Consumer Activists Delay More Rate Hikes

By Published On: March 12, 2010

Faced with mounting pressure from consumer groups over the rising cost of utility bills, the California Public Utilities Commission balked this week at two expensive measures said to promote clean energy. One involves a Pacific Gas & Electric proposal to install 500 MW of photovoltaic panels and the other a plan by Southern California Gas to install 6 million “smart” gas meters. Both the multi-billion dollar solar proposal and $1 billion smart meter plan--ostensibly aimed at helping customers conserve energy-- were scheduled for approval at the commission’s March 11 meeting. They were abruptly pulled off the agenda. The postponement came shortly after an unusual March 10 afternoon hearing on the PG&E plan. A parade of consumer advocates blasted the proposal, calling it too expensive and principally aimed at fattening the utility’s bottom line. The commission held the hearing after several organizations complained about the plan, acknowledged commission administrative law judge Maryam Ebke. Pressure mounted after CPUC president Mike Peevey introduced a revised alternate proposed decision that would allow PG&E to include in its rate base the cost of installing 250 MW of the plan’s 500 MW total. “This is going to be an expensive program,” said Matt Freedman, attorney for The Utility Reform Network. Power generated by the solar panels would cost 29.5 cents/kWh, or $295/MWh, adding about $295 million a year to utility bills in the company’s service territory. The current average cost of the utility’s power is 8 cents/kWh, according to Bill Booth, attorney for the California Large Energy Consumers Association. As state regulators are to oversee what customers pay for energy, both Ebke’s proposed decision and an earlier alternate decision by Peevey aimed to limit the cost of PG&E’s plan to ratepayers. Each proposal sought to allow only the current competitive market-based cost of solar power to be passed on to consumers. They also aimed to limit the pass-through of costs to the actual amount of power produced by the solar systems, rather than their capital (equipment and installation) costs. PG&E proposes installing 500 MW of solar panels in its service territory in numerous projects, generally ranging between 1 and 20 MW to help meet its 20 percent renewable portfolio standard requirement, explained Fong Wan, the utility’s senior vice president of energy procurement. Half the capacity would be utility owned and the other half would be developed under competitive power purchase agreements. Wan said that utility ownership is crucial because many of the renewable projects being developed under power purchase agreements have failed to materialize and the utility faces a legal deadline for hitting the 20 percent renewable power mark. However, Wan said that PG&E likely would ax the plan if it could not fully recover the cost of the utility owned facilities through its rate base. Those utility installations alone would cost about $1.5 billion, according to consumer group testimony at the March 10 hearing. Fong said the company would make sure its utility owned facilities would be “cost competitive.” The commission also deferred action on SoCal Gas’s $1 billion proposal to install “smart” meters on the premises of its customers, from the Mexican border up into the Central Valley--an area home to more than 20 million people. CPUC chief administrative law judge Karen Clopton found that the meters would cost about $150 million more than they would save by helping customers conserve energy and cutting utility costs. The judge, therefore, recommended that the commission disapprove the plan. Before the commission pulled the item from its agenda, CPUC commissioner Diane Grueneich drafted an alternate proposed decision under which the plan could have gone ahead. TURN executive director Mark Toney pointed out that smart meters for electricity are aimed at allowing people to control usage of a product that fluctuates in price by the hour. Gas prices, he pointed out, are relatively stable. TURN said the utility’s aim was simply to earn a $200 million return on its investment. The Utility Workers Union of America also opposed the plan, noting it would allow the utility to cut 1,000 meter reader jobs, since the smart devices can be read remotely through automated technology. Unemployment in Southern California ranges up to 27.3 percent in Imperial County and stands at 15 percent in the populous Inland Empire in Riverside and San Bernardino Counties. It is at 12.5 percent in Los Angeles County, the region’s most populous area.

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