Big Bills Ahead From SDG&E;, Lawmaker Warns

Ratepayers could get a new sticker shock in 24 months unless SDG&E; tells customers that an adjustment many believe to be a credit on their monthly utility bills is actually an accruing balloon payment, a state senator said Thursday.

Sen. Bill Morrow (R-Oceanside) said he will introduce legislation next week to force San Diego Gas & Electric to list a customer’s mounting debt on each bill, the result of a deferred billing program enacted by the Assembly.

“It should be like any consumer bill that shows the debt and interest accumulation,” Morrow said. “I want SDG&E; to make it clear with every monthly statement what the customer’s financial debt is.”

Because of a rate relief measure adopted by the Assembly last summer, SDG&E; includes an “electric energy rate adjustment” that is subtracted from every monthly bill. The adjustment varies each month, increasing and decreasing along with the market price of electricity.

The adjustment, which is actually an underpayment, is the difference between the price cap enacted by the Legislature for electricity used by consumers and the wholesale price paid by SDG&E.;

The difference is to be accumulated between June 2000 and December 2002, or December 2003 if the price cap is extended an additional year by the Public Utilities Commission, said SDG&E; spokesman Art Larson.

Morrow said that many ratepayers believe the underpayments are credits. But Larson said the utility has never referred to them as such.

“We said very early on that this is a rate adjustment recorded in a balance account for future collection,” Larson said. “We compared it at the time to a credit card account, accruing interest.”

SDG&E; had already planned to give customers a running balance of the underpayment account beginning with January’s bill, Larson said. He estimated that underpayments for 2000 alone will total $376 million.

If the price cap ends in December 2002, the utility estimates the underpayments will total $750 million. It will increase to $950 million if the cap is extended for another year, Larson said. Collection of the underpayments will begin in 2003 or 2004, depending on when the price cap is lifted.

SDG&E; customers in San Diego County and south Orange County are the first in the state to pay daily market prices for power under a deregulation plan approved by the Assembly.

Consequently, the price paid for electricity by some SDG&E; customers tripled this summer, when sizzling temperatures sent electricity demand skyrocketing in California.

The Legislature put a cap of 6.5 cents per kilowatt hour on the price of electricity paid by consumers. Before the cap, SDG&E; customers paid as much as 24.1 cents.

Morrow said he will also introduce a measure that would allow consumers to pay off the entire bill every month, including the rate adjustment, if they wish.

The legislation that created the price cap does not give consumers an option to pay the entire bill, Larson said. He said the utility would support a measure that would allow ratepayers to do that.

Morrow said it needs to be determined who will pick up the tab for the underpayments and whether there will be refunds for the soaring bills already paid by ratepayers.

Larson said the Legislature has yet to “establish a mechanism to recover the underpayments.”