California Electric bill tax suggested

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Published Wednesday, December 27, 2000

Electric bill tax suggested Consumer groups are expected to contest PG&E's push toward a surcharge to pay for turmoil in wholesale markets at a hearing today

The PUC hearings are scheduled to start at 10 a.m. today in the commission offices at 505 Van Ness Ave., San Francisco.

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By Carrie Peyton

SCRIPPS-McCLATCHY NEWS SERVICE

SACRAMENTO -- Pacific Gas and Electric Co. on Tuesday suggested adding a surcharge to electric bills for the next 10 years to pay for just one year's turmoil in wholesale electricity markets.

It also backed away from years of efforts to sell its hydroelectric plants, offering instead to keep them temporarily, boost their worth on paper to $2.8 billion and collect a 12.5 percent return on that figure as part of new, higher electric rates.

Consumer groups are expected to strongly contest such efforts Wednesday morning in San Francisco, when two days of hearings begin into whether regulators should lift a rate freeze and authorize new charges for millions of Californians.

The state Public Utilities Commission will hear from PG&E, Southern California Edison and power users big and small who are disputing how much consumers should pay for the disarray spawned by electric deregulation.

PG&E's power costs will average 45 cents a kilowatt hour in December, at a time when it can only bill customers 5.4 cents a kilowatt hour for the electricity portion of their bills, utility lawyers said in documents filed with the PUC late Tuesday.

They predicted PG&E will run out of cash in the next three to seven weeks because of the "frightening" explosion in wholesale power costs.

Unless the PUC raises rates soon and promises that more rate increases will come later, PG&E said, its credit rating will sink so low that it will not be able to borrow enough money to keep paying for electricity.

The utility also presented regulators with estimates about future power costs that, it said, would require rate increases of 23 percent to 66 percent.

Meanwhile, Gov. Gray Davis said he sought advice on dealing with California's energy crisis during a two-hour private meeting with Federal Reserve Chairman Alan Greenspan and Treasury Secretary Lawrence Summers in Washington on Tuesday, but did not ask them to intervene with utility companies' creditors.

"Suffice it to say they agreed that this is one of the more intractable problems they've seen in the short term, but we will get through this with more conservation and bringing more supply on line," Davis said, appearing on PBS' "Nightly Business Report."

Davis again blamed power generators for exacerbating the crisis by "gaming and marketeering the system," and said Californians "are the victims of a failed experiment."

"This is a serious problem, but we will manage it if everyone does their part," Davis said. "I need some help from the generators -- they can't be charging 800 or 900 percent the cost of electricity. We need more conservation than we've had before and we need to accelerate additional supply."

He said power generators should realize that if deregulation fails in California, "deregulation is over in America. They have a vested interest in seeing that deregulation down the road can work without sacrificing the California economy that is now contributing disproportionately to the nation's growth."

The Democratic governor would not comment on proposed rate increases before the state Public Utilities Commission.

Last week, the PUC ordered the emergency rate hearings that opened Wednesday, and said it hopes to make a decision on rates Jan. 4.

Meanwhile, one of the nation's major energy trading firms, the Oklahoma-based Williams Companies, announced that its fourth-quarter earnings will be much higher than expected, in large part because of profits from selling electricity on California's wholesale market.

While the fiercest battle at the hearings will be fought over how high rates could go, secondary debates began erupting almost immediately over an issue that could be even more important for some consumers -- whose rates will go up the most.

Should people who use only a few hundred kilowatt hours a month be spared?

Should power-guzzling homes be forced onto programs that automatically shut off their air conditioners or bill them tens of times higher for electricity used at 4 p.m. than they pay for it at 4 a.m.?

Should businesses shoulder most of the extra costs while residents get special protection from price swings?

Should low-income discounts be expanded?

Those are among the issues being raised by ratepayer groups in documents filed with regulators since last Thursday's call for emergency hearings.

Millions of dollars can ride on each arcane rate decision that regulators usually take months to mull, after hearing from scores of accountants and lawyers in quasi-legal rate proceedings before an administrative law judge.

"Jan. 4 is a very ambitious date for any kind of final decision," said Michael Shames, head of the Utility Consumers Action Network.

Many consumer groups contend that PG&E and Edison, California's two biggest utilities, should not be allowed to raise rates at all, after collecting an estimated $18 billion in extra payments from customers to fund a transition to electric

San Jose Mercury News contributed to this story.

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


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