Large California Companies Unhappy With Power Rate Increase : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Large California Companies Unhappy With Power Rate Increase SAN DIEGO (AP) 9.10.01, 10:45a --

After enjoying two decades of low electricity rates, some large California businesses are now threatening to sue following recent increases of up to 49 percent.

In an effort to remedy the energy crisis, a series of decisions by the Public Utilities Commission has swept away 20 years of preferential treatment for the factories, mills and refineries that devour a third of the state's electricity and employ thousands of workers.

In January, during a time of rolling blackouts and soaring wholesale prices, the commission approved laws that plunged the state into the power business and protected more than half of California's residential consumers from any retail rate hikes at all.

In May, the commission slapped a 49 percent increase on large consumers in much of the rest of the California, which had been protected by a 3-year rate freeze. Residents saw less than a 20 percent increase.

The result, business groups say, is a shift in costs to the large consumers and is leading to layoffs and threats to sue for the right to shop around for better deals. Many have joined a massive lobbying campaign aimed at wrangling better treatment from the state Legislature.

"PUC seems to have this wrong-headed idea that they should make those (large) consumers pay more," said Jack Stewart, president of the California Manufacturers and Technology Association. "We think those rates are just too high, it was a wrong decision by the PUC, it has to be retracted."

Advocates for small consumers, however, say even with the recent rate increases those businesses are still a long way from paying their fair share of electricity costs. Households for years have been paying too much for electricity to keep rates low for businesses.

"Starting in 1986, my predecessors started to give certain businesses special breaks," said commission President Loretta Lynch. "Even with this decision (raising rates), we are not making businesses pay their fair share of electricity costs."

A North County Times review of federal, utility and state records confirms that big businesses have enjoyed a cheap ride that began in 1982, when costs were roughly the same for residential utility customers, small businesses and large industrial consumers.

By 1999, average electricity rates in California had fallen 4 percent for large businesses while they had increased 48 percent for households. Small businesses also suffered steadily rising rates, with costs climbing 32 percent from 1982 to 1999.

Backed by economists who argued that a large factory costs less to power than thousands of homes, regulators not only allowed cheaper prices for bringing service to the building, but also cut rates for the electricity itself.

In fact, at one point, Pacific Gas & Electric -- the state's largest utility -- formed a task force to figure out a way it could squeeze residential customers in order to cut rates for large consumers without undermining utility profits.

-- PHO (, September 10, 2001

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