SDG&E told to revise rate hike application
Judge says utility did not detail its cost-cutting plan

By Craig D. Rose
San Diego Union-Tribune May 23, 2007

A California Public Utilities Commission judge yesterday agreed with consumer groups who allege that San Diego Gas & Electric improperly withheld key information from a $1.5 billion rate increase application.

Administrative Law Judge Douglas Long ordered SDG&E to revise hundreds of pages of testimony in less than two weeks to reflect what the consumer groups have said is a detailed plan for cost reductions at the utility.

Long also asked the local utility to indicate whether the cost-cutting plan was fully reflected in earlier testimony from SDG&E in its case for rate increase.

The utility says it needs a rate increase of $250 million annually over six years to cover higher costs and that no decision has been made on whether to implement the cost-cutting plan.

The locally based Utility Consumers' Action Network and San Francisco-based Utility Reform Network say SDG&E should have disclosed the plan, which lays out a program for cutting costs over the next eight years. Long agreed.

"I find the (consumer groups) have made sufficient showing that there may well be significant evidence that to date was excluded," Long wrote in a ruling released yesterday. "I find this exclusion may directly bear on the commission's ability to adopt just and reasonable rates."

In addition to ordering a revision of SDG&E's testimony in the rate case by June 4, the judge asked the utility to indicate whether the information it gave to consultants who prepared the 2,500-page cost-cutting report - which SDG&E calls the Utility of the Future program - was the same given to consumer groups to justify a rate increase.

A consultant for the consumer groups said the plan envisons a cost reduction of 5 percent across the board at SDG&E, with staff reductions of up to 50 percent in some departments.

The Public Utilities Commission had planned to issue a ruling on the rate increase request by the end of the year, and yesterday's ruling does not alter that schedule.

SDG&E spokeswoman Stephanie Donovan said the utility planned to file the revised testimony on time, as ordered. "We believe the supplemental testimony will help everyone understand the Utility of the Future program," Donovan said.

Asked why SDG&E did not provide the cost-cutting plan earlier, Donovan said, "We determined that it was not appropriate to include a plan that was not approved by (the the utility's board)."

"It still has not been approved, and we are still evaluating it" Donovan said. "That is why we did not include it (earlier)."

Consumer groups said the plan should have been on the table earlier in the rate case.

Michael Shames, executive director of UCAN, said the judge's ruling yesterday indicates that the plan is relevant to the rate case. Shames had complained to the PUC that the plan was provided to consumer groups long after they had requested such documents and after they had done significant analysis of SDG&E's costs and rate increase request.

Shames said it appears the plan, of which most details remain confidential, could lead to lower costs while improving service.

He added that the judge has set a tight schedule for SDG&E to revise its testimony. "I think the judge is putting SDG&E under severe pressure," Shames said.