to buy power for the three utilities when energy wholesalers refused to sell to them, fearing they would not get paid.

To get its billions back, the state plans to issue $12.5 billion in bonds, and has been told by Wall Street it can expect better rates if it shows it has a guaranteed and flexible incoming flow of money.

Lawmakers also ordered the PUC to suspend direct access to prevent customers from leaving the utilities. Current direct access customers would be allowed to remain with their energy providers through the end of their contracts.

The more who stayed, the bigger the pool of customers who could share the cost of paying back the state through their utility rates. Consumer advocates say a suspension also will keep big businesses from switching providers and leaving smaller residential customers stuck with the state's power bill.

Ending direct access should keep thousands of businesses and institutions from vying for cheaper power or supporting companies that generate electricity from renewable energy.

Though energy providers have told SPURR they wouldn't make a large-enough profit to sell electricity to the schools, Rochman said members hope competition remains and that state officials help it flourish. Rochman says long distance service has vastly improved due to competition, and that utilities could offer similar innovations to customers.

"Why shouldn't they allow you to link your (utility) account with your vacation house in Tahoe with your residence home in San Francisco?" he said. "Why shouldn't I be able to buy my electricity and my Internet service from the same provider if I think I could get a better deal?"

-- PHO (owennos@bigfoot.com), September 20, 2001