Customers Spared $28 Million : Cost of SDG&E; Contracts Put on Shareholders

The state Public Utilities Commission ruled on Friday that San Diego Gas & Electric Co.’s shareholders--not its customers--should be charged for $28 million worth of electricity that SDG&E; imported from the Southwest between 1984 and 1986.

Commissioners ruled that most of the electrical power SDG&E; imported from Arizona and New Mexico during recent years was reasonably priced. However, the PUC ruled that SDG&E;’s customers should not have to pay for costs generated by two specific contracts.

If the PUC order were implemented immediately, SDG&E;’s typical monthly electric bill, based on the use of 400 kilowatts of electricity and 40 therms of natural gas, would fall about 25 cents. However, rates will not be reduced if SDG&E; successfully appeals the ruling.

The rate decrease “might make SDG&E; the state’s low-cost electric utility,” said Michael Shames, executive director of Utility Consumers Action Network, a San Diego-based consumer group. “I haven’t done the calculations, but I think this would make SDG&E; cheaper than Pacific Gas & Electric,” which is now the state’s lowest-cost electric utility, he said.

The decision announced Friday came nearly five years after UCAN first objected to several contracts SDG&E; signed with utilities in the Southwest that have excess electricity for sale.

UCAN in 1984 argued that SDG&E;’s shareholders should absorb as much as $110 million in costs associated with the electric power SDG&E; was importing on its Southwest Power Link transmission line.

“I’m disappointed that it wasn’t more, but the case set an important precedent because utilities now must justify these contracts before signing them,” Shames said.

SDG&E; has consistently argued that the contracts were sound and that they provided San Diegans with a relatively inexpensive and highly reliable supply of electric power.

“We’re very disappointed,” SDG&E; Chairman Tom Page said Friday. “This decision makes the company pay for a major part of the cost of (imported) power--and then deliver that power to our customers free of charge.”

The PUC’s ruling “signals a disturbing and questionable trend in commission policy toward transmission and purchased-power contracts,” said Page, who also complained that the PUC was guilty of “second-guessing.”