San Diego Business Journal

San Diego's largest electricity users, reeling from sharply higher utility bills, are anxiously awaiting passage of legislation that may limit the amount of money they must pay for power.

Senate Bill 43X, authored by Sen. Dede Alpert, D-San Diego, is intended to rescue medium- and large-sized businesses, which are currently not under a rate cap. The bill would extend to them the same safeguards now protecting residential and small-business customers.

The bill was unanimously approved Feb. 22 by the Senate Committee on Energy, Utilities and Communications. The bill is next scheduled to go before the Senate Appropriations Committee March. 5, said Michael Robson, an aide to Alpert.

The bill is intended to correct an oversight in Assembly Bill 265, which provided a rate cap of 6 & #733; cents per kilowatt hour on electricity used by residential and small-business customers of San Diego Gas & Electric Co., Robson said.

At the time, larger energy users were excluded because lawmakers believed larger users would be able to negotiate cheaper rates on their own, he said.

But that open and competitive market never happened. That left about 4,500 large customers in San Diego paying much higher prices than the everyone else, Robson said.

The freeze would be retroactive to Feb. 7, the day the state began purchasing energy for SDG & E;, he said.

Patrick Hoy, facilities director for ST Microelectronics, is hoping the bill will pass quickly. The company's electricity costs have jumped, even as the company implemented energy conservation measures, he said.

"Our total energy bill has tripled over the last year. And at the same time we've reduced our consumption, per unit produced, by 25 percent," Hoy said.

Without SB-43X, it would be increasingly difficult for the company to remain competitive. The company, which currently employs 350 workers at its Rancho Bernardo facility, is looking to expand, but cannot justify its plan without assurances of stable electric rates, he said.

"From a large-business perspective, it's imperative that things are equal throughout California. We cannot be the only ones paying the exorbitant price," Hoy said.

The Valley Center Municipal Water District is another user looking forward to an extension of the original rate cap. Jere Jarrell, director of finance for the district, said 27 of the 75 meters the district uses are not covered under AB-265.

That means Jarrell must pay market rates for electricity , sometimes as high as 23 cents per kilowatt hour.

The results are dramatic. In the fiscal year that ended June 30, 2000, the district spent $2 million on electricity, he said.

That contrasts sharply with this fiscal year. In the first seven months, the district has already spent $3 million, he said.

Worse, the area's agricultural growers end up footing the bill, Jarrell said.

"Where the impact to us is seen, is I have to pass this increase through to my customers, who are agriculture growers growing avocados, oranges, flowers and that sort of thing," he said.

District customers have seen a 50 percent increase in the "pump zone" part of their water bills , which covers the energy costs of pumping the water to the area, Jarrell said.

Without the rate cap planned by SB-43X, the district will have to impose at least an additional 50 percent increase on pumping charges , and perhaps more, he said.

"We're watching (the bill) very carefully. we've already sent letters to the governor encouraging him to sign it," he said. "We desperately need 43X to be passed as urgency legislation and signed by the governor, so it can be effective as soon as possible."

Art Larson, a spokesman for SDG & E;, said the bill is not yet in final form, and therefore it would be difficult to comment on it. However, he did say the utility supported the bill.

"We've been very concerned about the strains that these high electric prices are having on local business and agricultural customers," he said. "We certainly support these efforts to provide some relief."

Larson was not worried about the effects of undercollected amounts on SDG & E;'s bottom line. He noted AB-265 had a provision in it that allows the utility to eventually collect the outstanding amount owed on utility bills, and expects that SB 43X will have a similar provision, he said.