Regulators Approve $3B/yr for Sempra Utilities

By Published On: August 1, 2008

California regulators approved a 12 percent rate hike for San Diego Gas & Electric and a similar increase for SoCal Gas, totaling over $3 billion annually. For the electric utility’s three-year rate case, the California Public Utilities Commission adopted a $1.3 billion revenue requirement for 2008 alone. For the gas company, regulators approved a $1.685 billion budget for this year. Consumer groups, like the Division of Ratepayer Advocates, tamped down the increase by $164 million, according to commissioners. While regulators accepted most of the utilities’ settlements with consumer groups and other parties, they dismissed two deals. One called for a six-year plan with the Greenlining Institute that was supposed to institute “corporate philanthropy,” according to commissioner John Bohn. He lauded the concept but said the commission has no authority in the matter. Bohn said he expects utilities to be “good corporate citizens” without ratepayer incentives. A second part of the rate case would have caused the utilities to give preference to union workers. That too was rejected on the grounds of “preferential treatment.” The utilities are required to file another triennial rate case in 2012. In other regulatory news, the commission adopted “dynamic pricing” for Pacific Gas & Electric. That is, customers pay higher prices during peak demand and lower prices during off-peak hours. PG&E expects to begin installing “smart meter” technology that provides prices to customers, according to commissioner Rachelle Chong. She added that the decision does not affect the state’s other two major investor-owned utilities. “California is a leader where the rest of the country needs to go” on dynamic pricing, said commissioner Dian Grueneich. In the commission’s decision, it noted that dynamic pricing would signal consumers to use “clean” power, such as hydroelectric and nuclear. It did not include that the state doesn’t recognize large hydropower facilities over 30 MW as renewable energy sources because of the fish and watershed impacts. Nor was it mentioned that nuclear power radioactive waste is building up on site at the state’s two operating nuclear facilities, as well as at a closed facility on the north coast. “Dynamic pricing,” also known as “time of use” rates, is expected to smooth out electricity demand to avoid the need for new power plants. Customers can do laundry and consume other power on off-peak hours, thus saving on electricity costs. The rub, so far, with smart meters is that they are not off-shelf technology. The meters that PG&E is installing may or may not integrate with meters that other utilities are installing. PG&E plans to spend over $1 billion for universal meter installation, which it launched last year. Finally, regulators adopted interim energy efficiency goals for utilities. The plan should save about 4,500 MW from 2010 to 2020, according to Grueneich. However, part of the decision ratchets down the amount of returns utilities can receive from ratepayers for instituting energy efficiency. “It’s like moving the goal post after kicking the ball,” said CPUC president Mike Peevey. The CPUC goals also are intended to save 620 million therms of natural gas. The decision allows the utilities to count efficiency measures for which they are not directly responsible. That includes power reductions from state building standards, lighting reductions under California law and federal appliance standards.

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