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Energy Prices in Eye of the Storm Again

Energy Prices in Eye of the Storm Again

Utility Blasts Consumer Group Over Inaction on State Rate Increase

BY LEE ZION

Staff Writer





San Diego Gas & Electric Co., warning that its customers could be facing a “huge and inequitable” rate increase, is blasting local ratepayers’ advocates for their alleged inaction on the issue.

William Reed, vice president of SDG & E;, fired off a letter Nov. 19 to the Utility Consumers’ Action Network, calling on UCAN to end its “inexplicable silence” on the issue.

The potential rate increase in question is a follow-up to an earlier increase that went into effect in October. The extra money is intended to cover the costs incurred by the state’s Department of Water Resources for electricity it purchased on behalf of the state’s three investor-owned utilities, SDG & E; spokesman Ed Van Herik said.

Before the previous rate increase took effect, SDG & E; officials had protested that the California Public Utilities Commission was planning to impose the increase in a “postage stamp” fashion. That means utility customers throughout the state would end up paying roughly the same price for DWR’s added expenses, he said.

However, this method failed to consider the costs of transmission. It costs more money to deliver that power to Northern California, so San Diegans end up subsidizing the expensive transmission costs for Pacific Gas & Electric Co. customers, Van Herik said.

Before the original rate increase went into effect, the CPUC seemed to move away from the postage stamp approach. An administrative law judge reached a draft decision Sept. 4 using a more cost-based formula, he said.

Now that the CPUC is getting ready to render a final decision, the agency has indicated it may revert to the postage stamp approach. This would cost SDG & E; customers an additional $300 million over two years, Van Herik said.

Van Herik noted that Michael Shames, executive director of UCAN, has remained silent on the issue.

“We haven’t seen him in this debate. Typically, you would see a consumer advocate fighting for the consumers that he represents. We have not seen any filings by him. He did not give testimony last week. The hearings went on for two weeks on this very issue,” Van Herik said.

Van Herik then called on Shames to join SDG & E; in fighting the commission on the postage stamp allocation.

Shames, however, has a different interpretation of the events.

“This is a classic cheap shot,” he said.

SDG & E; officials hadn’t heard from Shames because he disagreed with their testimony and the paperwork they had filed before the CPUC, he said.

“They know they’re proposing a methodology that’s going to lose. They know the PUC will reject it because it’s fundamentally unsound,” Shames said. “They’re looking for someone to blame. Why not me?”

Also, it’s not simply a matter of SDG & E; customers subsidizing ratepayers up north. The utility had tried to get other ratepayers to subsidize its own costs earlier this year, Shames said.

When the power company negotiated with Gov. Gray Davis over the “balancing account” allegedly owed to SDG & E; by its customers, the utility had attempted to obtain state funds to pay that debt back, Shames said.

Now the rest of the state is returning the favor, he said.

Shames added that he planned to submit additional documentation to the CPUC explaining why the utility’s methodology was incorrect. The date of filing was scheduled for Nov. 29, after press deadline.

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