PUC Advocate Says Gas Rates Should Be Lower

Southern California Gas Co. should lower customer rates next year by $140 million rather than raise them by $100 million as the Los Angeles-based utility has requested, according to an analysis released Friday by the state Public Utilities Commission’s customer advocacy arm.

The Office of Ratepayer Advocates, an independent division of the PUC, also recommended that San Diego Gas & Electric Co. reduce electricity rates by $42.3 million and gas rates by $10.1 million. SDG&E; wants to increase electricity rates by $84.7 million and boost gas rates by $21.4 million.

Both utilities are owned by San Diego-based Sempra Energy. Hearings begin this month. A decision from the PUC isn’t expected until next year.

“We believe that what they’re asking for is too high,” said Danilo Sanchez, a project manager with the Office of Ratepayer Advocates. ORA’s estimates incorporate a lower rate of return and some performance awards that were adopted since the utilities filed their applications in December, Sanchez said.

The recommendations by ORA mark the beginning of what could become a pitched battle over how much the two utilities are allowed to charge their business and residential customers for operations, excluding the cost of natural gas and electricity. Those operational expenses can make up as much as two-thirds of a customer’s bill.

“What ORA is focusing on here is just what it costs to run the buildings, run the trucks, employ the people, do the billing, maintain the distribution lines -- all the nuts and bolts of the utility industry,” said Michael Shames of the Utility Consumers’ Action Network. “They’re saying that the obesity epidemic has spread to our utilities and they need to go on a diet.”

Utility spokesman Ed Van Herik said ORA’s recommendations, if adopted, would lead to cuts in customer service and maintenance programs, among other things.

“We actually interact with our customers and physically run our system, so we believe we have a better handle on what our customer needs are and what we need to do to maintain the reliability of our system,” he said.

Among the differences:

* ORA’s estimate of capital expenditures is $139.5 million below the SoCalGas estimate and $134.5 million below SDG&E;’s.

* ORA forecast $37.2 million more in revenue than SoCalGas and $33.8 million more than SDG&E.;

* ORA calculated lower customer service costs ($35.3 million for SoCalGas and $15.5 million for SDG&E;).