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| Deregulation Cost-Savings Unmasked Some Electric Bills Double By Marcia Torrey-Jay, Managing Editor "It's exactly what I predicted would happen," said an irate Albert Vera in the wake of doubling prices in San Diego on consumers' electric bills, a first fruit of deregulation. |
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The former Culver City mayor and executive director of the Southern California Cities Joint Power Consortium, a group he founded five years ago, is afraid that Southern California Edison, the company that supplies electricity to Culver City, will follow suit just as soon as it is legally allowed to in about two years. San Diego is the canary down the deregulation shaft. Its electric supplier, San Diego Gas and Electric, paid its major debts and divested itself of its generating plants faster than other utilities allowing it to charge market rates sooner, according to a recent report in the Los Angeles Times. The result is that San Diego customers got to feel the full impact of deregulation with exploding prices, as the demand for electricity grew during the recent heat wave. According to the report, an average residential bill in San Diego jumped from $49.50 to $100.30 with further increases expected. And Vera along with representatives of the ten cities that make up the Consortium, want to find a way to stop the utilities from doing the same thing here. Vera thinks that ultimately the solution could be for the city to own its electric utility much like the city of Los Angeles. Unlike the investor-owned utilities, Los Angeles Department of Water and Power is currently doing well while its customers enjoy reasonable rates. "They have a win, win situation," Vera said, explaining that L.A.'s utility both keeps prices down for consumers and makes money selling their excess supply on the wholesale market. Vera said he is currently working with legislators in Sacramento to sponsor a bill that will empower municipalities to buy electricity wholesale. In order for that to happen, old agreements with the utilities, many dating back to the early 20th Century, would have to be set aside by a vote of the people in special municipal elections. As a first step, the legislature must act to allow such special elections, Vera explained. "City government needs to step up to the plate. Water, gas, electricity — you need no matter what you do," Vera said. "Right now individuals can buy electricity wherever they want but cities can't," Vera said. He sees the proposed legislation as a first step toward municipal ownership of its electric utility. Underscoring Vera's concerns, in a report delivered to Gov. Gray Davis on Aug. 2, the Public Utilities Commission said that Californians have paid $1 billion more for electricity in the last two months that they did in June or July of 1999 and more is on the way. In response the state attorney general's office is looking into the possibility of price fixing and criminal collusion within the state wholesale electricity market. Many legislators that championed deregulation four years ago are changing their tune with the legislature holding hearings on the sharply escalating prices. Also responding to the rate hike crisis, the Consortium — which in addition to Culver City, includes El Segundo, Redondo Beach, West Hollywood, Carson, Gardena, Hawthorne, Inglewood, Lawndale, and Lomita — will meet next Wednesday, Aug.16, at 7 p.m. in the Cathedral Room on the third floor at city hall. The public is invited to attend. The Consortium was originally created to act as a buying group in order to purchase electricity at wholesale prices, supplying less expensive electricity to the half million consumers it represents. Those efforts were derailed by the state when it passed electric deregulation in 1996. The idea of the deregulation deal with the utilities, was that competition would drive prices down. But Vera for one, never bought it. "It's a slight of hand trick on consumers," Vera said back in 1997. While the utilities did agree to cut consumers electric bills by 10 percent as part of the deregulation package, the cost of the temporary cut was enormous. As part of the deal, consumers have to pay for the utilities' so called "stranded costs," mostly bad investments in nuclear power plants until 2008. As a result, the rate cut was negligible since consumers have to pay for the billions of dollars in bonds that funded the cut. |
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