Editorials

SAN FRANCISCO — California’s top power regulator proposed immediate electricity rate hikes of up to 46 percent Monday, saying this should encourage customers to cut back on usage and conserve enough power to avoid blackouts this summer. 

Loretta Lynch, president of the Public Utilities Commission, said rates for customers of two cash-strapped utilities should be increased by an average of 3 cents per kilowatt hour. 

The increase later would be subject to a tiered rate system designed to protect consumers who conserve, while charging heavy users more, Lynch said. 

“Electricity hogs will have to pay more for the electricity they use, especially over the summer,” Lynch said. “The most important aspect of any tiered rate proposal is to motivate conservation.” 

The current residential rate for electricity alone averages 7.2 cents per kilowatt hour for customers of Southern California Edison Co. and 6.5 cents per kwh for customers of Pacific Gas and Electric Co. — meaning Lynch’s proposal would work out to a 42 percent increase for Edison customers and 46 percent for PG&E customers for electricity alone. 

But power bills actually are much higher. The basic rates for electricity are bundled with transportation costs, transmission costs and conservation programs, making the average price of a kilowatt hour closer to 12.5 cents for all Edison customers and 10.5 cents for PG&E customers. 

The average Edison residential bill now is $70 a month, and the average PG&E residential bill is about $60. Spokesmen for both utilities said Monday it was impossible to determine how much of an increase in those bills Lynch’s proposed hikes would entail, because the impact of the proposed tiered system is not yet clear. 

The higher rates could go into effect as early as Tuesday, when the PUC meets. 

“Never mind unfair, there is no justification for them,” said Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “Why should anyone be forced to pay higher rates when we don’t know what it is for? 

“Basically we are being held hostage by a handful of energy companies that, under deregulation, got control of our electricity supply. And until our elected officials start acting to protect us, we are going to be at their mercy – at the mercy of this ripoff.” 

At a speech in Los Angeles, Gov. Gray Davis said he is not in favor of electricity rate hikes, but has no power to order the PUC to maintain current rates. 

“It’s still my expectation that we can work within the existing rate structure,” Davis said. “As governor, I have not decided there should be a rate increase, and as governor, I have not decided that tiered pricing makes sense. 

“I can’t order or direct an independent body,” added Davis, who has appointed three of the five commissioners at the PUC. “I’ve not given any advice to them on the subject of a rate increase.” 

Davis administration officials told several key Assembly members Friday that the state’s power buying for credit-poor Edison and PG&E could cost $23 billion by the end of next year – far more than lawmakers and Davis estimated when they approved legislation authorizing the state’s power purchases. 

At the time, they projected they would need $10 billion in revenue bonds to buy power for the two utilities over a decade. The bonds will be repaid by the utilities’ customers over several years. The prospect of significantly higher electricity rates in California sent the stock of the utilities’ parent companies much higher Monday. 

Consumer advocates said the PUC, Davis and the Federal Energy Regulatory Commission are not doing enough to bring down exorbitant rates charged by out-of-state power generators. 

“The generators should be forced to take lower prices,” said Michel Florio, a senior attorney for The Utility Reform Network, who added that the state should use its powers of eminent domain to seize the power plants and run them itself. 

“If the governor isn’t willing to seize the power plants, then maybe we will,” Florio said, adding that TURN and other consumer groups have been considering statewide initiatives to remedy the state’s failed attempt at deregulation. 

Lynch’s proposal is at odds with that of administrative law judge Christine Walwyn, who recently advised the PUC that rate increases were not necessary. Any increase would be on top of the 9 percent to 15 percent rate increase the PUC approved in January, and an additional 10 percent increase already scheduled for next year. 

The governor repeatedly has said he is confident the state’s power crisis can be resolved without further rate hikes. But Davis aides have concluded that rates must rise, given that wholesale power costs remain high. Several lawmakers, including Assembly Speaker Bob Hertzberg, have said a rate increase is inevitable. 

“It’s obvious to me that unless you rob a bank or win a lottery you are not going to be able to do this without raising rates,” Senate President Pro Tem John Burton, D-San Francisco, said Monday. Administration officials have been negotiating with PG&E, Edison and San Diego Gas & Electric about purchasing the utilities’ transmission lines to give the companies cash to pay their bills – a process that could take two years, according to Assemblyman Fred Keeley. 

Keeley said he believes the state should ask for utilities’ hydroelectric plants instead, which he says will produce revenue and income for the state and would mitigate the cost of power the state would have to buy. 

“Deregulation is an abject failure in California, but to engage in essentially institutional denial will only make it more expensive to solve the problem,” said Keeley, D-Boulder Creek. “The governor was right to try and prevent rate increases. That was a noble goal. We’re now past the time of noble goals.” 

PG&E and Edison say they’ve lost more than $13 billion since last summer due to high wholesale electricity costs that California’s 1996 deregulation law prevents them from collecting from their customers. 

WATER WARNINGS 

If water agencies aren’t protected from rolling electricity blackouts, water might not be available for drinking and fighting fires, says a water agency group. 

The Association of California Water Agencies is challenging a proposed state Public Utilities Commission ruling that would allow power to be cut off to water utilities. A decision that could come as early as Tuesday. 

The PUC issued a draft decision March 16 proposing that water districts not be included as “essential facilities” exempt from power outages. 

The association said Monday that many water utilities have backup generators, but said those systems were designed for use during disasters like fires, floods or earthquakes, not as alternative power sources. 

If water treatment facilities were disrupted by a two-hour blackout, it could take two days to restore safe drinking water after flushing potentially contaminated water through the system, ACWA said. 

Cutting off power to water agencies could also hurt fire-fighting efforts, the association warned. 

It represents 438 local agencies that together provide about 90 percent of the state’s water.