Utility Cost Spike May Skewer Angry Town

Here on the cold eastern slope of the Sierra, townsfolk have stared catastrophe in the face, from forest fires and epic snowstorms to the slow torture of lumber mill layoffs.

But ask almost any of the old-timers, and they say the same thing. Nothing has hit Susanville quite as hard as California’s energy crisis.

The town has been in turmoil ever since the tiny local utility district, the sole source of power to 10,000 customers in Susanville, announced plans a few weeks ago to raise electricity rates as much as 162%, one of the biggest spikes anywhere in the crisis-plagued West.

Elderly residents worry about skyrocketing power bills gobbling their retirement checks. Small-business owners talk of closing up shop. Big firms are shopping for diesel generators, vowing to jettison any link to the power grid. Even level-headed Chamber of Commerce types warn that out-of-sight electricity bills could send Susanville, already an isolated and economically struggling prison town, teetering toward depression.

While legislative efforts in Sacramento could provide some relief, many residents remain outraged at leaders of the local utility district--and more than a little frightened.

“You drive around town, it’s dark. People are scared,” said Rick Stewart, owner of Susanville Supermarket. “Everybody has cut back. I’ve got a hot tub on the deck, but it’s not a hot tub anymore. I keep it at 40 degrees.”

Normally not a complaining lot, townsfolk have gotten unruly over the looming rate hike. Throw the bums out seems to be the prevailing mood. A recall is being threatened against the Lassen Municipal Utility District’s five-member board; that is, if the utility’s leaders don’t resign first.

One already has taken that route. Mike Deal, a district director since 1997, threw in the towel last week, citing emotional stress in a terse resignation letter. What pushed him to chuck it, locals say, was an ill-tempered ratepayer who threaten to throttle Deal after a recent board meeting.

Other board members say they, too, have been bullied. The district’s early January meeting was cut short by booing and taunts from the crowd of 300. Sheriff’s deputies were sent in to disperse the pack.

“I understand the frustration, but I don’t understand the attacks,” said John Baxter, district general manager. “We didn’t create this problem.”

As prices began to climb in California last fall, Baxter and the utility held off buying, figuring they’d wait for the traditional wintertime drop in electricity costs.

Instead, the state’s deregulated electricity market defied all the old rules of economic gravity. Prices continued to soar, to a point that the utility district felt obliged in December to snap up an electricity contract it once would have snickered at. Under the deal, the price of electricity could rise to 21 cents a kilowatt, one of the nation’s highest rates and triple what customers of Southern California Edison and Pacific Gas & Electric pay.

Some locals put the blame squarely on Baxter.

“He gambled with our electricity rates,” said Helene Williams, a former county supervisor now leading the most vocal group of utility district foes. “He gambled and lost.”

A final decision on the rate hike could come when the board meets Tuesday. Any increase would be retroactive to Jan. 1, but most residents aren’t waiting to take action.

Over at his market, Stewart has been eyeing a 225-kilowatt diesel generator to keep the lights on and freezers humming. If the rate hike hits hard, he figures he can power the place for about half what he would pay the utility district.

Anticipating big energy costs, he has also laid off half a dozen employees. Such acts of desperation have cropped up all over Susanville. The city’s racquetball club laid off eight people. A pizza kitchen let two of its employees go.

Locals estimate that the worst-case rate increase would strip $17 million out of Susanville’s local economy.

“It’s the worst potential economic disaster for this community I’ve ever seen,” said Randy Givens, a lifelong resident who owns a local beer and soft drink distributing company. “We could become a ghost town. It will be absolutely catastrophic.”

Givens figured that a quarter of the mom and pop markets he supplies would shut down almost immediately, and other businesses would follow. Prices for everything from groceries to gasoline would soar. Frustrated residents would move. Survivors, he fears, would head 90 minutes south on U.S. 395 to shop in Reno.

Elderly residents such as Olive Cork, 83, say they would be particularly hard hit. Everything at her apartment is powered by electricity--stove, water heater and furnace. Her monthly bill could jump to $300, about half Cork’s monthly income.

Outlying residents who rely on well water worry about huge electricity bills to power their pumps. Officials say the high school district could face an annual hike of more than $125,000. Local officials also worry that the two big state prisons, the backbone of the area economy, could begin losing guards and other personnel hammered by high energy costs.

At Idaho Grocery, Robert Urrutia just spent $20,000 on a room-size freezer for his specialty custom meats. But with the looming rate spike, the freezer sits empty, the power off.

“I never would have built it, had I known,” he said. “I had no idea they could screw up like this.”

Just up the town’s main thoroughfare, Patti Glass at Millwood Florist has turned off the 52 track lights rimming her display cases of daffodils and knickknacks. If necessary, she said, she may resort to turning off the cooler where she stores flowers at night.

“I’m sure we’ll be really hurting when this hits,” she said. “But we’re not quitters.”

Officials at the utility district are eyeing a raft of options to help, from quick fixes, such as restructuring their finances, to longer-term solutions, such as participating in efforts to build a power plant or hydroelectricity facility to guarantee a flow of cheaper electricity.

Some critics have suggested that the local utility merge with the neighboring Plumas-Sierra Rural Electric Cooperative, which recently announced a 5% rate reduction for its 6,500 customers.

Baxter has held talks with Plumas-Sierra officials. But any consolidation has legal and economic limits, he said, and at best would involve a lengthy process.

That’s not good enough for people like Williams, who has lost all confidence in the local utility’s leaders.

“People are frustrated, they’re angry, and we’ve every right to be,” Williams said. “One hundred and sixty-two percent! I find it inexcusable. He blew it. It’s over. Finished. End of discussion. He ought to resign, and the rest should go with him.”