S.D. Joins in Fight Against Automatic Gas Rate Hikes

The cities of San Diego and Los Angeles joined the Toward Utility Rate Normalization consumer group on Thursday in protesting a request by Southern California Gas Co. for automatic annual cost-of-living adjustments in exchange for freezing basic rates until 1990.

In a hearing before Administrative Law Judge Al Porter of the California Public Utilities Commission, representatives of the two cities objected to the proposed cost-of-living provisions for 1988 and 1989 but supported freezing rates.

Deputy City Atty. William S. Shaffran of San Diego said the city has “great objections” to Southern California Gas’ request that it be granted the so-called “attrition” adjustments in 1988 and 1989. However, Shaffran said the city had no objections to gas company simply forgoing a rate case for two years.

TURN, a San Francisco-based consumer group, called the gas company’s proposal “unprecedented, unlawful and terrible regulatory practice.” The consumer group maintained that a thorough review of Southern California Gas’ figures would probably indicate that its basic rate should be cut.

San Diego-based Utility Consumers Action Network did not appear at the hearing but did register its intent to object at a later date, according to Michael Shames, UCAN’s executive director.

The PUC ordered this week’s hearings in Los Angeles after its public staff division, which represents utility customers, last month negotiated the rate proposal with the gas company. The PUC public staff said a preliminary financial review indicated that consumers would be unharmed and that regulatory resources could be put to better use carrying out the pending deregulation of the natural gas industry in California.

In December, the commission approved, in principle, enabling gas utilities to “unbundle” their services. The policy would allow major customers to buy gas from one company and have it transported by another firm or maintain “standby” service with the utility while temporarily using a cheaper fuel. Hearings on how to implement deregulation are scheduled to begin next month, with a decision expected in June or July.

Southern California Gas argued that its rate proposal, by fixing costs, would help the company retain major gas customers that will be able to use other suppliers as deregulation is carried out over the next two years.

Robert L. Ballew, Southern California Gas’ manager of revenue services, particularly cited the possible loss of “non-core customers” such as large cities, major industries and other utilities, including San Diego Gas & Electric and Southern California Edison. Without these customers, the company said, consumers and small businesses, which would be unable to leave the gas company network, would be stuck with higher rates.

“The natural gas industry has become increasingly competitive, from wellhead to burner-tip, over the last two years,” Ballew said.

Southern California Gas is the supplier for SDG&E.;