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		 Subject: Utilities, Electric: Deregulation: California Governor Contemplates 
Bill to Reduce ...


 
California Governor Contemplates Bill to Reduce Electricity Prices 
Janet Lavelle 
? 
09/29/2000 
KRTBN Knight-Ridder Tribune Business News: North County Times - Escondido, 
California 
Copyright (C) 2000 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM) 

A bill that could give a $150 million bailout to San Diego Gas & Electric 
Co.'s 1.2 million customers if they're hit with high electric bills in a 
couple of years is awaiting Gov. Gray Davis' signature.

Davis has until midnight Saturday to decide the fate of Assembly Bill 1156, 
the only one of a trio of bills the governor hasn't signed that were designed 
to cut electricity rates for SDGOcustomers faced with skyrocketing power 
bills in the summer. 

SDGOcustomers saw their electric bills double and sometimes triple between 
June and August as soaring wholesale electricity rates were passed on to them.

Two years ago, San Diego became the first region in California to fall under 
a new electricity deregulation law, and the summer's wildly fluctuating 
wholesale power market was an unanticipated outcome.

Three weeks ago, Davis signed Assembly Bill 265, which capped retail electric 
rates SDGOcould charge its customers at 6.5 cents per kilowatt hour, 
retroactive to June 1 and extending to January 2002.

The rate cap rescues SDGOcustomers, at least temporarily, from paying the 
wholesale price that soared as high as 19 cents per kilowatt hour this summer.

Davis also signed Assembly Bill 970, which shortened the construction 
permitting process for some new power plants.

The third bill, AB 1156, now on the governor's desk, would set aside $150 
million in state funds to protect SDGOcustomers from high electric bills 
after the rate cap ends.

The money would be used so ratepayers won't be solely responsible for paying 
down any debt SDGOincurs if the company has to buy wholesale power at a 
higher rate than the 6.5 cents it can charge its customers.

The three bills were passed in the final hours of the Legislature's chaotic 
session and only after long days of deal-making between Democrats and 
Republicans.

Davis quickly signed the first two bills but set aside AB 1156, which 
Republican lawmakers had demanded in return for their votes in favor of the 
rate cap Democrats wanted.

When AB 1156 was written a month ago, the governor told some lawmakers he 
wouldn't sign it. Since then, Davis has been tight-lipped on the issue.

Only the governor's veto can kill AB 1156, though. It will become law if 
Davis either signs the bill or leaves it unsigned.

"I don't know what he's going to do, but if he were going to sign it, he 
would have done it by now because he's signed the other two bills," said Sen. 
David Kelley, R-Idyllwild. Kelley co-sponsored the bill in the Senate.

Kelley said he suspected the governor is considering vetoing the bill because 
it would set a precedent for 2003, when Pacific Gas&Electric and Southern 
California Edison Co. fall under the deregulation law and start charging 
their customers market electricity rates.

"I haven't heard anything," said Assemblywoman Denise Ducheny, D-National 
City, the author of the bill.

Ducheny said representatives from Pacific Gas&Electric and Southern 
California Edison were in the Capitol on Wednesday, and she agreed with 
Kelley that the governor is probably weighing whether he wants to set a 
precedent.

"I still think it's right to give people a safety net and assure them the 
state is willing to help so the rates don't adversely effect the economy," 
Ducheny said.

"I hope the governor does decide to sign the bill," Sempra Energy President 
Stephen Baum said Thursday. Sempra Energy is the parent company of SDG&E.

Baum opposes the 6.5-cent cap and said the company will have to borrow money 
to pay the difference between retail and wholesale prices.

His company estimates a so-called "balancing account" that tracks the cost 
will reach $300 million into the red by the end of November and could be $600 
million by January 2002.

Baum blamed the wildly fluctuating wholesale prices on a badly written 
electrical deregulation law the Legislature unanimously approved in 1996. He 
said it was reasonable to expect the state to share in the resulting costs.

As he has done repeatedly in the past few weeks, Baum said he regretted not 
signing long-term contracts with electricity suppliers to lock in lower 
prices. He said he expects that the Public Utility Commission may force his 
company to absorb some of any debt because of its failure to sign a contract.

"I think he'll veto it; it's a dumb law," consumer advocate Michael Shames 
said. "And the only ones who support it are Sempra and the Republicans."

His organization, Utility Consumers' Action Network, considers the bailout 
"premature."

No one knows how much money SDGOmay owe once the rate cap is lifted, and 
Shames thinks it won't be much.

"I liken (AB 1156) to getting a check from the insurance company before the 
estimators come out to calculate the cost of the damage," Shames said.

Shames said SDGOcould end up with little owing in its balancing account 
because some of the expenses will be offset by revenues the company makes 
selling power from San Onofre Nuclear Generating Station.

Reliant Energy has offered SDGOa two-year contract to buy electricity at 5.6 
cents, Shames noted.

"If SDGOsigned the contract, the balancing account wouldn't grow," he said.

Staff writer Dan McSwain contributed to this story. 

Folder Name: Utilities, Electric: Deregulation 
Relevance Score on Scale of 100: 96

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