Utility Annexations Still Vex Regulators

By Published On: April 14, 2006

The San Joaquin Irrigation District’s proposed annexation of Pacific Gas & Electric turf will not significantly affect PG&E’s remaining ratepayers, the California Public Utilities Commission agreed April 13. Taking over 40,000 PG&E customers would cause a small rise in the utility’s transmission and distribution costs, according to the commission resolution adopted on a 5-0 vote. Regulators complained, however, that they lacked authority to assess the cumulative impact of the various annexation projects. Several public agencies are attempting to garner investor-owned utility territories. Commission president Mike Peevey said CPUC attempts to seek legislative authority to broaden the scope of ratepayer impact assessments failed. “We had less than resounding success in finding an author [for a bill] this year,” he said. Peevey urged investor-owned utility representatives to also seek legislation to address the issue of cumulative impacts of annexations by cities, public power agencies, and irrigation districts. Also approved was a four-year phase-in of a proposed 1,300 percent rate increase for a small percentage of California ratepayers who reap low-cost Klamath River hydropower. Their current rate, which ranges between $0.003/kWh and $0.006/kWh, would rise to $0.079/kWh. “It is reasonable and appropriate to bring project costs up to the existing rates,” said commissioner Geoffrey Brown. A 333 percent rate increase becomes effective April 17 for 640 of the 45,000 Californians who received power from the Klamath River hydro. The $0.003/kWh-$0.006/ kWh rates would rise to $0.026/KWh, and rise annually the next three years. The Klamath’s low power rates date back to an agreement reached in 1956 between the Federal Energy Regulatory Commission’s predecessor, PacifiCorp, and the U.S. Bureau of Reclamation. That contract expires April 16, 2006. The Division of Ratepayer Advocates and Siskiyou County opposed the agreement, calling it inequitable to California ratepayers. DRA argued unsuccessfully that all the power users should continue to share the cost increase. Siskiyou complained that PacifiCorp is forcing “California customers who can least afford to pay higher electricity rates to subsidize other ratepayers.” It added that most of the deal’s “benefit will go to 10 percent of Project customers who use more than 100,000 kWh annually and more than 50 percent of the power consumed by PacifiCorp’s entire irrigation class.”

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