San Diego Energy Relief Package Not a Done Deal

The Legislature this week fashioned a three-pronged, temporary fix to electricity woes that hurt San Diegans severely this summer, but it is no sure thing that Gov. Gray Davis will sign all the lawmakers’ bills.

What’s more, nobody expects the last-hour action in the Capitol, including passage of a measure to speed up power plant construction, will solve California’s fundamental electricity shortage. Nor will it undo California’s four-year experiment in deregulation that has found San Diegans paying two to three times more for electricity this summer than last.

But politics is the art of the possible, and lawmakers say they accomplished as much as they could given the competing demands they face and mere days to strike a deal.

At a time when San Diegans are angry enough to throw rocks at utility trucks, the politicians worked as much to save their careers as to help their constituents.

“People in San Diego are wondering every single day why something isn’t done to help them,” said state Sen. Dede Alpert (D-Coronado), shortly before the Senate passed her bill to cap electricity rates. “I don’t want it to be said that I didn’t try and I didn’t get this started.”

Already on the governor’s desk are a measure to cut the monthly bills of San Diego Gas & Electric customers by about half and another to make $150 million in taxpayer money available if, by 2003, a rate cap has left the utility with so many losses that it would take steep hikes in monthly bills to cover them.

A third bill went to the governor’s desk Thursday night that would speed the permit approval process for new, clean-burning power plants and spend $50 million on energy efficiency. The money could be used by cities, for example, to put better bulbs in traffic signals.

Backed by environmentalists and utilities, the bill, AB 970 by Assemblywoman Denise Ducheny (D-San Diego) and Assemblyman Jim Battin (R-La Quinta), passed the Senate on Thursday evening, 33-1. The only no vote was cast by Sen. Tom Hayden (D-Los Angeles).

A few hours later it passed the Assembly unanimously, 67-0.

With California’s electricity use growing at a pace that demands about five new power plants a year--and at best only three new ones are expected to be up and running by next summer--the odds grow that California will experience more rolling blackouts.

Weird alliances formed as the bills went through the Legislature, with Republicans--usually opposed to subsidies--pushing for $300 million in taxpayer funds to help consumers and San Diego Gas & Electric cover their costs. The liberal Hayden refused to support the subsidy bill because he said utilities were exploiting a crisis.

Gov. Davis is expected to sign the bill by Alpert and Assemblywoman Susan Davis (D-San Diego) that puts an adjustable cap on San Diego Gas & Electric’s rates until 2003. He is undecided about the $150 million in taxpayer money, a spokesman said.

All 32 Republicans in the 80-member Assembly signed a petition Thursday evening asking the governor to extend the legislative session to deal with California’s electricity crisis.

They would use the time, they said, “to call in government and industry experts from throughout the nation to help us diagnose and develop real solutions.”

But spokesman Steve Maviglio said Davis “is convinced that steps taken in recent days adequately address our short-term goal of providing rate relief from the gouging by energy producers.”

The 1.2 million San Diego and southern Orange County customers of the utility are the first under deregulation in California to pay the full cost of wholesale electricity. Economists say primarily scarcity drove prices high this summer. But many people accuse the few private energy firms that recently bought many of the state’s power plants of charging “unconscionable” prices.

Consumer activists also accuse San Diego Gas & Electric of lackadaisical efforts to hedge against rising prices.

Both the utility and power sellers are under investigation by state and federal energy authorities. Ultimately, many experts say, the tools to fix California’s soaring electricity prices rest with the federal government, which can cap wholesale prices.

Utility executives argue that the fledgling market set up by the Legislature is flawed in ways that allow energy producers to keep prices extraordinarily high, even at night when electricity demand plummets.

“In our judgment there is no higher priority than fixing this market,” said Bob Foster, vice president of governmental affairs for Southern California Edison, whose millions of customers pay rates that are frozen at 10% less than 1996 levels under the deregulation law. That rate gets unlocked in March 2002 at the latest.

“We do not want to expose our customers to wholesale price volatility,” Foster said.

In San Diego, it is not clear yet whether voters will take out their frustration on Alpert, who is up for reelection and faces Superior Court Judge Larry Stirling, a Republican, in November, and on Assemblywoman Susan Davis, who hopes to oust Republican Brian Bilbray for a seat in Congress. Both women voted for deregulation, a key architect of which was state Sen. Steve Peace (D-San Diego), who is seeking to become California’s next secretary of state.

“There’s a real feeling of betrayal,” said Michael Shames, executive director of Utility Consumers Action Network in San Diego. “It’s like, ‘You told us rates would go down.’ Rather than bait and switch, it’s bait and slash. It’s the worst kind of deal.”