Sempra Utilities Get Incentives Approved

By Published On: March 19, 2005

San Diego Gas & Electric and SoCal Gas were given the green light to reap millions of dollars each year in incentives to improve reliability, customer satisfaction, and safety by the California Public Utilities Commission during its March 17 meeting. Consumer advocate The Utility Reform Network slammed the incentives as a means to increase utility profits. The commission also approved a formula for factoring the cost of inflation into rates over the next three years. Until the next general rate case for SDG&E and SoCal Gas is made in 2008, the cost of inflation will be tied to the Consumer Price Index (CPI). The adopted decision by commissioner Geoffrey Brown modified a decision by administrative law judge Doug Long. The final decision adopted a stakeholder-wide settlement on the rate provision?s inflation formula. Brown?s decision added a ceiling and floor to the CPI. At the same time, it incorporated the provisions by Long that insisted that incentives be included with penalties to encourage better service, which had been contested by consumer groups. SDG&E spokesperson Peter Hidalgo said the cost-of-service decision, which came as no surprise, was in the best interest of the public and the utility companies. ?The decision is 90 percent good,? said Marcel Hawiger, TURN attorney. He took issue, however, with the sections allowing the utilities to reap millions in incentives to improve safety and reliability. He said these performance-based incentives have gone from being ?a mechanism to prevent cost-cutting to a means for making millions in shareholder profits.? Indeed, in recent meetings with the financial community, officials from Sempra?the parent company of the utilities?hawked the CPUC?s performance-based incentive program as a means to profitability. According to Hawiger, SDG&E can collect up to $3.75 million for limiting weather-based outages each year, although tree-trimming standards and undergrounding have reduced the impact of wind on power lines. The decision, however, notes that if that were so, utility response to outages would decrease, but that is not reflected in the five-year trend. Hawiger also claimed the two utilities will be able to rake in up to $1 million for positive customer satisfaction surveys, which are subjective. Recently, Southern California Edison admitted to falsifying customer satisfaction surveys, and it is no longer allowed to reap incentives based on survey findings (<i>Circuit</i>, May 28, 2004). Hidalgo would say only that the ruling was based on the utilities? records, which were ?fairly consistent.? Also during the meeting, the CPUC approved two resolutions. One allocates Edison?s $9.2 billion revenue requirements from 2003 among the different customer classes pursuant to a settlement. The other allows SDG&E to enter into a gas storage contract with its affiliate SoCal Gas for 6 billion cubic feet of gas at a capped price. The unanimously approved resolution would require that the gas storage deal be made public and that SDG&E customers be protected from having to pay more than its sister company?s core customers for storage.

Share this story

Not a member yet?

Subscribe Now