SDG&E hid information, groups allege

Cost-cutting plan is still under review, utility says

By Craig D. Rose
San Diego Union Tribune May 16, 2007

Two of California's largest consumer groups are alleging that San Diego Gas & Electric improperly withheld key information from a request for a $1.5 billion rate hike.

The locally based Utility Consumers' Action Network and The Utility Reform Network in San Francisco said SDG&E kept secret a major cost-cutting plan while it was telling state regulators it needed the $1.5 billion over six years to deal with rising costs.

In response, SDG&E said the plan is still under review by them and added that it would share any cost savings that resulted if the program were implemented.
But UCAN and TURN say that SDG&E failed to release the cost-cutting plan until this month, despite a request in February for this type of information.

In a filing to the California Public Utilities Commission, the groups said SDG&E's withholding of the plan may have wasted five months of their effort on the rate hike case and will warrant a delay of "at least several months" so they can study the cost-cutting proposal, which they say includes 5,000 pages of documents.

Any delay could postpone a PUC decision on the rate case, which had been expected by year-end. Under SDG&E's proposal, the rate increase would begin in 2008.

A consultant for the consumer groups who reviewed a sampling of the documents said they lay out strategies for a 5 percent across-the-board reduction in costs, as well as cuts in staffing of up to 50 percent in certain departments. The plan was prepared by Accenture, a worldwide consulting firm.

SDG&E has requested that details of the plan remain confidential because it said they could compromise its bargaining position with vendors. But Lee Schavrien, senior vice president of regulatory affairs for the utility, acknowledged that the program includes proposals for reduced staffing.

He declined to provide details beyond saying, "Those are long term."

The consumer groups are asking regulators to rule on whether the plan should remain confidential.

In response to the groups' filing, PUC Administrative Law Judge Douglas Long yesterday ordered SDG&E to respond by Friday and explain why the the cost-saving plan should remain confidential.

The state's third major consumer advocacy group, the Division of Ratepayer Advocates, an office within the PUC, said it had not completed its review of the withholding allegations.

Michael Shames, executive director of UCAN, said the failure to provide the cost-cutting plan earlier is unacceptable.

"In the 20 years I have been doing this, I have never had an experience where a utility withheld a blueprint that had material impact," Shames said. "Utilities fudge all the time, but this is the regulatory equivalent of keeping a double set of books."

SDG&E acknowledged that it commissioned the cost-cutting plan but says its recommendations have not been adopted.

What's more, said Schavrien, if the plan were adopted and cost savings resulted, the savings would be shared with customers under rules established by the PUC.

"We had a study to look at technical cost savings that may or may not be out there, and it has not been approved by the Sempra board," Schavrien said.

Schavrien said the cost-cutting blueprint did not envision any savings until at least 2011, which would be the fifth year of the six-year rate hike requested by SDG&E.

The study, he said, was completed in 2006.

"But we are still analyzing it," he added.

He acknowledged that UCAN had requested any such plans in February, but he said SDG&E informed the group in March that it was undertaking a "company-wide" search to find them.

"We said we wanted to capture everything and it turns out we had over 130 documents and thousands of pages," Schavrien said. "We provided them to (UCAN) as quickly as we could."