Power regulators OK 46 percent rate hike
SAN FRANCISCO (AP) – Amid the jeers of protesters yelling ”Hell, no, we won’t pay,” the state Public Utilities Commission voted unanimously Tuesday to approve electricity rate hikes of up to 46 percent for customers of California’s two largest utilities.
The increases for Pacific Gas & Electric Co. and Southern California Edison Co., which take effect immediately, are the largest in California history.
PUC commissioners, who voted 5-0 for the rate hikes, said they were necessary to head off blackouts this summer and to keep the cash-starved utilities from going under.
However, the PUC simultaneously ordered the nearly bankrupt utilities to pay the state for billions of dollars of electricity it has bought on behalf of their customers, and to pay producers of renewable energy for future electricity deliveries.
”The PUC has done all it can,” commission president Loretta Lynch said. ”We have fought back hard in every venue possible against these unjust energy prices.”
Not all PG&E and Edison customers will face higher bills. The PUC said it would create a tiered system that will protect low-income customers and penalize those customers who use the most electricity.
Ratepayers have labeled the plan a ”rip-off” that could hit as many as 10 million homes and businesses fighting to stay cool amid rolling blackouts and spiraling energy costs. The rate hikes could effect as many as 25 million Californians.
The increase is on top of a 9 percent to 15 percent rate hike the PUC approved in January and made permanent Tuesday. An additional 10 percent increase already is scheduled for next year.
”Our bills have gone from $26 to $70 for a stinking studio apartment and we don’t have a heater, we use the oven to heat up the studio,” said Belinda Lazzerini, 40, who serves fruit smoothies at Jitters & Shakes in downtown San Francisco. ”The laundromat has gone up from $1.50 to $3, so now we will have to clean our clothes by hand and dry them in the basement. It’s crazy.”
Though utilities still cannot set their own rates for electricity because of a rate freeze mandated by the state’s 1996 attempt at deregulation, the PUC has the authority to increase rates. The rate freeze must end by March 2002.
Gov. Gray Davis, who appointed three of the five PUC commissioners, released a statement saying he continued to oppose an immediate rate hike.
”The PUC’s action today was premature because we do not have all the appropriate financial numbers necessary to make a decision. Until we do, I cannot support any rate increase,” he said.
”While I have opposed rate increases, if it becomes clear that a rate increase is absolutely necessary for the good of the state, I will support one that is fair and do my duty to convince Californians of its necessity.”
Last Friday, Davis administration officials informed several key state Assembly members Friday that the state’s power buying for credit-poor Edison and PG&E could cost $23 billion by the end of next year – far more than lawmakers and Davis estimated when they approved legislation authorizing the state’s power purchases.
The PUC meeting was disrupted at least five times by screaming protesters. Before the meeting, a group led by former Green Party senatorial candidate Medea Benjamin stood in the PUC chambers with yellow signs saying ”We Won’t Pay.”
Jason Zeller, an analyst for the state Office of Ratepayer Advocates, said the hikes will be by far the largest in state history.
Sam Sahouria, owner of the Fox Plaza Grocery and Deli in San Francisco, said such rate hikes could be too much for his family-run store to bear.
”It’s terrible, we will probably go out of business,” said Sahouria, who has owned the deli for 15 years. ”It’s very simple – we cannot afford any rate increases.”
The increase was unveiled Monday by Lynch, who said she hoped the increases would force Californians to conserve more energy and would send a message to ”electricity hogs” to ease up on power usage.
”Electricity hogs will have to pay more for the electricity they use, especially over the summer,” said Lynch, who was appointed by Davis. ”The most important aspect of any tiered rate proposal is to motivate conservation.”
Standard and Poor’s kept California under credit watch with negative implications Tuesday after news of the rate increase. The credit rating service said it was not clear how much revenue the state could expect to see, particularly if the tiered rate system prompted more conservation.
Consumer groups said they’re fed up with rate increases.
”We don’t need increases in our bills, we need increases in law enforcement so our governor can protect us from these modern-day robber barons,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica.
Residents already pay on average $65 a month for electricity – 7.2 cents per kilowatt hour to Southern California Edison and 6.5 cents per kwh to Pacific Gas and Electric Co., the state’s two largest utilities.
Lynch’s proposal would mean a 42 percent increase for Edison customers and 46 percent for PG&E customers for electricity alone. But the basic rates for electricity are bundled with transportation costs, transmission costs and conservation programs, making the average price of a kilowatt hour closer to 12.5 cents for Edison customers and 10.5 cents for PG&E customers.
Spokesmen for both utilities say it’s impossible to calculate how much Lynch’s plan would cost customers because the impact of the tiered system is not yet clear.
PG&E and Edison say they’ve lost more than $13 billion since last summer due to high wholesale electricity costs that the deregulation law prevents them from collecting from their customers.
Expectations of the rate hikes cheered the utilities’ shareholders. Shares in PG&E Corp. surged 29 percent on Monday and Edison International’s stock gained 30 percent. Both companies had slight losses Tuesday.
Also Tuesday, California’s Independent System Operator declared a Stage 2 alert, which means electricity reserves were approaching only 5 percent of available power. The ISO, manager of most of the state’s power grid, urged consumers to limit electricity use.
The alert follows two days of statewide rolling blackouts last week.
ISO spokeswoman Stephanie McCorkle said the state started the day 10,000 megawatts short due to power plant repairs, and is missing nearly 3,000 megawatts because many alternative generating facilities remain off-line, in part because haven’t been paid by the utilities.
The Stage 2 alert was triggered when another 1,000 megawatts unexpectedly was lost from the Pacific Northwest on Tuesday afternoon. McCorkle said she didn’t know what caused the loss of Northwest power. The alert was scheduled to stay in effect until 10 p.m.
On the Net:
California Public Utilities Commission: http://www.cpuc.ca.gov
Pacific Gas and Electric Co.: http://www.pge.com
Southern California Edison Col: http://www.sce.com
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