Regulators Raise San Diegans' Share of DWR Costs

After struggling with competing methodologies for permanently allocating the costs of the state's long-term power contracts among the three investor-owned utilities? ratepayers, California Public Utilities Commission member Carl Wood provided the swing vote for the plan that increases costs for San Diego Gas & Electric customers over the next 10 years. Joining commissioners Geoffrey Brown and Loretta Lynch, Wood rejected CPUC president Mike Peevey's alternative proposal because it would "perpetuate the current inequity" under which Pacific Gas & Electric and Southern California Edison ratepayers subsidize SDG&E customers, he said during the CPUC's December 2 meeting. Before the vote, several San Diegans urged the regulators to adopt Peevey's proposal. The alternative would have minimized the cost increase for the region by shifting $400,000 to SDG&E, compared with $800 million under the final decision. "The energy crisis was not fair to anyone, but our bills doubled and tripled," said Mitch Mitchell, representing business interests in San Diego. Much of the debate over divvying up the Department of Water Resources power deals was about how to spread out the "above-market contract costs," projected to be $7.4 billion from 2004 to 2013. SDG&E will pay 9.9 percent of that cost, which represents a $733 million increase in its share. PG&E will pay 44.8 percent of the above-market costs, which amounts to a $418 million decrease, and Edison will pay 45.3 percent, a $315 million drop. The allocation mirrors the one used to divide DWR's bond charge revenue requirement. The precedent-setting allocation also ties contract costs to the amount of power that was physically allocated to each of the three utilities by the commission earlier. Wood and Peevey agreed that finalizing the numbers before them was not an exact science and around a 2 percent increase was at issue, about $100,000 a year in 2007. "It is a rough justice system," Peevey said. Lynch said Brown's plan "stops the fancy footwork and fairly squares the issue." At the same time, she faulted her colleague for not taking DWR to task for its revenue requirements. Once again, she railed against DWR for "padding its numbers" -about $290 million in 2004, which includes the $160 million in refunds it will receive from the El Paso settlement, which DWR has refused to subtract. The commission had postponed a vote on the complex matter twice before (Circuit, Sept. 19, 2004), but Wood cast his vote noting that he was "the Hamlet holding up the issue." He continued to raise concerns about his inability to get clear figures on the ratepayer impacts of the various proposals and DWR's questionable estimates of its revenue requirements. Elizabeth McCarthy

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Regulators Raise San Diegans’ Share of DWR Costs

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