Dear Energy Committee Member -

I just spoke with two of Governor Davis' top energy advisors.  As you know,
the Governor mentioned the need for a rate increase in his televised address
last Thursday night.  While his speech, and corresponding notes, went into
some detail on how that increase would impact residential customers, it did
not go into great detail on the increase to commercial customers.

As you know, the PUC's proposed increase was not at all proportional
relative to use by residential and commercial customers, and the
corresponding rate increase for each.  SVMG has long argued that some level
of increase would probably be necessary, but that any rate increase should
be proportional to use.  For instance, since residents use approximately
one-third of the power, then residential customers should absorb one-third
of the increase (taking into account, of course, the most vulnerable
residents), and commercial customers should absorb the two-thirds in a way
that is proportional to use.

I am encouraged by my phone call with the Governor's advisors, in that they
seemed to agree strongly that the PUC proposal was not at all proportional,
and seemed to concur that such a disproportional structure would be damaging
to California employers.  They are going to send me more details tomorrow
(Tuesday) about the Governor's plan, and I will then pass that information
along.

In the meantime, I hope this limited information helps, and will keep you
posted as I learn more.

Sincerely,

Carl Guardino




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