Customers Pay Off Big Debt to San Diego Gas & Electric

Dec 16 - The San Diego Union-Tribune

Dec. 16--San Diego Gas & Electric customers have at last paid off one of the more infamous debts of the 2000-2001 electricity crisis, the $750 million charge the utility said it was owed for power purchases during the deregulation debacle. SDG&E said the controversial debt was erased Nov. 30, after about three years of customer payments and refunds.

But ratepayers shouldn't expect any large reductions in power bills because of the way the debt was repaid, the utility said. Customers paid down the charge through the Competition Transition Charge included in each monthly bill, which amounted to $1 or less for most customers. But larger sources of repayment included the transfer of funds by SDG&E from accounts in which it collected more than was needed -- for such things as tree-trimming and electricity produced by SDG&E itself -- as well as nearly $200 million in refunds from profits the utility earned through controversial power sales during the crisis.

SDG&E said it also applied $33 million from payments made by energy companies to settle charges of market rigging during the crisis. The utility said the $750 million debt arose when California's Legislature capped customer electricity payments during the crisis, after power costs here more than doubled and caused widespread economic hardship. While collections from customers were capped, SDG&E said its costs for electricity purchases continued to grow and it was suffering losses on the deals. The shortfall was compiled in a so-called balancing account and grew to the $750 million total.

"This is a milestone for customers because it signals the end of another sad chapter in the energy crisis and allows us to focus on the future rather than the past," said Ed Van Herik, a spokesman for SDG&E. But a local consumer advocate suggested that the debt repayment more specifically marked a sad chapter in SDG&E's relationship with its customers. "This debt was spawned from a fundamental betrayal of San Diego by SDG&E when it said it was not benefiting from the high electricity prices of 2000 and 2001," said Michael Shames, executive director of the Utility Consumers' Action Network.

Shames noted that instead of losing money on its power purchases during the power crisis, as the utility asserted, SDG&E earned about $400 million from reselling electricity it had purchased under certain contracts. The utility insisted these profitable power deals were made on behalf of its shareholders, not its utility customers.

The assertion sparked charges that SDG&E was sticking customers with the costs of bad electricity deals and profiting from the good ones, contrary to provisions of California's deregulation plan that barred utilities from earning profits on power sales to customers.

The matter was contested before the California Public Utilities Commission, which ultimately compromised with the utility and allowed it to keep about $173 million in profits, while returning about $200 million to customers, money that was ultimately applied to partly offset the $750 million debt claimed by SDG&E. While repayment of that debt is a milestone, larger SDG&E customers may have little time to celebrate. Last month, the PUC imposed $733 million in new crisis-related charges on SDG&E. That cost is expected to fall most heavily on SDG&E commercial and industrial customers. The utility plans to file for a rehearing of that decision by Monday.

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