SDG&E; Rate Reduction Plan Draws Protest : Business Operators Fear Adverse Impact on Co-Generation Projects

The general public won’t get a chance to testify on San Diego Gas & Electric’s recently proposed electricity rate reduction plan when the state Public Utilities Commission convenes a public hearing here Wednesday.

But that schedule didn’t stop more than 40 disgruntled business owners and managers from attending a lengthy preliminary hearing on Monday as show of force aimed at PUC Administrative Law Judge Randy Wu, who chaired the hearing in the state’s downtown office building.

Though the business people, members of the San Diego Energy Alliance and the California Assn. of Manufacturers, were seen but not heard, Wu quickly learned that the silent protest was staged to register opposition to a complex San Diego Gas & Electric rate package that is being discussed during the hearings.

SDG&E;’s electricity rates have driven some local businesses and government agencies to install co-generation units that produce lower-cost electricity. Co-generators also use the waste heat thrown off by those electric generators to heat and cool their buildings or run factory machinery.

Plans for Testimony

Co-generation supporters will testify that the proposed rates would kill many economically beneficial co-generation projects in San Diego.

SDG&E;, according to documents filed with the PUC, will defend its proposed rate package largely with the claim that existing rates subsidize co-generators at the expense of smaller, largely residential customers.

The hearings will run for two weeks in San Diego and resume in December in San Francisco. Wu will then issue a decision that the full commission will use to determine whether the proposed rate package, if accepted, should be adopted late this year or early in 1988.

The hearings that began in San Diego on Monday are part of an arcane “energy cost adjustment clause” procedure that the PUC undertakes every few years to determine whether electric rates need to be changed.

SDG&E; has asked the PUC for approval to reduce its electricity rates by $82.5 million, largely because of recent decreases in the cost of the fuel it burns to produce electricity. The typical residential bill would fall to $60.89 from $62.07 if the rate reduction is approved for homeowners.

SDG&E;’s rates for electricity hit an all-time high in late 1983, when the typical residential bill skyrocketed to $72.75.

Utility Consumers Action Network, a San Diego-based consumer group, and the PUC’s Public Staff Division, which represents the public in rate cases, are supporting the proposed rate reduction, according to filings with the PUC.

Which Customers?

However, UCAN and the public staff disagree with SDG&E; on which customers--residential, commercial or industrial--should receive the lower rates.

The PUC will determine which parts of the proposed rate package--including the section dealing with large users of electricity that often turn to co-generation--should be adopted or modified.

Other California utilities have won PUC approval to adopt electricity rate changes that are somewhat hostile to co-generation, but co-generation proponents in San Diego have argued that “things in this part of California are different,” according to Jerry R. Bloom, an attorney representing the San Diego Energy Alliance.

“Unlike (Pacific Gas & Electric), SDG&E; needs the (electric-generating) capacity that co-generation brings,” Bloom said during a brief opening statement to Wu on Monday. As an intervenor, he was permitted to make a statement.

In addition to the individuals who will speak during the public session on Wednesday, co-generation will be defended by four official spokesmen from the energy alliance, including Father Joe Carroll, who operates the newly opened St. Vincent de Paul shelter in downtown San Diego.

State-of-the-Art System

The shelter’s state-of-the-art energy system is designed around a co-generation unit that would be uneconomical to operate if SDG&E;’s proposed rates are adopted, according to Bloom.

The proposed rate schedule also will be blasted by representatives of hospitals, not-for-profit institutions, state agencies and universities in San Diego.