SDG&E supports CPUC judge’s recommendation for allocation of state electric rate increase

SAN DIEGO, Sept. 13, 2001 – San Diego Gas & Electric (SDG&E) filed comments late yesterday with the California Public Utilities Commission (CPUC) supporting the administrative law judge’s Sept. 4, 2001, draft decision proposing the allocation of the state’s pending electric rate increase for SDG&E customers by the California Department of Water Resources (DWR).

Some previous recommendations under consideration by the CPUC presented a “postage stamp” approach to allocating the state rate increase, spreading the electric-procurement costs incurred by the DWR evenly among the utilities, even though it costs more to deliver power to customers in the northern part of the state. The postage-stamp approach could more than double the size of the increase for SDG&E customers.

“While we are concerned about the impact the state-mandated rate increase will have on our customers, we believe the recommendations of CPUC Administrative Law Judge Pulsifer appear to be a fair and equitable allocation of the Department of Water Resources energy costs between Southern California Edison, Pacific Gas & Electric and SDG&E, based on actual and projected future costs of DWR-provided electricity,” said Debra L. Reed, president of SDG&E.

The DWR has been purchasing electricity for customers of SDG&E since Feb. 7, 2001. The agency has been purchasing power for PG&E and Southern California Edison since the beginning of the year. The judge’s recommendations took into account the cost differences between different regions in the state, due to factors such as shortages in electric supplies and the condition of the area’s electric delivery transmission system. For instance, electricity congestion conditions similar to those in Northern California that were caused by a bottleneck on Path 15 near Bakersfield have an impact on regional electricity prices.

“The judge’s recommendations also recognize that electric commodity and delivery prices differ from area to area within the state due to available power supplies, transmission-system conditions and the anticipated future electric demand,” Reed said.

The judge also based his decision on the quantities of electricity purchased by the DWR for each region this year and on a projected basis for 2002.

Administrative Law Judge Pulsifer’s proposed decision sets the revenue requirement DWR must collect from the state’s electric customers. At present, the CPUC is simultaneously considering a separate proposed decision for collecting these funds from SDG&E customers based on a tiered-rate-increase plan. Under the proposal, residential low-income customers who are enrolled in the CARE plan, those who rely on physician-ordered medical equipment and those using 130 percent or less of their baseline allowance (for most customers this is 325 kilowatt-hours or less per month) will not have their rates increased.

Under the proposed rate increase structure, the more energy customers use, the higher their price per kilowatt-hour will be, except for CARE and medical-baseline customers, who will see no rate increase. The typical SDG&E residential customer using 500 kilowatt-hours will see an increase of a $1.60 a month, or 2.3 percent, to $71.93 from $70.33. More than 40 percent of SDG&E’s residential customers would not be subject to any rate increase under the proposed plan. Under the same proposal, the average rate increase for small businesses would be about 14 percent while the average rate increase for larger commercial/industrial business customers would be approximately 20 percent.

“We are asking the CPUC to increase the funding of energy-assistance programs and are accelerating and expanding customer communication plans with community agencies to raise awareness of all available customer-assistance programs,” Reed said.

San Diego Gas & Electric is a regulated utility that provides service to 3 million consumers through 1.2 million electric meters and 740,000 natural gas meters in San Diego and southern Orange counties. SDG&E is a subsidiary of Sempra Energy (NYSE: SRE – news), a Fortune 500 energy services holding company based in San Diego.

SOURCE: San Diego Gas & Electric

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