Year after California's power crisis, consumers likely won't
see lower bills anytime soon
Gaudette AP in SF Gate 2002.3.25
Jenny Lovrin used to rip open the natural gas electricity bill
each month and find that she and her five roommates owed less than
$100. This winter's
bills have hit $225.
"Every month I'm afraid to open that bill and see how much
higher it's gotten" said Lovrin, a receptionist. "With
six people it's hard to tell everybody
'Turn off the lights, don't use the heater as much."'
The end of March marks the end of one year since rolling blackouts
and utilities' debts prompted California power regulators to raise
partly to keep the utilities in business.
The emergency hikes mean customers of Pacific Gas & Electric
Co. and Southern California Edison are paying among the country's
highest rates. The
Public Utilities Commission later hiked rates for San Diego Gas
& Electric Co. consumers as well.
Coincidentally, the end of March also marks the end of a rate
freeze that was imposed by the Legislature's ill-fated 1996 plan
to deregulate the state's
electricity markets. Utilities say that freeze plunged them into
debt and ruined their credit ratings by preventing them from passing
power prices along to ratepayers.
Despite recent lower wholesale energy prices, the end of the rate
freeze won't bring relief any time soon to businesses and consumers
like Lovrin. The
state still needs to recoup the roughly $10 billion it has spent
buying electricity for the struggling utilities, and the higher
rates likely will stay put until the
PUC decides consumers are paying enough to cover the costs.
"I think the most likely outcome is that rates will be at
this level for a long time," said Severin Borenstein, director
of the University of California's Energy
"I don't think they're likely to rise any time soon, but
I think that once the PUC has increased rates to this level, they
will follow the path of least
resistance, which is to just leave them there," he said.
That's unwelcome news at LaurelGlen Farms, a horse ranch in Placerville
that cut its electricity use by 31 percent last summer and still
saw its bill nearly
double. Folks there hope PG&E or the PUC will grant them a $2,544.37
credit -- which they claim represents billing errors and unfair
"I'm angry and it's just wrong and we all know it's wrong,
and yet we're still plodding down the same path," said ranch
spokesman Al Colley. "The
people feel helpless that they can't do anything."
Deregulation was supposed to lower rates through competition between
energy sellers and the state's electric utilities. Instead, prices
State officials claim plant operators were in cahoots with energy
sellers last winter to close power plants for maintenance four times
as often as the
previous year. With the plants off-line, the supply of electricity
fell, forcing utilities to bid up the price of power from other
suppliers and driving them to
Under the new rates for residential customers, prices rise sharply
once a consumer reaches 30 percent above a "baseline,"
an estimate based on a
typical household's needs that varies according to seasonal temperatures,
climate and neighborhood.
But baselines have not been readjusted in years. They don't acknowledge
the prevalence of home electronics, and people who need air conditioning
California's hot spots complain their allotments are too similar
to customers along the breezy coast. Also, since the allotment is
based on average
consumption in an area, a family living among single folks receives
a smaller allotment than a family surrounded by other families.
"If you live in an apartment and you hardly use your stove
or maybe have a TV on and that's about it, you're under baseline
and effectively shielded
from the brunt of the energy crisis," said Doug Heller of the
Santa Monica-based Foundation for Taxpayer and Consumers Rights.
"But God forbid you
get married and have some kids because you shoot past that baseline
real quick and the price increases multiply so quickly."