Calif. Regulators Endorse Electricity Hike

By
John Howard
January 7, 2006, 10:00 AM ET
2 min read

S A N F R A N C I S C O, Dec. 22, 2000 -- Californians will get stuck with higher utility bills in the new year.

The unanimous action by the Public Utilities Commission onThursday means that hikes likely would take effect beginning Jan.4, affecting 10 million customers of Pacific Gas and Electric Co.and Southern California Edison Co. The level of increase has yet tobe determined.

“Retail rates in California must begin to rise,” the PublicUtilities Commission ordered Thursday. “This is crucial in lightof the extraordinarily serious financial difficulties thedysfunctional wholesale markets have imposed on the utilities.”

However, the commission promised an independent audit of theutilities’ books before ratifying its decision on Jan. 4.

Utilities Blame Wholesale Costs

The two privately held utilities have said they were squeezed byderegulation in the state. PG&E and SoCal Edison blame $8 billionin losses since May on soaring wholesale costs and frozen customerrates.

Commission President Loretta Lynch said wholesale electricitycosts had increased five-fold over three weeks.

“We are operating on an emergency basis,” she said.

Consumer groups balked at the commission’s decision, saying itpaved the way for a bailout to appease investors.

“This is regulation by Wall Street. The commission hasprejudged the case and decided, before any evidence has beenpresented, that the utilities will be granted a rate increase,”said Nettie Hoge, head of the utility watchdog group TURN.

But Dan Richard, of PG&E, said Wall Street’s approval was vitalto fiscal health and that the losses had wrecked the utilities’credit.

Spreading Hike Over Time

Richard said PG&E would set up a rate-stabilization plan tospread the spikes over time. The company earlier proposed a 17percent hike, which would have raised the average $54 monthly billto about $63.

Both PG&E and SoCal Edison complained about the commission’sdelay in responding to the crisis.

“The good part is, they’re doing something. The bad part is,they didn’t act in October,” Richard said.

Meanwhile, with electricity imports slowing to a trickle,managers of the state’s power grid declared another Stage 2 alertThursday, meaning that power reserves fell below 5 percent.

Consumers were asked to cut back and some commercial customerswere warned they might have to cut power in places. There have beennearly three dozen power alerts since June.