California Utilities Panel Hearing Is Flooded By Protesting Consumers

April 4, 2001

California Utilities Panel Hearing Is Flooded By Protesting Consumers

By Kate Berry

Consumer advocates and ratepayers denounced state energy regulators at a raucous meeting in San Francisco on Tuesday at which the California Public Utilities Commission approved an opt-out provision for companies and schools in so-called "interruptible" contracts with Southern California Edison.

Scores of demonstrators tried to break up the meeting to protest a rate hike of as much as 36 percent approved by the commission last week.

Chanting "Heat and light are a right," the protesters forced PUC President Loretta Lynch to demand twice, over a chorus of voices: "We will have order in this commission." After almost two hours of public comments from 34 ratepayers and consumer activists, the commission approved several measures, as expected. Regulators dramatically revised a decade-old program in which businesses and schools received discounted electricity rates in exchange for curtailing power use when requested during periods of peak demand.

Business groups, including the Orange County Business Council, had lobbied heavily for the changes in the interruptible contracts, which impose heavy penalties on users that don't cut power when requested. Customers will now be allowed to opt out of the program and avoid paying penalties accrued since November. "It is mostly good news," said Julie Puentes, executive vice president of public affairs at the OCBC. But she said businesses are still upset that they will be notified only minutes before a rolling blackout occurs, making interruptions difficult for manufacturers with sensitive equipment.

In all, three new programs to encourage energy conservation by businesses were adopted. The PUC also allowed Edison to expand a program in which residential customers agree to have their air-conditioning automatically shut off in times of power shortages.

Among the business options, one proposal will pay customers $350 a megawatt-hour to reduce usage by at least 100 kilowatts on a same-day or day-ahead basis. Another exempts customers from rolling blackouts if they agree to reduce usage during each Stage 3 power alert. Customers currently in interruptible contracts with Edison can opt out of their contracts, either retroactive to Nov. 1, 2000, or at the start of the next billing cycle. Those dropping out can either pay penalties accrued since November or reimburse their utility for a 15 percent discount on rates. The commission also launched a formal investigation into the financial relationships between the state's two cash-strapped utilities, Edison and Pacific Gas & Electric, and their parent companies, which have received billions of dollars from the subsidiaries in recent years. Both corporations objected.

"The CPUC should be taking steps to restore the credit-worthiness for California utilities so they can build, maintain and operate a reliable electric system," said Thomas Higgins, an Edison senior vice president.

The companies have said that the cash transfers from the utilities, for dividends, taxes and other payments, were normal business practice and were in keeping with rules set by regulators.

The commission also approved the maximum size of a state bond issue, allowing State Treasurer Phil Angelides to move forward on selling bonds to pay for power purchases. The bond issue, set at $13.4 billion, will enable the state's Department of Water Resources to pay for power purchases. The commission also voted for all acute-care hospitals to be exempt from rolling blackouts. Previously, only hospitals with 100 beds or more were exempt. Residential customers on life-support equipment will be notified by their utility prior to a blackout.