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PG&E Rate Cuts Get Nod by Mike Taugher Contra Costa Times, February 27, 2004

Electricity bills are headed down next month after regulators on Thursday approved a compromise made possible by Pacific Gas & Electric Company's nearly completed journey out of bankruptcy.

The overall rate reduction amounts to 8 percent, but it will help businesses and farmers more than residents. That is because two-thirds of residential customers use less than a specified amount of power and were shielded from power crisis rate hikes in 2001, said PG&E spokeswoman Christy Dennis.

"The business customers ended up shouldering most of the burden of the energy surcharge, so they will see most of the reduction," Dennis said.

The cuts go into effect Monday and are retroactive to Jan. 1. Dennis said PG&E expects to issue credits in May for overpayments made in January and this month.

In a 3-2 vote, the California Public Utilities Commission approved the package of rate cuts agreed to by PG&E and a number of business and residential customer groups. The average of 1 cent per kilowatt-hour reduction reverses less than one-fourth of the rate hikes.

Utility regulators say further rate reductions are possible for PG&E customers.

"We'd like to see about another penny off the bill," said Kevin Coughlan, a program manager in the PUC's energy division. Money to pay for further cuts could come from power company refunds, renegotiated power contracts and other means, he said.

"(Some of) this depends on events that may or may not occur," he said.

Two commissioners Thursday asked for a delay in the rate cut, saying deeper cuts might be possible in the coming weeks. A recent refund to PG&E from an energy company and other uncounted funds might be available, they said.

One of those commissioners, Loretta Lynch, also noted that the commission's administrative law judge found that the residential customers were only getting about two-thirds of their share of the rate reduction. She said it would have been better to craft a larger, more balanced cut.

"If we would have done it fairly, based on who and how much they paid, we would have done it differently."

Lynch added that she doubts many more reductions will be possible. "This is the bulk of the payback."

But other commissioners argued it was important to get the rate cuts approved quickly and that there was little sense in altering their structure, since PG&E and numerous groups, including residential groups such as the Utility Reform Network, approved it.

"As California's economy begins to recover and struggles to regain its ability to produce jobs, the time to reduce electricity rates is now," said commissioner Susan Kennedy.

In its decision, the PUC said that even though residential customers were getting a 4 percent decrease instead of a 6 percent decrease, there may have been other factors involved in the negotiations between PG&E and customer groups.

Dennis, the PG&E spokeswoman, said residential customers as a group got less of a cut because baseline power figures were raised in 2002, and that increased the number of residential customers exempted from rate hikes. Doing so left a $100 million to $200 million hole that had to be filled.

The California Chamber of Commerce, meanwhile, said some of its members did not get their share of the cuts.

"Rate reductions should have been more in proportion to the sectors that saw the increases in 2001," said chamber spokeswoman Sara Lee.

But, she added, "It's a step in the right direction."

           APPROVED ALLOCATION OF THE RATE DECREASE BY CUSTOMER CLASS

                                      Current           Proposed
                                      Average           Average
                                       Rates             Rates          Percent
     Customer Class                (cents per kWh)   (cents per kWh)    Reduction
     Residential                        13.13              12.60           4.0%
     Small Business                     16.82              14.94          11.2%
     Medium Business                    15.53              14.20           8.6%
     Agriculture                        13.26              11.37          15.0%
     Streetlights                       17.40              14.87          14.6%
     E-19                               13.97              12.64           9.5%
     E-20                               11.90              10.52          11.5%
     Transmission                       10.25               8.73          14.8%
     Primary                            12.12              10.80          10.9%
     Secondary                          13.62              12.36           9.2%
     Average Bundled Rate               13.90              12.78           8.0%