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Energy PUC OKs rate increase for SDG & E; customers



Energy: Hikes Up to 20% Will Pay for State Costs

It’s official , San Diegans will see their electricity rates climb this month.

The California Public Utilities Commission voted Sept. 20 to authorize a rate increase for customers of San Diego Gas & Electric Co., starting Oct. 1. Business customers will face rate increases as high as 20 percent, while some residential customers will see no increase at all.

The CPUC also voted to rescind “direct access,” under which customers had been able to choose among energy providers. Direct access was one of the cornerstones of California’s energy deregulation plan.

Ed Van Herik, a spokesman for SDG & E;, reminded customers the additional money collected will go to the state’s Department of Water Resources to pay off power purchases made by the state.

The rate increase is actually half what the DWR had originally sought under what Van Herik referred to as a “postage stamp” approach.

That approach would have allocated the statewide rate increase evenly among the utilities, although it costs more to deliver power to Northern California customers. The new approach takes those cost differences into account, leading to a more equitable allocation of the DWR’s energy costs between Southern California Edison, Pacific Gas & Electric and SDG & E;, he said.


Tiered Plan

The plan also raises rates on a tiered plan. Low-income customers, customers using medical devices and customers using less than 130 percent of their baseline allowance of electricity will not see any increase. That’s about 45 percent of SDG & E;’s customers, Van Herik said.

Among residential customers, average users will see their monthly bills rise by about $2 a month, while heavier energy users will see an increase of about 23 percent of the total bill, he said.

Small business customers will face a rate increase of about 14 percent on their electricity bills, while larger commercial and industrial business customers would see an increase of about 20 percent, Van Herik said.

Michael Shames, executive director of the Utility Consumers’ Action Network, said this particular rate increase was not necessarily unfair but it comes at a bad time for the economy.

“We’re going to see a rate increase that coincides with the beginning of a documentable recession, and the prospect of people’s rates going up while their jobs are going into the ether is lamentable,” Shames said.

Shames noted that the cost of DWR’s purchases cannot be audited by the CPUC. However, this did not worry him greatly. For one thing, the DWR is being audited by third parties, he said.


Hike Cut In Half

For another, the CPUC has done a good job of forcing the state agency to justify its proposed rate increases. In fact, due to earlier questions posed to the DWR, the CPUC was able to cut the requested rate increase to San Diegans in half, Shames said.

As to the issue of direct access, Shames did not categorize it as an abandonment, but a suspension. That suspension will be lifted once large electricity customers “get their act together,” he said.

At issue is who ultimately pays for the electricity bought by the DWR. When the DWR entered into its long-term contracts, it did so with the understanding that it would be buying energy to benefit all Californians , including large electricity customers, Shames said.

However, some of these customers may be looking to switch providers, leaving smaller customers with the responsibility of paying for those purchases, he said.

Large customers benefited from DWR’s purchases at a time when nobody could buy power because of market uncertainty. Now, those same customers should contribute to paying those contracts off, Shames said.

“At the time, I didn’t hear them screaming, saying, ‘No, no, no, don’t buy any power. Leave us in the dark,'” he said. “They should be making their fair contributions. Why should small customers get stuck holding the bag?”


Direct Access

Currently, direct access , one of the promised benefits of deregulation , is not available to small customers. As originally envisioned, customers would be able to shop around for their energy providers, thus locking in the lowest price, Shames said.

However, when deregulation failed last year, alternative energy providers were not able to secure electricity at a competitive price in an uncertain market. Many power providers gave up, returning their residential customers to SDG & E;, he said.

In the immediate future, direct access will be available only to large customers, Shames said.

“The residential markets has effectively been closed down, and probably will for the next five years. For large customers, there may be more options available, if the large customers can reach accommodation concerning the payment of the long-term contracts,” he said.

The issue could be resolved as early as December, if state lawmakers act to address direct access, Shames said.

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