Californians Nervous on Electricity
By JOHN HOWARD
  
09/22/2000 
AP Online 
Copyright 2000 The Associated Press. All Rights Reserved. 
SAN FRANCISCO (AP) - The long, hot summer is ending for San Diego's 
electricity customers. But millions of other Californians fear they could 
face the same kind of misery when deregulation reaches their part of state. 
San Diego-area ratepayers were horrified to see their electricity bills 
triple this summer when the region became the first in California to 
deregulate. 
Next up is Pacific Gas and Electric Co., with 4.5 million customers from 
Bakersfield to the Oregon line. It wants to lift the lid on rates next 
spring, or even sooner. 
And Southern California Edison, which serves 4.3 million customers in the Los 
Angeles metropolitan area, has not said when it wants to deregulate, but 
under state law it has to happen by 2002. 
"Everybody's worried. But ratepayers have paid enough. They've overpaid, and 
they're not going to pay a penny more," said Harvey Rosenfield, a consumer 
advocate in Santa Monica. 
The state Public Utilities Commission, which wrote the first report seven 
years ago urging deregulation, said in a grim assessment that more problems 
loom on the horizon unless there is a "mid-course correction." 
The summer's woes "represent a precursor of what lies ahead for California 's 
economy over the next 30 months," the PUC said. 
The PUC is investigating its options, which could include putting the brakes 
on deregulation. 
The 1996 deregulation law was pushed mainly by big industrial customers, who 
wanted lower rates. It was supported by utilities and free-market advocates. 
Consumer groups generally opposed it. It was overwhelmingly supported by 
lawmakers and signed by then-Gov. Pete Wilson. 
Under the law, utilities would be forced to sell their energy-producing 
assets, such as dams and power plants, and buy power instead on the open 
market. 
The theory was that competition would drive down rates. But it didn't work 
out that way. 
When San Diego Gas & Electric , with 1.2 million customers, deregulated, the 
average monthly residential bill there and in southern Orange County rocketed 
from $40 to $68 to $130 in less than three months. 
Ratepayers and politicians were so alarmed that California retreated somewhat 
from deregulation by rolling back San Diego rates and promising a $100 
million rebate to customers there. 
Most agree that an inadequate supply of a power - combined with high demand, 
caused by a sweltering summer, a booming economy and a growing population - 
precipitated the soaring rates. 
The episode has raised concern that the deregulation law is deeply flawed and 
tries to accomplish too much too quickly. 
Five power plants are under construction and at least a dozen more are 
proposed, but none will be ready to boost supplies this year, or most of the 
next. None were built in recent years because investors were wary of the 
uncertain California market. 
In the meantime, other states are watching California and at least one - 
neighboring Nevada - may drop plans to deregulate. 
"Our hope is that the states that stumbled into deregulation reconsider, and 
that those that have not yet acted don't even bother," said Charlie Higgley 
of Public Citizen, a Washington-based consumer group. 
At least a half-dozen other states are in some phase of deregulation, 
including Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island and 
Connecticut. None has experienced the roller-coaster rates California has. 
That's because they did it differently, according to industry experts. In 
some cases they did not force the sell-off of generation facilities, or they 
took more time. 
PG&E has lost about $2.2 billion since June and SoCal Edison has been running 
up similar losses while they await deregulation. That's because the utilities 
rates' have been frozen during the transition period, while they sell off 
their power-generating assets. 
Once they sell off their assets, the utilities want to pass those costs on to 
their customers. That alarms consumer advocates. 
Rosenfield, who wrote a 1988 ballot proposal that cut insurance rates, said a 
ballot initiative to roll back electric rates is in the works. 
"There is a ratepayer rebellion," he said. "It started in San Diego, it has 
spread to the Bay Area and in two years it will be everywhere in the state." 
---