CA Utilities, Regulators Spar Over $5 Billion

Consumers and utilities continued to butt heads in California last week over how to deal with almost $5 billion in uncollected revenues by the state's three major investor-owned utilities in the wake of this summer's wholesale electricity price spikes. With retail rates frozen the utilities have only collected a portion of the added cost of power since May. Consumer activists in San Francisco and San Diego last week launched a campaign against the utilities seeking pledges from political candidates throughout the state to oppose attempts to raise consumer rates to recover utilities' costs.

On Friday, with only one left day in which to act, California Gov. Gray Davis was expected to drop a state legislative measure providing up to $150 million in taxpayer funds to help make whole San Diego Gas and Electric over the next three years. The governor had until the end of the day Saturday to sign or veto the measure; otherwise it dies through inaction.

A spokesperson in the governor's office noted Friday morning that Gov. Davis had not acted on the measure and there were no plans at this point for him to act, although he was still wading through several hundred unsigned bills.

"It is time for our elected representatives to say 'no' to these companies," said Nettie Hoge, head of The Utility Reform Network (TURN), a San Francisco-based utility consumer watchdog group, who argues that California's three major utilities have collected more than $14 billion in revenues to cover their stranded costs, more than enough to offset the under-collections this summer. The utilities contend that is mixing apples and oranges.

In appealing to elected officials and prospective officeholders, TURN and several allied consumer groups are asking the officials to prevent any utility rate increase while the state-mandated retail rate freeze is still in effect and to oppose attempts to "end the rate freeze retroactively, "and/or require consumers to pay anything more for electricity costs allegedly incurred" by the utilities.

In earlier filings with the Securities & Exchange Commission and in upcoming state regulatory requests, California's two largest utilities, Pacific Gas and Electric and Southern California Edison, are seeking assurances the monies will be eventually recoverable in utility rates and not left to be absorbed by shareholders. Both utilities are suggesting that under the state's 1996 electricity industry reform law they could now pay off their so-called stranded costs so a four-year-old retail rate freeze could be lifted. That would allow them to recover the full cost of power supplies in retail rates that would vary with the market as SDG&E was doing prior to this summer's corrective legislation re-capping San Diego retail rates (see Daily GPI, Sept. 27).

©Copyright 2000 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.