Utilities’ surcharge proposal is ill-timed

Three of California’s largest utilities are proposing something so heavy-handed, it almost seems like a prank. But this is no laughing matter.

Southern California Gas Co., San Diego Gas & Electric Co. and Pacific Gas & Electric Co. -- which collectively serve about 10 million natural gas customers -- want to shift $90 million in fees paid each year by business customers onto residential customers. The fees primarily go toward helping low-income people heat their homes.

The utilities contend that these fees, which are now shared almost equally by business and residential customers, make California too pricey for companies. If some relief isn’t offered, the utilities say, those companies will pack up and move elsewhere.

Last week, an administrative law judge at the California Public Utilities Commission issued a draft decision rejecting the utilities’ request. But the matter is scheduled to go before the full commission next month, and regulators could still decide to heed the utilities’ wishes.

“The average working family is having a very tough time right now,” said Richard Holober, executive director of the Consumer Federation of California. “The utilities want them to pay more so that profitable companies can pay less. That’s just wrong.”

At issue are so-called public-purpose programs. The most prominent is California Alternate Rates for Energy, or CARE, which provides a 20% discount on energy bills for about 2.5 million low-income households. The programs are funded by a surcharge on monthly natural gas bills.

According to the judge’s draft decision, SoCalGas residential customers currently cover about 51% of program costs in the utility’s service area. Business customers pay about 44% of the cost, with the remainder covered by energy industry sources.

Similar ratios apply to the two other utilities.

Under the utilities’ proposal, SoCalGas residential customers would shoulder slightly more than 78% of the programs’ cost, and businesses would cover about 21%.

In SDG&E;’s case, the burden for residential customers would jump to nearly 84%, while the hit to businesses would drop to almost 16%. PG&E; residential customers would see their percentage rise to about 68%, while businesses would cover about 32%.

When the higher fees are completely phased in after three years, SoCalGas residential customers would see their annual surcharges jump to about $41.50 from $27. SDG&E; customers would pay almost $36, up from just under $25. Surcharges for PG&E; customers would rise to $36 from about $28.

Adopting the utilities’ proposal, the judge said, “will be detrimental to most ratepayers” and to the public-purpose programs, which could end up underfunded if surcharges become “intolerably high” and can’t be paid by some households.

Gillian Wright, director of commercial and industrial services for SoCalGas, said the utility was disappointed by the ruling but was hopeful the commission would approve the companies’ proposal. She was also speaking on behalf of SDG&E;, which, like SoCalGas, is owned by Sempra Energy.

“We have had complaints and frustration and concern from business customers,” Wright said. “The burden of the cost for these social programs is disproportionate for business customers.”

She points out that although businesses represent only about 5% of SoCalGas’ 5 million customers, they’re funding almost half of the programs.

Another way of looking at it, though, is that business customers are among the biggest users of natural gas and account for 28% of SoCalGas’ and SDG&E;’s combined gas revenue. The same goes for PG&E.;

“We’ve got to try to help make it more attractive for businesses to do business in California,” said Jeff Smith, a PG&E; spokesman. “We can make it more equitable by having businesses pay a fairer amount.”

What is equitable, though? Is it equitable to raise rates for families while lowering them for the likes of Chevron Corp. and Bank of America Corp.? Is it equitable to offer a helping hand to employers by increasing the financial burden on employees?

I asked the utilities what their message is to residential customers who face growing challenges as the economy tumbles into recession.

“We think this would help promote a more competitive business environment,” said SoCalGas’ Wright. “Ultimately this would benefit the entire customer base.”

Smith offered a similar sentiment. “We believe this is in the best interests of Californians,” he said.

California is an expensive place to do business, no question. It’s also an expensive place to live and work.

The utilities’ proposal may be well-intended insofar as it addresses the needs of some of their biggest customers. But it also comes off as ill-timed and remarkably hardhearted by making things tougher for people when many are wondering whether they’ll still have a job a few months from now, let alone be able to afford food, rent, healthcare and other necessities.

The judge ruled wisely on the proposal. But there’s no telling how the Public Utilities Commission will vote.

You can make your voice heard by e-mailing the commission at public.advisor@cpuc.ca.gov.

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David Lazarus’ column runs Wednesdays and Sundays. Send your tips or feedback to david.lazarus@latimes.com.