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PUC to Chart Varied Territory

February 15, 1987|BRUCE KEPPEL | Times Staff Writer

The 2,000 decisions that the California Public Utilities Commission will make during the next year range from setting rates for tiny "mom-and-pop" phone companies and water suppliers serving the state's hinterland to allocating billions of dollars in revenue sought by some of the world's largest privately owned utilities.

The most controversial matters involve how financial responsibility should be divided for the hundreds of millions of dollars in construction cost overruns at the San Onofre and Diablo Canyon nuclear generating stations.

Other highlights are the regularly scheduled general rate reviews for Southern California Edison and General Telephone and proposed rules for private meetings between commissioners and utility lobbyists.

In the San Onofre case, Edison was outraged by a long-awaited PUC decision last October finding that the utility's shareholders--rather than its customers--should shoulder $344.6 million of the $4.51-billion cost of building the huge nuclear plant in northern San Diego County.

The $344.6 million represents a portion of the cost overruns for the plant, which was finished in 1984. When first proposed in 1970, the facility was expected to cost $437 million and be completed by 1977.

The company maintains that extra costs and delays were either unforeseeable or the consequence of safety requirements imposed by federal regulators following the Three Mile Island nuclear accident.

A PUC hearing officer had accepted that reasoning in recommending that utility customers pay the full bill, a recommendation that was rejected by the commission on a 3-2 vote.

In a related case, Edison shareholders also face having to assume an additional $52 million in overcharges stemming from the company's $1.5-billion investment, a 16% share, in the Palo Verde Nuclear Generating Station near Phoenix.

If Edison wins a reduction in the San Onofre case from the PUC, its liability for Palo Verde will go down as well--to the tune of $20 million for every $100 million dropped from the San Onofre bill.

Even more controversial than San Onofre is the construction cost of the Diablo Canyon nuclear power plant, built in San Luis Obispo County by Pacific Gas & Electric.

William Aherne, director of the PUC public staff, is expected to release its recommendation in that case on March 2. Public hearings will follow before the commissioners finally decide how much of trouble-plagued Diablo's $5.8-billion price tag should be picked up by the utility's customers.

While customers pay for cost overruns through increased bills, a company must subtract such charges from its operating earnings.

Some other major issues before the PUC:

Electricity. Southern California Edison has filed for a total of $524.9 million in revenue increases over the next three years--$301.5 million in 1988, which would be a 5.4% increase; $125.7 million, or 2.3%, for 1989, and $97.7 million, or 1.8%, for 1990.

The increases are needed, the company says, to finance the upgrading of its power transmission and distribution network, building new facilities and to cover anticipated higher operating costs.

If approved in full, the monthly bill for consumption of 500 kilowatt-hours of electricity, typical of a residential customer, would rise to $51.31 from the present $42.88. Hearings begin next month, with a decision due in December.

Natural Gas. The PUC last December adopted a policy aimed at enabling gas utilities to take advantage of federal deregulation, but must now devise specific rules under which Southern California Gas, San Diego Gas & Electric and PG&E carry it out.

Major gas customers now will be able, for example, to buy gas from one company and have it transported by another firm or to retain "standby" service with the utility while temporarily using a cheaper fuel, such as oil.

According to Aherne, the goal was to protect residential and other customers who have no supply alternatives by making it more attractive to major gas users to remain customers in one form or another and thus continue to support the cost of the network.

In addition, Southern California Gas had planned to seek a $158-million rate increase effective next year, but the company and the public staff have since proposed that the PUC delay the usual yearlong review for two years in light of current low inflation rates.

The company would be eligible for annual "cost of living" increases and revision of its authorized rate of return on its investment, however. The delay, if approved, would make it six years between basic reviews of the gas company, a point the consumer group Toward Utility Rate Normalization, or TURN, considers "outrageous."

The PUC will hear the public's view of the proposed delay at a hearing starting at 10 a.m. Thursday at 107 S. Broadway.

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