Flat Charge for San Diego Electricity Urged

San Diego homeowners would pay $68 a month for electricity for the next 2 1/2 years under a plan announced Wednesday by Gov. Gray Davis and Democratic lawmakers from the San Diego area.

The plan, if signed into law, could mean dramatically reduced bills for residents, small businesses, hospitals and schools in the next few months.

It is a more sweeping version of a rate reduction imposed by state utility regulators Monday. But ultimately, under the new proposal the 1.2 million customers of San Diego Gas & Electric would pay the full cost of this summer’s extraordinarily high electricity rates unless federal investigators concluded that energy generators were gouging Californians and ordered them to return profits.

Help also came from Washington on Wednesday, as President Clinton released $2.6 million for additional relief to about 12,000 low-income households in San Diego County and southern Orange County that have seen their electric bills more than double this summer.

Promising to “do what we can to help you get through this summer,” Clinton doubled the federal funds available to help low-income Southern Californians pay those bills.

He also called on the nation’s energy regulators to speed up an investigation that will put the pricing and distribution decisions of California’s energy-utility industry under a microscope.

“There is an unusual impact there, different from virtually any other place in America, and it needs to be examined,” Clinton said of California’s 4-year-old experiment in electricity deregulation. “I hope the assistance we’re giving in the meanwhile will help.”

Under a deregulation system adopted by the Legislature in 1996, San Diegans have been the first utility customers in the state to bear the full cost of wholesale electricity. Politicians say they fear a localized economic recession as businesses cut back hours and lay off employees to save on electricity bills.

A bill that would have rolled back and then frozen San Diego’s rates at pre-June levels passed the state Senate two weeks ago. But it faced uncertain support from Assembly Republicans and the governor. With the Legislature racing toward an Aug. 31 adjournment, a team of San Diego area lawmakers worked Wednesday to draft another bill that would both cut rates and address the long-term problem of California’s electricity shortage, as Assembly Republicans insisted.

Although no bill is yet written, Davis heralded key elements of the plan as a balanced approach that offers rate relief without bankrupting SDG&E.; The utility would have to borrow money to cover the difference between what it pays to buy electricity and what it can collect from customers protected by a price cap. But as electricity prices drop over time and customers continue to pay $68 even in winter when they use less electricity, enough should be collected to reimburse SDG&E;, the governor said.

In addition, he said, Federal Energy Regulatory Commission investigators may conclude that the handful of private electricity companies that have taken control of about 20% of California’s electricity supply under deregulation have charged unjust and unreasonable rates this summer. The commission has the authority to order power generators to return profits.

Saying that such a rescue is a big assumption, some consumer activists accused Davis of going too far to protect SDG&E.;

“The priority of this [plan] is to make the utility whole first,” said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights in Santa Monica. He said the Legislature should freeze rates in San Diego and reimburse consumers for high bills already paid this summer.

The governor predicted Republican support for the proposal he unveiled with state Sen. Dede Alpert (D-Coronado) and Assemblywoman Susan A. Davis (D-San Diego). The bill to be written, he said, would include language to shorten the time it takes to find sites and get permits for new power plants in California, as Assembly Republicans have demanded.

But Wednesday evening, GOP support appeared uncertain.

“Republicans weren’t involved in any discussions,” said Assembly Minority Leader Scott Baugh of Huntington Beach. “It’s an odd way to negotiate.”

He criticized the proposal for “sticking” consumers with 100% of increased electricity costs, while Republicans have offered to spend $300 million of a $1-billion budget surplus to help San Diegans with tax credits.

The governor’s plan, Baugh said, “just delays the pain until after the election.”

The proposal endorsed by the governor closely follows an action taken Monday by the Public Utilities Commission. But the new plan goes further, extending the $68-a-month charge to all homeowners, regardless of their electricity use. Bills for small businesses that consume 3,500 kilowatt-hours or less each month, plus bills for all schools and hospitals, would be set at $220 until the end of 2003.

The plan would be retroactive to June 1, 2000, so homeowners who paid more than $68 on a monthly bill this summer would be credited on a future bill.

As for the federal funds, about 300,000 households in the SDG&E; service area could be eligible. A family of three must have a yearly income of less than $27,829 to receive the aid. But low income alone does not assure access, even to the newly expanded pool of funds, because the federal money is not enough for all who need it, said Sandra Vinson, deputy director of programs for the California Department of Community Services and Development.

For small-business owners, who have warned that skyrocketing energy costs could bring financial ruin, Clinton offered a modest helping hand, ordering the Small Business Administration to step up its efforts to offer such firms special loans. Those loans can be used to help pay unusually steep electric bills, Clinton said.

The federal energy commission also announced a formal investigation into California’s electricity market, describing the action as separate from a previously announced nationwide fact-finding examination of electricity prices. The commission said it will investigate a charge filed Aug. 2 by SDG&E; that the state’s deregulated power market is “fundamentally flawed and inherently incapable of producing workable competition to protect the interests of consumers.”

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Vogel reported from Sacramento and Healy from Washington. Times staff writers Chris Kraul in San Diego and Nancy Rivera Brooks in Los Angeles contributed to this story.

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Eligibility by Income

The following figures represent the maximum income families could earn and still be

considered for the proposed new Cal Grants.

Besides income, eligibility depends on a variety of financial criteria, such as number of children in college. Cal Grant A is targeted at moderate-income students with B averages and aims to cover their college fees. Cal Grant B is aimed at poor students with at least a

C average; it offers a modest stipend to start college and helps with fees later on.

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College Bound

Officials hope the expansion of financial aid will increase the rate of college enrollment in California. The state ranked 39th in the nation in the percentage of high school graduates going on to college in 1998.

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Sources: California Student Aid Commission; Council for Opportunity in Education

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COPING WITH THE SURGE IN ELECTRIC BILLS

Consumers who have seen electricity costs soar are just trying to get by until rate relief arrives. A20