CPUC Approves Sizable Business Rate Cuts

State regulators September 8 unanimously approved rate discounts of up to 25 percent for businesses considering moving out of California. In spite of reservations about whether electricity rates are a key factor in business decisions and whether some companies might get rate cuts for doing nothing, all five California Public Utilities Commission members supported Pacific Gas & Electric's and Southern California Edison's proposed "economic development" discounts. The new rates give qualifying businesses that use above 200 kW a 25 percent rate discount the first year. "I am not a big fan of special rates," said commissioner John Bohn. "It reflects that something is wrong with the system." He voted for the tariff because it has a fixed life and rates are high. "The good news is that the program expires in five years," when the Department of Water Resources contracts signed during the energy crisis largely come to an end. The discount given to eligible businesses decreases 5 percent a year. Calling pricey power bills a "hidden tax on businesses," commissioner Susan Kennedy said that slicing the electricity tab was needed to retain, attract, and lure business into the state. Her proposed decision, which adopts the two utilities' rate plans, won out over administrative law judge Robert Barnett's proposal that rejected the investor-owned utilities' economic discount rates. Commissioners invoked the plight of businesses by highlighting an organic food processor's decision to expand in Oregon last year instead of in-state (Circuit, Oct. 29, 2004). "The experience of Amy's Kitchen reflects the commission's inability to issue a timely decision," Kennedy proclaimed. The Santa Rosa-based food processor uses 8,400 MWh annually and pays about $1.2 million in electricity charges. Concerns were raised about "free riders" and allocation of the program's costs. In addition, the Office of Ratepayer Advocates insisted that business retention rate discounts would be more effective if applied to small businesses. Kennedy's decision requires a third party to evaluate whether a business applying for the rate cut was seriously considering moving. It also requires recovery of the discounts if awarded under false pretenses via a liquidated damages provision. She also capped the discount at 100 MW in each investor-owned utility program. San Diego Gas & Electric is "strongly encouraged" to file a similar business discount plan. "We support the concept of economic development rates and are eager to go ahead with the filing," said SDG&E spokesperson Ed Van Herik. The vote followed an hour-long power outage at CPUC headquarters and its surrounding San Francisco neighborhood. After the lights came back on in the darkened commission auditorium, CPUC president Mike Peevey said, "I'm very sorry about the outage, but not as sorry as PG&E. It's their way of drawing attention to the role they play in our society," he quipped. Some PG&E representatives were not amused.

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CPUC Approves Sizable Business Rate Cuts

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