Utility pursues cost-cutting plan, rate hike at same time

By: DAVE DOWNEY - Staff Writer

Click here to see this story as it originally appeared in the North County Times.

A local consumer watchdog group has charged that San Diego Gas & Electric Co. improperly withheld information about a cost-cutting program, even as it was seeking a rate hike that it says is needed to cover rising operational costs.

However, San Diego Gas & Electric contended that it did not violate any rules because the cost-cutting program was in its early planning stages, and potential savings were too speculative to seriously consider against the backdrop of a $1.5 billion rate hike request.

Utility spokeswoman Denise King said that it would be at least 2011 -- well after the proposed Jan. 1, 2008, effective date of the rate increase -- before any savings would be realized. King said indications are that the program actually would increase costs initially.

Still, she said, "Any savings would be shared with customers."

"It's really a technology enhancement program," King said, saying that it could result in fewer new employees being needed to run the utility. At the same time, she said, "The truth of the matter is, we're always looking for ways to be more efficient and save costs for customers."

The watchdog group stated in a filing with the California Public Utilities Commission on Tuesday that new documents submitted by San Diego Gas & Electric show the cost-cutting program could pare utility operational costs 5 percent across the board. That could negate the need for the requested increase, the group said.

In December, the utility filed for permission to boost revenues by $1.5 billion over six years, starting next year. If the full increase being sought is granted, county ratepayers would see monthly bills for electricity and natural gas rise by a combined $7 to $9.

North County coastal residents would see electric bills rise by $5.44 a month while inland residents would pay an additional $4.16, King said. As for natural gas, both inland and coastal customers would see bills climb by about $3 a month, she said.

The "need for such increases appears to be directly undermined, if not absolutely contradicted" by the utility's plan to curb costs, according to a filing of the Utility Consumers' Action Network, the San Diego watchdog group. The group was joined in its filing by The Utility Reform Network of San Francisco, California Farm Bureau and Aglet Consumer Alliance.

"If SDG&E ... did not incorporate the report's recommendations into its rate-making request, then the prospects are very good that we'll be able to avoid the $1.5 billion rate increase that SDG&E is seeking from the CPUC," said Michael Shames, the group's executive director, by e-mail. "So these reports may prove to be the bulletproof vest that protects San Diego ratepayers from what could have been a very expensive attack by SDG&E on ratepayers' bank accounts."

The group alleged that San Diego Gas & Electric acted improperly by failing repeatedly to respond to its many requests going back to February to see information about a cost-cutting plan. Utility Consumers' Action Network is trying to analyze whether in fact the rate hike is necessary.

For months, "SDG&E was silent: the utility provided no substantive response, no objection, no request for more time, nothing," the group stated in its filing. And then on May 7, the utility delivered 2,500 pages of documents for the group's inspection.

Utility officials said the documents weren't delivered earlier because the plan is in the development stages and it took a while to gather the various reports associated with it.

"This is a case where UCAN has misunderstood and mischaracterized documents produced in routine data requests," King said. "In fact, we have been responsive and we continue to be responsive to their requests for information."

The cost-cutting plan is being kept confidential. But the consumer organizations are asking the commission to rule on the question of whether the plan should be made public. Commission Administrative Law Judge Douglas M. Long on Tuesday ordered the utility to make its case, by Friday, for why the information should remain confidential.

-- Contact staff writer Dave Downey at (760) 740-5442 or ddowney [at] nctimes [dot] com.