Calif. utilities plead for big rate hikes

John Howard

Thursday, Dec. 28, 2000 | 11:40 a.m.

SAN FRANCISCO -- Two giant utilities are pleading for permission to sharply raise rates, saying they could face ruin because of deregulation and a haywire wholesale market.

The requests by Pacific Gas and Electric Co. and Southern California Edison Co. came as Gov. Gray Davis said California's electricity crisis is nowhere near ending, adding that more power plants are needed to calm the turbulent market.

Davis said Wednesday after meeting with President Clinton that "it's going to be a good two years before we can have enough additional supply to balance out demand. When we have that, deregulation may work."

"But it's clearly not working now," the Democratic governor told reporters in Washington. "It's an experiment that, at best, was prematurely launched in California."

The two companies want the state Public Utilities Commission to lift a rate freeze that has stabilized electricity bills for 10 million homes and businesses for the last three years. The cap is to expire in 2002.

The utilities also want approval for rate hikes -- 26 percent for PG&E and 30 percent for SoCal Edison. That would raise a $55 electric bill to $68 and $71.50 per month.

Pacific Gas and Electric told the commission at a jammed public hearing Wednesday that without help it faced imminent ruin.

Southern California Edison said its own demise was already at hand: The utility asked a federal appeals court to force the Federal Energy Regulatory Commission to immediately curb wholesale prices, at the heart of California's seven-month crisis.

The court ordered the federal commission to answer SoCal Edison by Jan. 2.

The PUC, which resumes its meeting today, had decided earlier to allow a rate increase -- of undetermined proportion -- for PG&E and SoCal Edison, private companies serving 10 million customers. The ongoing public hearings were ordered by the commission in advance of a Jan. 4 vote finalizing the hike.

The utilities say recent wholesale price spikes have left them $9 billion in debt.

But critic Doug Heller, of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, doesn't believe the companies' insolvency pleas.

"This is just part of a demand for more rate increases. They are using it as an excuse," Heller said.

However, the utilities said staying afloat was a legitimate issue.

"We are out of credit and we are close to being out of cash. People will not lend us money to buy power. You need to understand that," PG&E lawyer Roger Peters told commissioners.

Also Wednesday, U.S. Energy Secretary Bill Richardson extended for another week his order requiring electricity producers to send power to California to ease shortages.

P. Gregory Conlon, a former PUC member who helped develop the 1996 law, urged the PUC to lift the rate freeze.

"The right thing is to keep the utilities liquid and viable, because if you don't, the lights will go out," Conlon said. "This is something that is not a California event -- it's happening all over the world."