Great Debate: CA Power Firms Vs. Consumers
To borrow a little from Shakespeare, the Summer of 2000 in San
Diego has been the season of consumers' extreme discontent.
Consumers burn their bills in protest, others just are burning.
State officials, led by Gov. Gray Davis, claim profit-hungry
non-utility power plant owners have taken advantage of severe
supply shortages to gouge consumers. But what's the real story?
To that end, federal and state investigations met laate last
month to figure out how to ease the pain, so the speak. Are the bad
guys really the generators, wholesale power marketers and
transmission grid operators? Have they just been wrongly accused?
State officials, lead by Gov. Davis, say the generators are
manipulators who are reaping excessive profits at the expense of
San Diego Gas & Electric Co.'s 1.2 million electric customers.
There is no doubt SDG&E and its suppliers have profited this
summer. But has the profit been excessive?
Public records of the California Independent System Operator
(Cal-ISO) and Power Exchange (Cal-PX) show that even in off-peak
times, such as Sundays, generators have been charging prices five
times higher than comparable Sundays a year ago.
On average, state records show considerably fewer megawatts (up
to about 700 MW daily) are not bid into the Cal-PX day-of and
day-ahead markets. The assumption by critics is that supplies were
intentionally kept off the market to allow Cal-ISO to dip into
higher-priced emergency real-time supplies.
However, generators counter that supplies are tied up in
long-term bilateral or hedging deals. And merchant generators argue
that significantly higher natural gas costs, higher air emission
credit costs, increased operating and maintenance costs for plants
operating full time, and hedging and bilateral contracts have
distorted the picture.
As for consumrs before summer ends, SDG&E's smallest
customers will have received more than $500 million in relief in
the form of cash rebates or bill credits, not even counting the
total value of the capped rates retroactive to June 1.
Most San Diego customers pay electric bills of $68 monthly for
their first 500 kWh of use (70% on average each month), or 13.6
cents/kW, which is higher than the average cost/kilowatt in all but
two states (New Hampshire and Hawaii) as of last year. It's also
higher than the 11.4 cents/kW rate currently paid by customers of
the two other major investor-owned utilities in California, which
had rates frozen at 1996 levels.
By factoring in rebates and credits, the consumer will gain even
more. An average $400 rebate for a typical residential customer
will buy another six months worth of electricity at the
500-kwh/month volume and 13.6 cents/kW rate.
Consumers in other parts of the country who pay $200-plus
electric bills every summer also question why San Diegans are
complaining about bills "doubling to $150."
But it's not just the monthly bill. California consumer groups
counter that most regions pay rates-per-kilowatt that are
considerably cheaper, on average, than the typical California
Nationally, only a handful of states average less
electricity-per-customer than California, which last year used an
annual average of 6,670 kWh. Virginia electric customers by
comparison averaged 12,971 kWh; Tennessee power consumers averaged
15,253 kWh annually.
Richard Nemec, Los Angeles