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Customers may pay for PG& E losses

The Associated Press
Thursday October 05, 2000

SAN FRANCISCO — Pacific Gas and Electric Co., losing $1 million an hour from skyrocketing wholesale energy costs, sought permission Wednesday to eventually pass $2.2 billion in losses onto their customers. 

Southern California Edison Co. prepared a similar filing for the Public Utilities Commission. 

The moves were among an array of actions Wednesday by public and private utilities grappling with the changes in California’s deregulated electrical power market. 

The power woes started this summer with skyrocketing power prices in the San Diego area, served by San Diego Gas and Electric. That prompted the larger northern utilities to take steps to fend off similar spikes. 

PG&E, which serves 4.5 million people from Bakersfield to Oregon, told the PUC that its petition was prompted by the “extraordinary and unforeseen crisis in wholesale retail power markets in California.” 

Unless the PUC acts, the utility “and its customers face a deepening regulatory and financial crisis over the rapidly growing mountain of debt PG&E is incurring to buy power in wholesale markets in order to serve its customers,” the company said in its petition. 

SoCal Edison, which serves about 4.3 million customers, planned a similar request as early as Thursday, said a company executive who spoke on condition of anonymity. The company is absorbing losses slightly lower than PG&E’s. 

PG&E also prepared a request for the Independent System Operator – the Folsom-based board that manages most of California’s power grid under the state’s 1996 deregulation law – to authorize a $100 cap on some wholesale power purchases. Earlier, the cap was lowered from $750 to $500, and then two months ago to $250. 

SoCal Edison also sought wholesale price curbs, although in a different form than PG&E’s. 

The two huge utilities, bound by rate freezes, are not able to pass their energy costs onto their customers, and they have been absorbing hundreds of millions of dollars in costs monthly. 

Under the deregulation scheme, investor-owned utilities must operate with a rate freeze until they sell off their assets as required by the 1996 law.