Calif. Power Regulator Calls for Rate Boost

S A N   F R A N C I S C O, March 26, 2001 -- California's top power regulator proposed anearly 50 percent increase in electricity rates today for some 10million homes and businesses, hoping to stave off blackouts thissummer by encouraging conservation.

Loretta Lynch, president of the Public Utilities Commission,said the increase would affect customers of Southern CaliforniaEdison and Pacific Gas & Electric, the state's biggest utilities.

Under the proposal — which follows two earlier increases — rates would go up an average of 3 cents per kilowatt hour and then atiered system would apply, charging heavy power users more thanthose who conserve.

'Hogs' Will Pay More

"Electricity hogs will have to pay more for the electricitythey use, especially over the summer," Lynch said.

The proposal could go into effect as early as Tuesday, when thecommission meets. Lynch and two other members of the five-memberPUC were appointed by Gov. Gray Davis, and the proposal is expectedto win approval.

Davis said he is not in favor of rate hikes, but has no powerover the PUC.

"I can't order or direct an independent body," he said. "I'venot given any advice to them on the subject of a rate increase."

The PUC approved a 9 percent to 15 percent rate hike in Januaryand an additional 10 percent increase is scheduled for next year.

The residential rate for electricity averages 7.2 cents perkilowatt hour for SoCal Edison and 6.5 cents for PG&E customers,though other fees raise the rates to 12.5 cents for all Edisoncustomers and 10.5 cents for PG&E. Lynch's proposal would amount toa 42 percent increase for SoCal Edison customers and a 46 percentboost for those of PG&E.

The average SoCal Edison residential bill now is $70 a month andthe average PG&E residential bill is about $60. Spokesmen for bothutilities said it was impossible to predict how much bills might goup because the impact of the proposed tiered system is not yetclear under the proposed rate increases.

"Never mind unfair, there is no justification for them," saidHarvey Rosenfield, president of the Foundation for Taxpayer andConsumer Rights in Santa Monica.

"Basically we are being held hostage by a handful of energycompanies that, under deregulation, got control of our electricitysupply," he said. "And until our elected officials start actingto protect us, we are going to be at their mercy — at the mercy ofthis ripoff."

Power Crisis Has Already Forced Blackouts

The two utilities have pushed for rate increases, saying soaringwholesale power costs and rate caps under California's 1996deregulation law have left them more than $13 billion in debt andhave pushed them to the brink of bankruptcy.

After Lynch unveiled her plan, stocks of both utilities' parentsrose sharply. PG&E Corp. surged $3.10, or 29 percent, to close at$13.75 on the New York Stock Exchange, where Edison Internationalgained $3.35, or 30 percent, to close at $14.55.

The power crisis led to rolling blackouts in January and earlierthis month as electricity supplies dwindled to nearly nothing.Davis and state lawmakers have scrambled to find solutions.

"It's obvious to me that unless you rob a bank or win a lotteryyou are not going to be able to do this without raising rates,"said state Senate President Pro Tem John Burton of San Francisco.

State officials told Assembly members last week that the state'spower buying for SoCal Edison and PG&E could cost $23 billion bythe end of next year — far more than lawmakers and Davis estimatedwhen they approved legislation authorizing the purchases.

At the time, the state projected it would need $10 billion inrevenue bonds to buy power for the two utilities over a decade — bonds that will be repaid by the utilities' customers over severalyears.

Consumer advocates said the PUC, Davis and the Federal EnergyRegulatory Commission are not doing enough to bring down exorbitantrates charged by out-of-state power generators.

"The generators should be forced to take lower prices," saidMichel Florio, an attorney for the Utility Reform Network. He saidthe state should seize the power plants and run them itself.