Electric Utilities Request Rate Hikes

* By seriously considering the electric utilities’ demands for rate hikes (Dec. 28), Gov. Gray Davis and the California Public Utilities Commission seem to have forgotten whom they are sworn to serve. Here’s a reminder: That “P” in CPUC really does stand for “public.”

The utilities’ rationale for gouging the public is their alleged risk of bankruptcy. But state officials should welcome utility bankruptcies. This is the public’s opportunity to set up a state-owned utility that would ensure adequate, affordable power supplies. Publicly owned utilities like the L.A. DWP are the stars of the current crisis, having maintained stable prices and surplus generating capacity.

Many good people work for utilities like Southern California Edison and PG&E;, and their jobs and expertise should be preserved. But the senior management and shareholders deserve no mercy. The state’s disastrous “deregulation” regime is the one the utilities had written to order for them in 1996. They dangled false promises of lower rates, then tried to solidify those illusions with artificial upfront subsidies. The utilities now have the “competitive” market asked for, and they should be forced to accept bankruptcy as an inherent risk of competition.

MICHAEL KATZ

Berkeley

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Prices do not make us poor. Prices are a measure of scarcity that lead us toward more efficient behavior. Higher retail electricity prices are a signal to investors and utility managers to invest in more capacity, because there are profits to be made. And as we saw in San Diego last August, higher prices are a signal to consumers that power is scarce and should be conserved. The PUC’s willingness to consider allowing retail electricity prices to increase is a mere baby step in the right direction.

We have a choice. We can deregulate retail power prices and permit households and firms to adjust their own consumption in response to fuel price spikes (just as we do with gasoline); or we can fix prices below generation costs and ration power with brown-outs, rolling blackouts and voltage drops. We can’t have it both ways. We can’t fix prices and expect power on demand, and the fact that we can’t does not constitute a crisis.

JAMES E. MOORE II

Assoc. Professor, Civil Engineering

and Public Policy, USC

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So, Edison wants to raise rates. Why? Does it want to buy the naming rights to another baseball stadium?

PAUL SCHOWALTER

Cypress

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Excuse me, but how can the electricity market be deregulated if power companies must beg a government agency for approval to increase rates? What if supermarkets had to seek Sacramento’s permission to set the price of bananas? Or fast-food restaurants the price of a cheeseburger? Or media companies the price of a newspaper?

STEVE KELLEY

Hermosa Beach

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Why is no one calling for regulation of the very high electricity rates being charged to utilities by the independent producers? These companies are racking up profits of 600% to 800%! Doesn’t concern for the general well-being of the people empower the PUC or the Federal Energy Regulatory Commission or some other regulatory body to act decisively?

WILLIAM C. PRYOR

Anaheim