PUC division presses for cut in gas rates

The consumer arm of the state Public Utilities Commission recommended Thursday that Southern California Gas Co. customers get a $68-million rate reduction starting in 2008 instead of the $140-million increase sought by the utility.

In particular, the commission’s Division of Ratepayer Advocates objected to incentive bonus and compensation programs that were included in the gas company’s rate proposal.

“It is patently unfair for consumers to be asked to pay for excessive executive and management bonus, compensation and stock option programs,” division Director Dana Appling said.

SoCal Gas, the nation’s largest natural gas utility, had filed a proposal in December seeking approval from utility regulators to boost rates for customers beginning next year. The company, a subsidiary of San Diego-based Sempra Energy, serves a territory that includes more than 20 million people spread over 20,000 square miles of Central and Southern California.

Lee Schavrien, senior vice president of regulatory affairs for SoCal Gas and sister utility San Diego Gas & Electric Co., said the ratepayer division was “recommending some adjustments that we don’t think are appropriate.” He added that SoCal Gas disagreed with the group’s conclusions about compensation and employee rewards.

The gas company’s proposal would impose an 11% increase in gas rates for residential customers, boosting bills by $2.36 a month to $62.90 for a typical household using 50 therms of natural gas each month, according to a bill insert distributed by the utility. The hike would take effect Jan. 1, with yearly increases laid out through 2013.

Under the ratepayer division’s plan, the bill for the same customer would go down $1.15 a month to $59.40, according to Aaron Johnson, deputy director of the advocates division. The group’s recommendation also cut back the gas company’s requested funding for certain operation and maintenance expenses and corporate costs, and included lower forecasts for depreciation costs and customer service expenses.

“It’s sort of a little bit here and a little bit there,” Johnson said. He said the compensation costs “were well above industry norms.” The group recommended a $40-million reduction in that portion of the utility’s request to $117 million. The total reflects the cost of all employee benefits, expenses and pensions.

Both Johnson and Schavrien noted that it was typical in complex rate cases to see a big gap between a utility’s request and counterproposals from the ratepayer division and other groups.

Separate rate recommendations are set to be filed today by San Diego-based Utility Consumers’ Action Network, San Francisco-based Utility Reform Network and others. Hearings by the commission will begin in August, with a proposed ruling expected in January.

SDG&E;, which serves about 3.4 million customers in the San Diego region, requested a rate increase beginning in 2008 totaling $198 million for electricity customers and $34 million for gas customers. The ratepayer division countered Thursday with a plan that would trim the rate hike to $90 million on the electricity side and cut $4.3 million from current gas rates.

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elizabeth.douglass@latimes.com