To borrow a little from Shakespeare, the Summer of 2000 in SanDiego 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-hungrynon-utility power plant owners have taken advantage of severesupply shortages to gouge consumers. But what’s the real story?
To that end, federal and state investigations met laate lastmonth to figure out how to ease the pain, so the speak. Are the badguys really the generators, wholesale power marketers andtransmission grid operators? Have they just been wrongly accused?
State officials, lead by Gov. Davis, say the generators aremanipulators who are reaping excessive profits at the expense ofSan Diego Gas & Electric Co.’s 1.2 million electric customers.There is no doubt SDG&E and its suppliers have profited thissummer. 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-peaktimes, such as Sundays, generators have been charging prices fivetimes higher than comparable Sundays a year ago.
On average, state records show considerably fewer megawatts (upto about 700 MW daily) are not bid into the Cal-PX day-of andday-ahead markets. The assumption by critics is that supplies wereintentionally kept off the market to allow Cal-ISO to dip intohigher-priced emergency real-time supplies.
However, generators counter that supplies are tied up inlong-term bilateral or hedging deals. And merchant generators arguethat significantly higher natural gas costs, higher air emissioncredit costs, increased operating and maintenance costs for plantsoperating full time, and hedging and bilateral contracts havedistorted the picture.
As for consumrs before summer ends, SDG&E’s smallestcustomers will have received more than $500 million in relief inthe form of cash rebates or bill credits, not even counting thetotal value of the capped rates retroactive to June 1.
Most San Diego customers pay electric bills of $68 monthly fortheir first 500 kWh of use (70% on average each month), or 13.6cents/kW, which is higher than the average cost/kilowatt in all buttwo states (New Hampshire and Hawaii) as of last year. It’s alsohigher than the 11.4 cents/kW rate currently paid by customers ofthe two other major investor-owned utilities in California, whichhad rates frozen at 1996 levels.
By factoring in rebates and credits, the consumer will gain evenmore. An average $400 rebate for a typical residential customerwill buy another six months worth of electricity at the500-kwh/month volume and 13.6 cents/kW rate.
Consumers in other parts of the country who pay $200-pluselectric bills every summer also question why San Diegans arecomplaining about bills “doubling to $150.”
But it’s not just the monthly bill. California consumer groupscounter that most regions pay rates-per-kilowatt that areconsiderably cheaper, on average, than the typical Californiaelectric bill.
Nationally, only a handful of states average lesselectricity-per-customer than California, which last year used anannual average of 6,670 kWh. Virginia electric customers bycomparison averaged 12,971 kWh; Tennessee power consumers averaged15,253 kWh annually.
Richard Nemec, Los Angeles
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