PUC Divides Power Costs for Utilities
If you’re a San Diego Gas & Electric Co. customer, Thursday was an expensive day.
The California Public Utilities Commission divvied up among the customers of the state’s three investor-owned utilities the costs of long-term electricity contracts the state signed during the 2000-01 power crisis.
The PUC, faced with four complex plans to divide billions of dollars of power purchases by the state’s Department of Water Resources, in a 3-2 vote shifted $733 million in costs to SDG&E;, a subsidiary of San Diego-based Sempra Energy.
In a separate ruling, the PUC increased the utility’s gas distribution revenue -- one of the many charges on a typical bill -- and lowered its electricity distribution revenue.
As a result, SDG&E; bills will get bigger, although the utility was still assessing by how much Thursday.
Edison International’s Southern California Edison predicted slightly lower bills and PG&E; Corp.’s Pacific Gas & Electric Co., which has applied for a rate increase starting Jan. 1, said it would recalculate the boost.
“We are very disappointed with today’s decision and we will be looking to appeal,” SDG&E; spokesman Ed Van Herik said. “That’s $733 million in unwarranted costs for our customers.”
SoCal Edison said in a statement that it supported the PUC’s “conclusion that each utility should bear a reasonable share of the economic burden created by the state’s long-term power contracts. We applaud the commission for rejecting pressure from one utility to shift its fair share of these costs to customers of other utilities.”
The cost shift would shave about $9 off a typical residential bill over 10 years and would reduce the bill of a typical large industrial customer by nearly $145,000 over a decade, Edison said.
The Department of Water Resources stepped in to buy emergency supplies of power during the energy crisis, which caused blackouts across the state and prompted San Francisco-based Pacific Gas & Electric to file for bankruptcy protection.
The PUC’s decision covers department power contract costs retroactive to Jan. 1, 2004, until 2013.
The commission has been struggling for more than two years to sort out the bills from the power emergency and work with other agencies to point the state toward a more stable electricity market.
The key item in the PUC’s decision was how to divide among the utilities $7.4 billion in above-market charges -- a calculation of how much more power will cost than if the contracts were signed today. In an earlier interim allocation, the San Diego utility wouldn’t have had to share any of those charges.
Although the San Diego utility got a $733-million bill, the decision reduced Pacific Gas & Electric’s share by $418 million to $3.31 billion and cut SoCal Edison’s portion $315 million to $3.34 billion.
The PUC also approved about $1.46 billion in 2004 natural gas distribution revenue for Southern California Gas, also a Sempra unit. For San Diego Gas & Electric, the PUC authorized $754.8 million in electricity revenue and $204.7 million in gas revenue.
The authorizations mean a $33-million decrease from current rates for customers of Southern California Gas, an $8.2-million reduction for electricity customers of SDG&E; and a $1.6-million increase for its gas customers.
The commission also directed Edison to search for ways to keep open its 1,580-megawatt coal-fired Mohave Generating Station. The Laughlin, Nev., plant is slated to close at the end of 2005.
*
Reuters and Bloomberg News were used in compiling this report.
