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California and the West

Flat Charge for San Diego Electricity Urged

Energy: Democrats' proposal would spread costs--to homeowners, small firms, hospitals and schools--over 2 1/2 years. GOP leader in Assembly voices skepticism.

August 24, 2000|MELISSA HEALY and NANCY VOGEL | TIMES STAFF WRITERS

SACRAMENTO — San Diego homeowners would pay $68 a month for electricity for the next 2 1/2 years under a plan announced Wednesday by Gov. Gray Davis and Democratic lawmakers from the San Diego area.

The plan, if signed into law, could mean dramatically reduced bills for residents, small businesses, hospitals and schools in the next few months.

It is a more sweeping version of a rate reduction imposed by state utility regulators Monday. But ultimately, under the new proposal the 1.2 million customers of San Diego Gas & Electric would pay the full cost of this summer's extraordinarily high electricity rates unless federal investigators concluded that energy generators were gouging Californians and ordered them to return profits.

Help also came from Washington on Wednesday, as President Clinton released $2.6 million for additional relief to about 12,000 low-income households in San Diego County and southern Orange County that have seen their electric bills more than double this summer.

Promising to "do what we can to help you get through this summer," Clinton doubled the federal funds available to help low-income Southern Californians pay those bills.

He also called on the nation's energy regulators to speed up an investigation that will put the pricing and distribution decisions of California's energy-utility industry under a microscope.

"There is an unusual impact there, different from virtually any other place in America, and it needs to be examined," Clinton said of California's 4-year-old experiment in electricity deregulation. "I hope the assistance we're giving in the meanwhile will help."

Under a deregulation system adopted by the Legislature in 1996, San Diegans have been the first utility customers in the state to bear the full cost of wholesale electricity. Politicians say they fear a localized economic recession as businesses cut back hours and lay off employees to save on electricity bills.

A bill that would have rolled back and then frozen San Diego's rates at pre-June levels passed the state Senate two weeks ago. But it faced uncertain support from Assembly Republicans and the governor. With the Legislature racing toward an Aug. 31 adjournment, a team of San Diego area lawmakers worked Wednesday to draft another bill that would both cut rates and address the long-term problem of California's electricity shortage, as Assembly Republicans insisted.

Although no bill is yet written, Davis heralded key elements of the plan as a balanced approach that offers rate relief without bankrupting SDG&E. The utility would have to borrow money to cover the difference between what it pays to buy electricity and what it can collect from customers protected by a price cap. But as electricity prices drop over time and customers continue to pay $68 even in winter when they use less electricity, enough should be collected to reimburse SDG&E, the governor said.

In addition, he said, Federal Energy Regulatory Commission investigators may conclude that the handful of private electricity companies that have taken control of about 20% of California's electricity supply under deregulation have charged unjust and unreasonable rates this summer. The commission has the authority to order power generators to return profits.

Saying that such a rescue is a big assumption, some consumer activists accused Davis of going too far to protect SDG&E.

"The priority of this [plan] is to make the utility whole first," said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights in Santa Monica. He said the Legislature should freeze rates in San Diego and reimburse consumers for high bills already paid this summer.

The governor predicted Republican support for the proposal he unveiled with state Sen. Dede Alpert (D-Coronado) and Assemblywoman Susan A. Davis (D-San Diego). The bill to be written, he said, would include language to shorten the time it takes to find sites and get permits for new power plants in California, as Assembly Republicans have demanded.

But Wednesday evening, GOP support appeared uncertain.

"Republicans weren't involved in any discussions," said Assembly Minority Leader Scott Baugh of Huntington Beach. "It's an odd way to negotiate."

He criticized the proposal for "sticking" consumers with 100% of increased electricity costs, while Republicans have offered to spend $300 million of a $1-billion budget surplus to help San Diegans with tax credits.

The governor's plan, Baugh said, "just delays the pain until after the election."

The proposal endorsed by the governor closely follows an action taken Monday by the Public Utilities Commission. But the new plan goes further, extending the $68-a-month charge to all homeowners, regardless of their electricity use. Bills for small businesses that consume 3,500 kilowatt-hours or less each month, plus bills for all schools and hospitals, would be set at $220 until the end of 2003.

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