Power regulators to consider increasing rates by up to 46 percent


Tuesday, March 27th 2001, 12:00 am
By: News On 6


(SAN FRANCISCO) - California's top energy regulator is considering raising rates by almost 50 percent to send a message to ``electricity hogs'' to ease up on power usage.

Ratepayers have labeled the plan a ``rip-off'' that would hit 10 million homes and businesses fighting to stay cool amid rolling blackouts and spiraling energy costs.

The higher rates could be in effect as early as Tuesday, after the Public Utilities Commission hears its president's plan to raise prices by an average of 3 cents per kilowatt hour.

``Electricity hogs will have to pay more for the electricity they use, especially over the summer,'' said Loretta Lynch, the PUC's chief, who was appointed by Gov. Gray Davis. ``The most important aspect of any tiered rate proposal is to motivate conservation.''

The increase later would be subject to a tiered rate system designed to protect consumers who conserve, while charging heavy users more, Lynch said. But some residents say they're fed up waiting.

``We are being held hostage by a handful of energy companies that, under deregulation, got control of our electricity supply,'' said Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. ``Until our elected officials start acting to protect us, we are going to be at their mercy, at the mercy of this rip-off.''

Residents already pay on average $65 a month for electricity _ 7.2 cents per kilowatt hour to Southern California Edison and 6.5 cents per kwh to Pacific Gas and Electric Co., the state's two largest utilities.

Lynch's proposal would mean a 42 percent increase for Edison customers and 46 percent for PG&E customers for electricity alone. But the basic rates for electricity are bundled with transportation costs, transmission costs and conservation programs, making the average price of a kilowatt hour closer to 12.5 cents for Edison customers and 10.5 cents for PG&E customers.

Spokesmen for both utilities say it's impossible to calculate how much Lynch's plan would cost customers because the impact of the tiered system is not yet clear.

Davis has repeatedly said he is not in favor of electricity rate increases. But in a speech Monday, Davis said he didn't have the power to order the PUC, an independent body, to maintain current rates.

``It's still my expectation that we can work within the existing rate structure,'' Davis said. ``As governor, I have not decided there should be a rate increase, and as governor, I have not decided that tiered pricing makes sense.''

Davis has appointed three of the five PUC commissioners.

The proposed increase would be on top of the 9 percent to 15 percent hike the PUC approved in January, and an additional 10 percent increase already scheduled for next year.

Consumer advocates argue the PUC, Davis and the Federal Energy Regulatory Commission are not doing enough to bring down exorbitant rates charged by out-of-state power generators.

``The generators should be forced to take lower prices,'' said Michel Florio, a senior attorney for The Utility Reform Network, who added that the state should use its powers of eminent domain to seize the power plants and run them itself.

``If the governor isn't willing to seize the power plants, then maybe we will,'' Florio said, adding that TURN and other consumer groups are considering initiatives to remedy the state's failed attempt at deregulation.

PG&E and Edison say they've lost more than $13 billion since last summer due to high wholesale electricity costs that California's 1996 deregulation law prevents them from collecting from their customers.