SDG&E; and PUC Agree on Rate Cut : Average Bill Would Be Trimmed $1.25

San Diego Gas & Electric and the state Public Utilities Commission’s staff reached an unprecedented agreement Monday on a rate reduction plan that would cut the “average” SDG&E; residential customer’s monthly natural gas and electric bill by about $1.25 per month.

The agreement, which is to be signed this morning, came at the start of the PUC’s review of SDG&E;’s general rate case. The full commission must approve the agreement before it becomes effective.

The general rate proceedings that began Monday will help to determine what level of revenue SDG&E; will be allowed to collect each year in order to recoup its various costs of doing business between Jan. 1, 1988, and Dec. 31, 1990.

Typically, general rate cases have been settled only after pitched battles between SDG&E; and the PUC’s Division of Ratepayer Advocates. But the two groups surprised utility industry observers with word of the pre-case agreement.

SDG&E; in December suggested that it had reduced its operating and maintenance costs to the point that annual revenues could be trimmed by about 1.3%, or $13 million a year. The division countered with the demand that SDG&E; cut its revenues by 7.1%, or about $50 million.

The reduction announced Monday fell somewhere between those numbers.

The agreement covered several key parts of SDG&E;’s general rate case, but negotiators failed to reach agreement on portions of the case that ultimately must be determined by the full PUC.

Consequently, if commissioners accept Monday’s agreement, rates would fall an average of $1.25 per month. But if commissioners side with the division on remaining issues, SDG&E;’s gas and electric customers could enjoy even lower monthly bills.

Representatives of the City of San Diego and the federal government on Monday applauded the utility and the division for completing the agreement.

Deputy City Attorney William J. Shaffran said he was “hopeful the city will be able to join in the settlement.” An attorney for the Washington, D.C.-based Federal Executive Agency, complimented SDG&E; and the division staff for “the openness in which they completed these discussions.”

However, Michael Shames, executive director of the San Diego-based Utility Consumers Action Network, blasted the agreement as one that needlessly short-circuited the review process that was created to give the public representation in general rate cases.

Shames on Monday asked the PUC administrative law judge who is presiding over the general rate case to subject the agreement to severe public scrutiny. Shames also contended that the agreement reached by the PUC division and SDG&E; failed to cover several key issues.

Division Attorney Philip Weismehl, who helped to draft the agreement, said Monday that the agreement “was not a back-room deal. . . . It was the product of an unusual and unprecedented series of settlement conferences” that various groups--including UCAN, the City of San Diego and the federal government--were invited to attend.

SDG&E; and the division began negotiations in early January to explore the settlement of some general rate case issues.

According to an early draft, the agreement “is fair and reasonable to both SDG&E; and its customers.” The agreement “alleviates the need for the major commitment of time and resources that otherwise would be devoted to litigating the case in full.”

One SDG&E; executive last week described the agreement as the result of a process that “is more like arbitration than litigation.”

The agreement, if accepted by the PUC, could cut several weeks off the general rate case and save various parties an estimated $1 million in legal expenses, according to the utility executive.