Face the Facts

Mr. Jack Thomas has effectively described some of the difficulties faced by SDG&E; in implementing the 1978 Public Utilities Regulatory Policy Act (“Co-Generation Boom Is Going Bust,” Sept. 20). He even magnanimously agrees that SDG&E; supports “good co-generation.” Difficult or not, co-generation is more than twice as efficient as SDG&E;’s own power plants, and SDG&E; has some of the highest rates in the country.

Facing the facts, SDG&E;’s rate proposal eliminates the investment economics not only of all co-generation but also of every other energy-conserving system existing today. Apparently “good co-generation” to SDG&E; is no co-generation.

Why is co-generation looked on so favorably by San Diego area businesses? SDG&E;’s rates are so high that many businesses are unable to compete for national and international business. That inability costs the San Diego economy significant income and jobs.

Those dollars being drained from San Diego’s economy are not-so-mysteriously appearing in SDG&E;’s record bottom-line profits. Co-generation gives many businesses the opportunity to step out from under the utility yoke that weighs them down each month.

The popular SDG&E; myth is that co-generators do not pay their own way, causing an additional burden on other customers. Co-generators pay large standby fees to cover costs of power when their own systems are not operating (which is rare). In addition, gas service fees and huge interconnection fees are paid by co-generators to SDG&E.; Independent rate experts confirm that the co-generators are in fact paying just about exactly what it costs SDG&E; to serve them.

The co-generation industry supports cost-based utility rates. However, the co-generation industry feels that SDG&E;’s inefficiency and past rate history make it an unlikely candidate to develop truly cost-based rates of its own accord--especially if those rates allow competition in any form to exist.

GEOFFREY W. SMITH

President

American Tool & Engineering Corp.