PUC Urged to Pull the Plug on SDG&E; Co-Generation Plan

Times Staff Writer

San Diego Gas & Electric’s proposed electricity rate, which opponents claim will kill co-generation in San Diego County, was soundly and roundly thrashed during a daylong public hearing held Wednesday in San Diego by the state Public Utilities Commission.

Only one witness defended the utility’s proposal. The remaining 20 witnesses blasted SDG&E;’s proposed rate schedule.

SDG&E;, in filings with state regulators, has argued that the existing rate forces residential customers to subsidize large industrial and commercial customers that have the capital to build co-generation plants. The plants churn out comparatively low-cost electricity, along with steam and cold water that can be used to heat and cool buildings and heat water.


The utility maintains that residential customers are paying an unfair share of the costs associated with expensive backup generating equipment needed to meet the sudden demand created when co-generation plants shut down and large customers demand electricity.

High Backup Charges

The proposed rate plan, which requires PUC approval, would force co-generators to pay what critics on Wednesday described as an unrealistically high “backup charge” to pay for that generating equipment. Opponents of the plan on Wednesday also complained that SDG&E;’s proposed rate makes its electricity cheaper than power generated by co-generation plants that, under existing rates, are very competitive.

SDG&E; has argued that the rate plan would not adversely affect many co-generation plants in its service area.

Under the proposed rate plan, about half of SDG&E;’s large commercial and industrial users would see rate increases while the other half would enjoy rate decreases, according to SDG&E.; The effect on residential users, however, is more uniform.

When coupled with other SDG&E; rate proposals being considered by the PUC, the package under review Wednesday would produce slightly lower residential rates.

Additionally, the proposed rate package would not increase SDG&E;’s overall revenue base, according to a spokesman who described the package as “revenue neutral.”


Support for Package

Only the spokesman for The Broadway offered support for SDG&E;’s proposed rate package. The department store chain, which has no co-generation plants at its six San Diego County stores, would enjoy lower electric bills if regulators adopt SDG&E;’s proposed rate, according to spokesman Ralph Bean.

The remaining witnesses testifying at the PUC hearing agreed with Utilities Consumer Action Network (UCAN) Executive Chairman Michael Shames’ claim that SDG&E; wants to “commit ‘co-genocide’ ” through a rate package that destroys economic advantages now enjoyed by co-generators.

Shames said the plan will increase electricity bills for many of the county’s schools and churches.

UCAN wants the PUC to toss aside SDG&E;’s proposed backup charge and make up the difference by trimming its operating costs. Utility rates will rise by about $500,000 a year for San Diego County if the rate package is approved, according to a county spokesman. The county has spent $7.5 million on co-generation equipment to reduce electricity bills at the county courthouse and several other county buildings.

Hospitals in San Diego County that use co-generation plants to provide electricity, heat and cool their buildings, and heat water will have to increase patient bills if the rate is approved, according to Matthew Brady, a spokesman for hospitals in San Diego and Imperial counties. Nine co-generation plants worth $22 million probably would become uneconomical to operate if the new rate plan is adopted, Brady said.

‘Financial Hardship’

Palomar College in San Marcos, which recently completed a multimillion-dollar energy efficiency program, would “face a financial hardship” if the rates are adopted, according to Bryant L. Guy, the college’s director of purchasing services.


The proposed rate would turn the college’s spanking new, 650-kilowatt co-generation system into a white elephant, according to Guy. Palomar expects to trim its utility bill by about $5,000 each month, but the proposed rate would boost Palomar’s annual energy bill by about $9,000, according to Guy.

San Marcos-based Hunter Industries might install a co-generation system and backup generators, then “cut the cord and drop off of SDG&E;’s grid,” according to spokesman Gary Estes.

Less than 12 months ago, SDG&E; officials were promoting co-generation as one answer to the county’s growing demand for electricity, complained Estes, who also is chairman of the San Diego Energy Alliance, an industry group that is lobbying against the proposal.

PUC Administrative Law Judge Randy Wu, who is chairing the two-week hearing in San Diego, is expected to issue a decision on the proposed rate package in December. The PUC will use that decision in making its final ruling on the rate package.