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O.C's big SD PG&E users hurt

POWER: Mission Hospital and Saddleback College are among larger customers paying market rates.

February 3, 2001

By TONY SAAVEDRA The Orange County Register

Budget planners at Mission Hospital in Mission Viejo are taking a knife to the books.

Administrators at nearby Saddleback College are considering putting a road project on hold, closing off-site classrooms and hiring fewer people next year.

High electricity bills are putting the squeeze on large energy users in parts of south Orange County serviced by San Diego Gas & Electric.

The company was the first of the state's three investor-owned utilities to pass a key threshold under the state's 1996 deregulation law, allowing it to pass along market prices to customers.

An outcry from customers about soaring bills last summer prompted state legislators to cap rates for most of SDG&E's 1.2 million customers at 6 cents per kilowatt-hour. But about 8,000 large users still pay market rates, now at 19 cents per kilowatt-hour.

For Mission Hospital Regional Medical Center, the only trauma center in south county, that means an extra $1.5 million for electricity this fiscal year. The hospital's medical offices are billed at the higher rate, while the buildings housing patients are billed at the lower rate because of an exemption for emergency facilities.

However, even the lower price comes with a caveat: Customers will eventually be charged for the difference between the capped rate and the market rates. Mission Hospital's running tab with SDG&E is $620,000, said Glenn Neal, director of facilities.

"We're carrying that as a liability on our books," Neal said. "We haven't had to pay it today, but the question, when all the dust settles and they come back around, nobody knows."

Neal said the hospital has installed energy-efficient lighting and energy-saving equipment, but still is in a bind with its electricity bills. Because of managed-care commitments, there is no way the hospital can pass the expenses on to patients, he said.

"We're going to have to cut some things somewhere, and my fear is it will come out of operational-type things, like deferred maintenance," Neal said. "We're looking at belt-tightening across the board."

At Saddleback, officials predict the campus will spend an extra $1.11 million this fiscal year for electricity, 119 percent more than last year. December's bill, at $238,428, was more than four times as high as in the same month last year.

This comes at a time when the college has conserved a month's worth of electricity through such simple measures as turning off lights in unused classrooms. But the bills keep rising.

"The good news is we have been able to keep all of this as far away from students and instruction as possible," said campus spokeswoman Susan Lemkin.

The bad news is the college might have to delay construction of a planned perimeter road, not fill all of 16 new faculty positions, freeze other hiring and close rooms in rented facilities off campus, Lemkin said.

"It's at the point where our budget is going to be expended, and it will be mostly on energy," she said.

Meanwhile, managers at the Ritz-Carlton Laguna Niguel are actually saving money during the energy crisis.

General Manager John Dravinski said the luxury hotel joined with others in the Marriott chain to privately purchase electricity from Strategic Energy in Pittsburgh, Pa. The hotels signed a three-year contract that began in November, locking in rates below SDG&E's.

The Ritz-Carlton has saved $200,000 in the first three months of the contract, said hotel spokeswoman Lisa Poppen. "It gives us security, and we can budget ahead on a fixed price, vs. the volatility," Poppen said. But electricity prices could fall below the rates locked in by the contract, she acknowledged. "There's no way we can predict what the prices are going to do."

Copyright 2001 The Orange County Register

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