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Date: Wed, 09 May 2001 15:50:17 -0500
From: "Tracey Bradley" <tbradley@bracepatt.com>
To: "Justin Long" <jlong@bracepatt.com>, "Paul Fox" <pfox@bracepatt.com>
Cc: "Ronald Carroll" <rcarroll@bracepatt.com>
Subject: Calif. regulators propose tiered electric rate rise
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Wednesday May 9, 4:34 pm Eastern Time
Calif. regulators propose tiered electric rate rise
(UPDATE: Adds details throughout)

SAN FRANCISCO, May 9 (Reuters) - The California Public Utilities Commission 
on Wednesday proposed two plans to increase electricity rates in the 
power-starved state through a tiered retail pricing system.

The parallel plans, submitted by an administrative law judge and CPUC 
President Loretta Lynch, are designed to encourage energy conservation by the 
24 million customers of PG&E Corp.'s (NYSE:PCG - news) Pacific Gas & Electric 
unit and Edison International's (NYSE:EIX - news) Southern California Edison 
subsidiary.

Higher rates also would allow the state to begin to recover money from 
utility bills to pay for power it has purchased on behalf of the 
cash-strapped utilities, Lynch said.

The plans are expected to be voted on Monday by the five-member CPUC. 
Approval would implement the commission's March 27 move to raise retail power 
prices to help recover soaring costs of wholesale power.

The March decision did not specify how the rate increases would affect 
different classes of electric customers.

The plans, announced by Lynch, would raise rates 20 percent to 50 percent for 
commercial and industrial customers, and 41 percent to 48 percent for all 
electricity used by residential customers in excess of a percentage of their 
existing base usage.

Lynch told a news conference, however, that up to half of California's 
residential customers who meet certain conservation targets would not face 
higher rates.

Electricity rate hikes for agricultural customers served by PG&E and SoCal 
Edison would be capped at 23 percent to 30 percent, she added.

Paul Clanon, a CPUC energy director, said the rate plans would raise $5 
billion this year from utility customers, with some of the money channeled to 
the California Department of Water Resources, which is buying electricity on 
behalf of the state.

The CPUC has not decided, however, exactly how much of monthly utility bills 
would flow to the agency.

California's power purchases this year have drained the state treasury of 
some $6 billion.

The state Senate on Wednesday approved a bill to issue $13.4 billion in bonds 
to pay for emergency power and sent the measure to Gov. Gray Davis, who is 
expected to sign it.

The Senate's approval came two days after the state Assembly passed the power 
bond measure as a piece of regular -- rather than emergency session -- 
legislation, meaning California will have to wait at least 90 days to issue 
the debt.

The bond issue aims to repay the state for the power purchases, with the debt 
to be paid off over 15 years through a portion of the monthly utility bills.