Davis Shifts Rate Impact to Residences
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NEWS RELEASE
May 15, 2001


CONTACT: Doug Heller - 310-392-0522 x309

Davis Shifts Rate Impact to Residences

Residential, Small Business Ratepayers To Bear Bulk of $450 Annual Rate Increase
San Francisco-- In a last minute reversal, state regulators appointed by Gov. Davis capitulated to pressure from the Governor's office and corporate lobbyists and ordered that most of the burden of rate increases fall on residential and small business ratepayers, rather than on the largest industrial users of electricity. Average families will pay 47% more for power, or approximately $36 more each month.

"Once again, residential and small business ratepayers, the innocent victims of deregulation, are being forced to pay the price for the deregulation debacle, while the special interests that foisted deregulation upon us get off easy," said Doug Heller, consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR). "This unforgivable betrayal by the Governor will not be forgotten."

The California Public Utilities Commission (PUC) decision today changes course from the original proposal offered by PUC President Loretta Lynch, which was scheduled for a vote Monday. Under the original plan, the rate hikes would have been spread in a manner that provided somewhat greater protections to residential and small business users, requiring industrial users to shoulder a larger share of the rate hikes.

After last-minute pressure from the Governor and the big business lobbyists who are his contributors, the PUC today approved an amended rate plan that shifts much of the electricity increase onto residential and small business bills. Based on the PUC decision, FTCR estimates that the rate plan will increase the average family's annual electricity bill by $432, or $36/month for Edison customers and $468 ($39/mo) for PG&E customers.

Under the plan for Edison customers:
  • Residential customers, on average, will pay 22.4 cents per kilowatt hour (kWh), which is up from 15.2 cents; this can increase depending on use
  • Small businesses and other commercial ratepayers will be charged 15.6 cents/kWh; this can increase depending on use
  • Industrial users will pay a maximum 12.9 cents/kWh
  • Agricultural customers will be charged 11.9cents/kWh, with a cap on the increase of 20%
Residential customer will see an average increase by 7.2 cents per kWh, while industrial rates will increase by only 4.3 cents/kWh. Residential customers will pay approximately 75% more than industrial consumers.

Group Predicts Greater Increases Ahead

FTCR called the latest blow to ratepayers "a devastating first act, with worse to come." Noting that the PUC acknowledged that "even these astronomical new average rates may prove inadequate to cover exorbitant wholesale electricity prices in the California market" (page 8 of the decision), the group said:

"Rate hikes will not solve our energy crisis, and instead of today's increases, Governor Davis must give the energy generators an ultimatum, in which they either charge reasonable prices for electricity or the Governor will take over the plants and operate them on a cost basis. Unless that happens, the unjustifiable and unfair rate increases of today are only the beginning," said Heller.

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