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August 21, 2000 (AP)
California regulators cut San Diego electricity rates in close vote
MICHAEL LIEDTKE, AP Business Writer


   (08-21) 16:28 PDT SAN FRANCISCO (AP) -- With consumers howling about
unexpectedly high electric bills this summer, California's Public Utility
Commission took a step back from deregulation and cut rates for most San
Diego residents by 43 percent, so that most customers will pay no more
than $68 per month through January.
   By a 3-2 margin, the commission also approved a rate cut for small
businesses and school districts, resulting in estimated bills of $220 a
month for customers that don't exceed strict usage limits of 1,500
kilowatt hours.
   "This isn't going to help anybody," muttered San Diego restaurateur Susan
Bauman as she waved a $10,284 electricity bill showing one of her two
businesses used 30,000 kilowatt hours in July.
   PUC Commissioner Henry Duque, who drafted the proposal, said it provides
some relief while encouraging energy conservation, since customers who
exceed the usage limits will have to continue paying market rates.
   Other San Diegans who attended the hearing called the action woefully
inadequate.
   "We are bleeding to death and this will not stop the hemorrhaging," said
San Diego Supervisor Dianne Jacob. "We are going to die unless we get more
help."
   The PUC rejected an alternative proposal that would have imposed price
controls through 2003 and lowered bills by 60 percent from current levels.
   Ed Guiles, CEO of San Diego Gas & Electric Co., said the alternative would
have accumulated hundreds of millions of dollars in deferred costs. With
interest, those costs ultimately would be passed on to customers beginning
in 2004.
   But even the measure that did pass could end up costing San Diego
customers as much as $100 million after 2001, Guiles said.
   "This is an interim solution that stabilizes the bills for consumers but
does not get to the root part of the problem of high energy prices,"
Guiles said.
   Consumer advocates say customers should not be forced to pay for the
higher rates, now or in the future.
   "The proposals are really just a ruse. They move the burden from the
consumers' checkbook to their credit cards to be paid at a future date,"
said Doug Heller of the Foundation for Taxpayer and Consumer Rights, a
Santa Monica watchdog.
   The deregulation of the state's $20 billion electrical power industry --
imposed under a complex 1996 law that phases in the effects from south to
north -- was supposed to lower prices by creating greater competition.
   But demand has outstripped electricity supplies, due to a growing
population, booming high-tech economy, and less electricity available from
neighboring states that haven't deregulated their systems.
   A sweltering summer in much of California hasn't helped, and cost hikes
and continuing power shortages that caused rolling "brownouts" in the San
Francisco Bay area in June have spurred demands of a repeal.
   Monday's action came at an emergency meeting called at the request of Gov.
Gray Davis, who asked the commission to lower soaring electric bills that
have sparked outrage in California's second largest city -- and fears in
other California regions due to buy electricity on the open market as
early as next year.
   Residential and business customers who receive their power from SDG&E have
seen their electric bills double or even quadruple since their rates were
deregulated in June.
   Jacob and other San Diego-area politicians on hand at San Francisco's
hearings said they were headed to Sacramento to lobby for a state law
proposing to revert rates to 1996 prices. The proposal doesn't specify who
would pay for the rollback.
   Other critics said the PUC's rate limits won't help elderly and sick
people who must run their air conditioning during the hot summer months.
Opponents also warned that small businesses still might have to lay off
employees or move from the area to offset their rising expenses.
   "What we have done is lower the rates for turning on your TV or running
your refrigerator, but basically what we're telling people is, don't turn
on your air conditioner," said PUC Commissioner Carl Wood, who wanted the
steeper rate cut that failed Monday.
   The cap adopted Monday applies to residential customers who limit usage to
500 kilowatts per month. About 70 percent of homes in San Diego fall under
the cap, estimated Duque.
   The prevailing market rate has soared under deregulation.
   On August 13, the average wholesale price for San Diego electricity was
$117 per megawatt hour, up from $25 per megawatt hour at a comparable time
last year, said Wood.
   The estimated $68 cap for residential customers will remain in effect
through January 2001 and then increase to a projected $75 cap through
December 2001.
   The projected $220 cap on electric bills that applies to businesses and
school districts will increase to $240 per month after January.
   Under deregulation, private utilities were required to sell off their
power plants and open their markets to electrical resellers, and buy power
on the open market, paying an amount that may fluctuate from day to day.
   But the state has been shunned by some power developers who are uncertain
about deregulation, and few new power plants are in the works.

   ------=?   On the Net:?   California PUC: http://www.cpuc.ca.gov?   California ISO: http://www2.caiso.com?   Energy Department electricity statistics: http://www.eia.doe.gov?   North American Electric Reliability Council: http://www.nerc.com?   Utility Consumers Action Network: http://www.ucan.org???----------------------------------------------------------------------?Copyright 2000 AP?