SDG&E Rate Increases Justified?

Gene Cubbison, NBC 7/39 Reporter

NBCSanDiego.com July 6, 2007

SAN DIEGO -- A preview of an intense battle over San Diego's utility rates played out Friday as consumer advocates accused SDG&E of grossly inflating projected costs it wants to pass on to customers.

"What we've found is that SDG&E, essentially, has been cooking the books," said Michael Shames, founder of the Utility Consumers Action Network (UCAN), while pulling a media stunt for news crews at UCAN's Hillcrest offices.

The sight gag: a ledger titled "Unbalanced Accounts" sitting on the grill of a portable barbecue, vapors from dry ice below wafting out of the Weber kettle as Shames lifted the domed lid.

"I have not seen a case as compelling - nor abuses as obvious - as those that SDG&E tried in this case," Shames added.

He was referring to SDG&E's proposed 5.9 percent rate increase of $1.4 billion over six years starting in 2008, which the utility says would raise the "typical" customer's monthly bill by $5.42.

UCAN and the California Public Utilities Commission's independent Division of Ratepayer Advocacy say their auditors have learned that SDG&E's cost projections are inflated by up to a billion dollars.

Shames said current members of the PUC, which begins regulatory hearings on SDG&E's request August 6, have tended to favor the energy industry in commission rulings.

"So the politics right now are such that SDG&E is feeling greedy, they're feeling aggressive," Shames said. "SDG&E figures, this is their chance - let's ask for the moon, let's give them the wish list ..."

"They didn't do their homework very well. And we caught most of the tricks."

Company officials denied any such tricks, saying auditors actually gave SDG&E's numbers "a clean bill of health."

Lee Schavrien, the firm's senior vice president of regulatory affairs, told reporters the proposed pass-on costs are baggage from contracts signed by state officials at the height of California's energy crisis several years ago.

SDG&E, he said, will "demonstrate to the commission that our request is reasonable."

Schavrien also dismissed UCAN's criticism that company profits have nearly doubled, while customers' bills have risen almost 50 percent, since the onset of the energy crisis.

"SDG&E makes what the commission allows us to," Schavrien said. "They have a hearing process. It sets a rate of return that we're allowed to earn."

And, while UCAN claims San Diegans pay the nation's second highest utility bills --only behind New Yorkers -- and the highest in California, Schevrien said SDG&E's rates are the state's second lowest, next to Pacific Gas & Electric's.