Performance-Based Rates Approved for SDG&E
With the advent of ending its electricity rate freeze this
summer and moving to a more volatile pricing environment, San Diego
Gas and Electric Co. was given a new incentive rate mechanism to
determine its future utility revenue needs by California regulators
last week. Current rates will not change because of the new
"performance-based ratemaking" (PBR) system, but the system will be
used the next time the regulators review SDG&E's performance.
The PBR mechanism provides potential rewards for SDG&E if it
meets or exceeds pre-determined goals for service, safety and
reliability, according to the California Public Utilities
Commission, which approved the new system. All of the other major
utilities in the state currently operate under some form of PBR or
are proposing to do so.
The CPUC noted that in two months SDG&E will begin providing
"service guarantees" to customers. "Credits," ranging from free
installations or dollar rewards, will be given to customers who do
not receive service within a four-hour bloc of time requested. The
PBR includes an indexing mechanism in which rates are adjusted
annually based on inflation, productivity and other factors.
SDG&E's productivity factor will increase over time and vary
between gas and electric service. For gas, it will be 1.08% in the
year 2000 and 1.38% in 2002; for electricity, it will be 1.32% in
2000 and 1.62% in 2002.
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