In an unprecedented special session Monday, the five-memberCalifornia Public Utilities Commission provided added retailelectricity rate relief for San Diego consumers who are stillreeling from this summer’s rate shock.

The regulators set aside recommendations from the area’s majorutility provider, San Diego Gas and Electric, which argued that theaction violates federal law, and therefore needs to be dealt withby federal energy regulators in Washington, DC.

By a 3-2 vote along political lines, the CPUC instituted ratecaps for residential and small business customers staying withinpre-set usage levels, an option favored by the appointees of theprevious governor, Pete Wilson, but not preferred by any of the SanDiego elected and consumer officials who spoke, or the two CPUCappointees of current Gov. Gray Davis. This inevitably means thatthe Democratic-controlled state legislature will attempt to pass abill providing a rate roll back to July 1999 levels in the next fewdays and weeks.

The stabilization plan is to provide a transition to astepped-up retail hedging, or “levelization,” plan that SDG&Eis ordered to file with the regulators by Sept. 30. In a separateaction, the CPUC announced it would hold public hearings Wednesdayand Thursday this week in San Diego as part of its investigationinto the causes of the summer wholesale price spikes, prior toholding a pre-hearing conference Aug. 29 to identify the issues theregulators intend to cover in the investigation.

“I am satisfied now that it is legal for this commission toprovide rate relief for San Diego (without violating federal law),”said CPUC President Loretta Lynch, who is an attorney.

The alternative rate relief proposal sponsored by CommissionerHenry Duque provided for the collection of unrecovered wholesalepower costs by SDG&E in a “transition balancing account” thatwould allow the utility ultimately to be made whole for its costsof power at some future point. This provision was not provided in acompeting measure sponsored by Commissioner Carl Wood. In addition,the Wood proposal would stay in effect through 2003, while thetactic adopted runs out at the end of next year, 2001.

“The bill stabilization plan is designed to provide an orderlytransition to a levelized payment plan (LLP), which allowscustomers to spread out projected electric costs over a year,” theCPUC news media announcement said. “The LPP program will useprojects of electric rates to avoid shortfalls that might leavecustomers facing large adjustments at the end of the year. “

Under the adopted plan, which is sure to be challenged in boththe courts and the legislature, residential customers using 500 kWhor less monthly will pay no more than $68 monthly through Jan. 31,2001, and $75 for the rest of next year. Small businesses using1,500 kWh or less monthly will pay no more than $220 monthlythrough Jan. 31, 2001, and $240 monthly for the rest of next year.It also provides a mandated levelized billing program for SDG&Ecustomers with a provision for customers opting out of the programis they don’t want to pay the same monthly charge regardless ofusage.

Former CPUC President Richard Bilas, an economist, said he”reluctantly” supported the alternative rate stabilization measure.”The prudent course would be to avoid unintended consequences onconsumers, meaning we allow time for more study on a statewidebasis before leaping into a bill stabilization plan for San Diegoor any area of the state. We haven’t even held our first meeting onthe investigation of this matter. I do feel that precipitous actionis unnecessary in light of our Aug. 3 decision taking temporarysteps while we took other steps to provide more long-lastingrelief.

“I thought we had already provided interim rate relief, butapparently the (state) Senate did not agree and has enactedlegislation that could result in San Diegans paying a hugesurcharge in the future and increased cost of financing bySDG&E.”

Bilas said that San Diego consumers have “clearly and unfairlybeen made the guinea pigs for this state’s electric restructuring.”But he added that citizens and businesses are now responding towhat they know are “price signals” each time the state’stransmission grid operator (Cal-ISO) issues a power watch day.

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