Ready for a shock? Then don't touch next electric bill By Bud Hazelkorn Of the Examiner

Despite a rate freeze guaranteed until 2002, Californians may expect a substantial jump in their electricity bills as early as next week, a public utilities commissioner said at an emergency hearing Wednesday in San Francisco.

Utility representatives asked for rate hikes of between 26 percent and 30 percent.

Before that happens, however, the commission must first judge the credibility of claims made by utility powerhouses Pacific Gas and Electric Co. and Southern California Edison that they are teetering on the edge of bankruptcy, said Public Utilities Commissioner Carl W. Wood.

"We will not take action until we have verified the truth of their claims," said Wood. "If that's what we're faced with, then we may do something."

The extent of the rate hike would depend upon a determination of the companies' financial status, he said.

At the hearing in a crowded auditorium, Roger Peters, PG&E's general counsel, made an impassioned plea for the "financial survival of PG&E and possibly the California economy." He said his company had lost $700 million in November, with worse losses in December. "We're out of credit, and we're close to being out of cash," he said.

Consumer advocate Douglas Heller, speaking on behalf of the Foundation for Taxpayer and Consumer Rights, charged that the hikes were unnecessary. Both companies collected record revenues between March 1998 and May of this year, he said, when wholesale energy prices suddenly took off.

"Now that the golden goose stopped laying, they want the consumers to foot the bill," he said. "Why not make the companies look for market solutions? Their parent corporations just had their best quarters in history. They should go to them to bail them out."

Commissioner Wood later acknowledged in an interview that both Pacific Gas and Electric Corporation and Edison International, as parent corporations, "are quite solvent," but added that they are insulated from the financial woes of their subsidiaries, PG&E and Southern California Edison, by an agreement signed in the 1980s, when the state was first considering deregulation.

Third-quarter revenues for PG&E Corp. jumped 34 percent over the same quarter last year, according to a company spokesperson.

Income for Edison International grew more than 40 percent during the same period, according to its Web site.

Fred Keeley, D-Boulder Creek and speaker pro tem of the State Assembly, suggested at the meeting that the state buy the companies' hydroelectric stations in order to both provide revenue for them and electricity for consumers at a stable rate.

"It will have the same effect as financial assistance to utilities and be quicker than a rate increase," Keeley said. The plan could be financed with revenue bonds, he said.

Heller said his organization, headed by consumer advocate Harvey Rosenfield, would introduce a Proposition 103-type ballot measure in the 2002 elections if the commission went ahead with a steep price hike. Prop. 103, passed in 1998, rolled back insurance rates by as much as 20 percent.

The initiative would require an "immediate refund of unnecessary rate increases and roll back rates to reasonable levels," Heller said. In addition, it would reinstate a regulatory system to protect residential customers, he said.

The utility rate hike is opposed by a host of consumer and environmental groups, as well as by the Office of Ratepayer Advocates (ORA), an adjunct agency to the Public Utilities Commission. The ORA is mandated to "represent independently the interests of all public utility customers and subscribers at Commission proceedings in order to obtain the lowest possible rate for service consistent with reliable and safe service levels," according to its mission statement.

Not everyone at the meeting was opposed, however. "Deregulation has its flaws, but the real culprit is our own success," said Jack Stewart, president of the California Manufacturers and Technology Association. "We've had increased population and an increased industrial base creating a much faster economic engine than in the past."

Stewart said his organization continued to support deregulation but that the state should "fix how energy is bought and sold. The real-time method is not working."

In addition, former PUC president Gregory Conlon blamed the energy crisis on the convergence of three unforeseen elements: no new power generating sites, previous drought years and increased natural gas prices. The previous commission decided on deregulation, he said, because "we thought it would bring rates down. Trust the system."

E-mail Bud Hazelkorn at bhazelkorn@sfexaminer.com

http://www.examiner.com/news/default.jsp?story=PUC.12280

-- Martin Thompson (mthom1927@aol.com), December 28, 2000