SDG&E Wants More Money From Rate-Payers, Public Asked To Weigh In
October 12, 2011 1:21 p.m.
Michael Shames, Utility Consumer Action Network
Related Story: Public Invited To Weigh In On Proposed SDG&E Rate Increase
CAVANAUGH: San Diegans say what they think about a proposed SDG&E rate hike, and San Diego state embarks on an ambitious project to reduce childhood obesity. This is KPBS Midday Edition. It's Wednesday, October 12. I'm Maureen Cavanaugh. Our top story on Midday Edition, public heart attacks are under way in San Diego about a $1.1 billion rate increase over the next four years proposed by San Diego gas and electric: The request would boost an average gas bill by about 4%, an electric bill by about 5%. Just a month since the big blackout may not be the best time to ask for more money from rate pairs, and a consumer advocate group says SDG&E should actually be lowering rates, not increasing them. Michael Shames is executive director of the utility consumer action network. Welcome to the show.
SHAMES: Good afternoon. A hot afternoon.
CAVANAUGH: Yes. Indeed, and that goes into all the rates that we pay for our air conditioning. I hear what you're saying. UCAN is not only against this increase, it's actually advocating for a rate decrease.
SHAMES: The process we followed, we hired a number of teams of experts to comb through SDG&E's books, and say look at their costs, their operations, what do they really need? What they found was they actually need far less than the hundred and 70 some odd million they want the first year. And combined with the testimony of the findings of the PUCs on staff, the two testimonies together suggest there should be a significant rate decrease. Not just stopping the increase. SDG&E, benefited from a rather tremendously large rate increase about four years ago, far larger than they needed. And it under its out, we were correct at that time. It was more than they needed. So we're hoping to separate back where they should have been in 2008.
CAVANAUGH: When you say the PUCs own investigative wing, I believe you're talking about the division of ratepayer advocate, an independent consumer advocacy division of the PUC. And it is, as you say, advocating for either a rate decrease or no rate hike.
SHAMES: That's right.
CAVANAUGH: Explain how this rate calculation work, if you it can, in a simple way that we can grasp. SDG&E is not allowed to make money on the commodity itself, on the natural gas or the electricity. What does SDG&E use this money for in.
SHAMES: This money they're asking for in the increase is specifically dedicated to the cost of running their business, running the line, take care of the lines, the customer service parts, the accounting, the various kind of things that go into a regular business. It does not which had any of the electric costs or any of their natural gas commodity costs.
CAVANAUGH: And as you say, you went through their books, which are open to the public, and open at least to investigators to look through and get some idea. And I believe you say that they say they need increases in just about every department.
SHAMES: Every single department but one. There was one department they were able to cut their costs. And that was for meter readers, the reason being they fired all their meter readers! They're all gone. We have smart meters now, we don't need them. Every single other department, in the midst of a recession, somehow found its costs going up.
CAVANAUGH: The cost of business is going up, according to SDG&E. Eric Anderson recently interviewed SDG&E spokes person Stephanie don von.
NEW SPEAKER: Anybody who runs a balance or anybody who runs a household has seen how the costs have gone up. And that is for virtually anything, whether it's the cost of steel or the cost of -- for wire, for our system, or insurance and medical premiums. Everybody has seen some of the same kinds of increases. And we are certainly interested in sitting down and talking with the public utilities commission, and others that are participating in this process and try to find some common ground.
CAVANAUGH: How do you respond to that, Mike?
SHAMES: Well, it's funny. We monitor a number of necessary commodities, housing, we look at the telephone service, we look at experience. And we found actually across the board almost all of those have actually dropped in the last few years in this recession. So in fact, households, the only costs that are going up for households that wee seen, food, no question. Even gasoline has been somewhat stable. And electricity! Oh, and water. Those are the three things, the four things. And SDG&E doesn't have water issues. They don't pay for water am so we're not seeing or not I guess sympathetic to SDG&E's argument that everything is going up and they're just following the lead.
CAVANAUGH: I do want to let everyone know that we did invite SDG&E to participate in this discussion but they declined. What kinds of comments are ratepayers telling the PUC during these public hearings?
SHAMES: This are two major sentiments being expressed at the hearings. . The first one is, please, not in the middle of the worst recession in our lifetimes are you going to start causing our rates to go up. We can't afford it. That's one. A lot of people are coming and saying I invested in solar power, and now you want to come and change the rates so that I have to pay SDG&E even if I don't take any power from you. Even if I'm producing more than I use, new set of rules, solar -- owners and solar industry is very upset about. They believe it will pretty much kill solar in San Diego. And San Diego is the leading place in the country where solar is being employed. So those two issues seem to be the predominant ones at the hearings.
CAVANAUGH: SDG&E wants solar customers not using any energy to pay a monthly fee?
SHAMES: Well, customers who are producing more power than they actually need. So they actually use SDG&E's power at night, and put their power back into the grid during the day, people like myself and other areas who actually end up at the end of the month having produced more than we actually used, SDG&E still wants us to pay.
CAVANAUGH: Okay. Wow, since the PUC's own consumer division is advocating against this rate hike, how much do you think that's going to influence the PUC's ultimate decision?
SHAMES: Quite a bit. The proceeding -- the case that both the PUC staff puts on, and that we've put on is a really impressive case. I've been doing this for 25 years. We put on the best case ever showing that SDG&E's costs should not go up. The PUC staff did an adequate job. SDG&E will have a chance to rebut our finding. We're very curious to see whether they find that their own numbers we didn't make up or own numbers, that their own numbers somehow are wrong. And we'll find out.
CAVANAUGH: I read a lot of times these rates are settled by negotiation. Is that the consumers' interest when that happened?
SHAMES: Sometimes it is. I've settled two general rate cases with SDG&E in my career. Both resulted in rate decreases. There is not going to be a chance that we're going to agree to a settlement where there's a rate increase this time around. As I said, the times are just too bad. In the middle of a recession, you simply don't raise rates unless you absolutely have to.
CAVANAUGH: Well, I want to let everyone know that the California public UT-shirts commission will be holding heart attacks today and tomorrow in San Diego County to discuss this proposed rate increase in El Cajon, it's at the El Cajon city hall council chambers at 2:00 PM and 7:00 PM today. And tomorrow it is up in Oceanside at the civic center library community room, also at 2:00 and 7:00 PM. I've been speaking with Michael Shames of UCAN and thank you so much for coming in and speaking with us.
SHAMES: As always, a pleasure Maureen.