California PUC approves plan to allocate record rate hike
SAN FRANCISCO (AP) – Amid jeers from protesters, the California Public Utilities Commission voted 3-2 Tuesday to increase residential electricity rates by up to 47 percent this summer.
The PUC had approved the overall amount of the rate increase earlier, but not how it was allocated. The allocation was worked out by PUC President Loretta Lynch after heavy lobbying by groups representing industrial, commercial, agricultural and residential ratepayers.
The hikes will begin appearing on June bills, and will be retroactive to March 27 – the day the overall rate increase was approved.
The vote took place amid the jeers from protesters, who wore tombstone-shaped placards that read: ”R.I.P. Affordable Energy.”
PUC Commissioner Jeff Brown bellowed back at protesters.
”We cannot walk away from it. We cannot pretend that this is some sort of problem that we can walk away from,” Brown said.
Lynch’s recommendations, which will affect about 9 million customers of the state’s two largest utilities, Pacific Gas and Electric Co. and Southern California Edison Co., were revised versions of a plan she released last week that would have spared many residential users from hikes and placed more of the burden on businesses and farms.
Lynch’s new proposal instead reduced a cap on rate hikes for agricultural customers from 30 percent to a maximum of 20 percent, and it suggested a new rate cap for industrial customers.
But commercial users said they still will be hurt by the revised rate schedule.
”This is probably the worst economic calamity the state has ever seen,” said David Marshall, chief financial officer at Gregg Industries, a 400-person iron foundry in El Monte. ”It has got ramifications well beyond anything that we can begin to understand.”
Gregg already has switched its production cycle from during the day to a night shift to save electricity, Marshall said, but he expects the rate hike plan approved Tuesday to cost Gregg at least $1 million this year.
Consumer rights groups earlier had expressed concern that Lynch delayed a scheduled vote on the plan Monday to change it to shift the brunt of rate hikes away from commercial customers and onto residential users.
A massive outcry from businesses proclaiming the proposed rate hikes would doom California’s economy and a critical statement from Gov. Gray Davis prompted Mike Florio, senior attorney with The Utility Reform Network to fear the worst for residents.
”The big industrial customers have been on a lobbying rampage the past several days trying to get more of the increase placed on residential customers,” Florio said.
Davis appointed three of the five PUC commissioners, including Lynch and Commissioner Jeff Brown, who said Monday he was working to lessen the impact on businesses.
”We can only hope that this extra time means that they’re carefully evaluating a plan that will perhaps be more balanced and more proportional than what they’ve put forward so far,” said Michelle Montague-Bruno, spokeswoman for the Silicon Valley Manufacturing Group that represents 190 busineses.
Since it unanimously approved rate hikes March 27, the PUC has crammed a year’s worth of work into six weeks, struggling to fashion rates that simultaneously recoup the $5.2 billion the state has spent buying power for the customers of the state’s two largest utilities and trigger enough conservation to help fend off some of this summer’s expected rolling blackouts.
All types of ratepayers rallied against rate hikes at public hearings throughout the state last week and at Monday’s meeting.
”I was raised to pay my bills and be responsible,” said April Lankford, a San Francisco resident. ”But I have a right to my own health and safety. That’s about hot water. That’s about turning on the heat when it gets cold. I am not going to not pay my health insurance just to afford electricity.”
The PUC has not gone out of its way to explain how the rate increase will be allocated. Lynch’s initial estimates last week were immediately contradicted by Paul Clanon, head of the PUC’s energy division. The confusion led to varying estimates in California media outlets.
Lynch’s original plan would have raised residential rates an average of 35 percent to 40 percent. Both versions of her plan charge progressively higher rates the more electricity is used. State law protects a big chunk of residential electric bills from any rate hikes, though businesses would have to pay more for every kilowatt.
Low-income customers, customers of San Diego Gas and Electric Co. and those who buy electricity directly from energy wholesalers, such as the California university system, are shielded from rate hikes.
On the Net:
California Public Utilities Commission: http://www.cpuc.ca.gov
Gov. Gray Davis: http://www.governor.ca.gov
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