San Diego Officials Decry Rate Plan

Camped in Sacramento to plead for relief from electricity bills that have cost San Diegans hundreds of million of dollars extra this summer, San Diego County supervisors on Monday attacked Gov. Gray Davis’ proposed rate relief plan as a sham.

The governor’s fix, said Supervisor Bill Horn, is window dressing designed to postpone a political backlash until after the governor faces reelection in November 2002.

“They need to put at least $300 million into a bill to hold San Diegans harmless,” said fellow Supervisor Dianne Jacob. “It’s not our fault. We’re innocent victims of a failed deregulation experiment created by the Legislature.”

With four days to go before the Legislature disbands until January, the governor and lawmakers are scrambling to cut the electricity bills of San Diego Gas & Electric’s 1.2 million customers in San Diego and southern Orange County. At the heart of the debate is whether state funds should be used to reimburse San Diegans for the high price they’ve already paid or whether SDG & E should be forced to absorb some of those costs.

The debate--and its implications for California’s two other major utilities--have triggered late-night, back-room lobbying and negotiation. Some observers compare the scramble to August 1996, when the Legislature unanimously passed a massive deregulation bill that nearly everybody now admits was flawed.

“Nothing good gets done in the Legislature in the last four days in the dead of night,” said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “The power companies have the power in the Capitol. The people have the power in open hearings with a more deliberative process.”

On Aug. 10, the state Senate passed a bill by Democratic legislators from San Diego to roll back and freeze rates. Then Gov. Gray Davis last week proposed his own plan, which would limit SDG & E’s exposure to debt by setting monthly bills for homeowners at $68 through the end of 2003. Through hot months and cold, the money collected by then should be sufficient to cover SDG & E’s costs, the governor said.

Republicans offered yet another plan. Their support is necessary in the Legislature to pass an “urgency” rate-relief bill by a two-thirds majority. Scott Baugh (R-Huntington Beach) the Assembly’s minority leader, proposed two weeks ago to use $300 million of a $1-billion budget surplus to fund tax credits for San Diego homeowners and businesses.

Since then, legislators and staff have been working to craft a compromise.

Monday evening, Democratic lawmakers appeared to be moving closer toward the Republican notion of tapping state funds to help SDG & E customers. Legislation still in the works would give the PUC authority to draw upon $50 million or more of taxpayer money if, over time, the price of electricity stayed too high for SDG & E to balance its costs and revenue while its customers are protected by a rate ceiling.

Republicans have drafted a similar proposal, which would trigger use of state funds if, over time, the PUC found that it would take more than a $7-per-month charge on a typical customer bill to pay back SDG & E for its electricity costs. Their plan would cap rates at 6.5 cents per kilowatt-hour.

(For comparison’s sake, San Diegans will pay 20.8 cents per kilowatt-hour for electricity consumed Monday, and the average monthly homeowner bill is $128, up from $53 in May.)

Jacobs, the San Diego County supervisor, had not seen such draft legislation, but said it would fall short of the immediate reimbursement needed to help the region of 3 million people avoid economic recession.

“Our position is very clear: SDG & E ratepayers should . . . in no way pay for the mistakes of others,” said Jacob.

Republicans insist that any rate-relief bill be linked to legislation that speeds the state’s permitting process for construction of new power plants. Both parties Monday were crafting bills to do so.

“We keep putting pressure on the Democrats to put money on the table and streamline permits so we can build more energy plants,” said Baugh. “That pressure has started to pay off.”

Baugh asked the governor to call a special session of the Legislature in September to work on the state’s problems with electricity shortages and price spikes. The governor has not done so.

The nearly 9 million ratepayers of Southern California Edison and Pacific Gas & Electric Co. are shielded from having to pay more than 9.4 cents per kilowatt-hour by a rate freeze imposed in the 1996 deregulation law. SDG & E paid off ahead of schedule its unprofitable investments in such projects as nuclear power plants, thus freeing itself of the rate freeze.

Edison and PG & E lobbyists are roaming the Capitol this week, seeking legislation to guarantee that the more than $1 billion in losses they have absorbed so far this summer are somehow paid for, over time, by their customers.

On Monday, an array of big business groups signed a letter opposing such a bill, including the California Manufacturers Assn. and the Western States Petroleum Assn.