Sempra Energy Chairman Stephen L. Baum called upon the Federal Energy Regulatory Commission to require refunds of "excessive charges" for electricity charged to consumers during this summer's price spikes, especially in the San Diego area, during testimony Tuesday.
Sempra Energy is the parent company of San Diego Gas & Electric (SDG&E), the first electric utility in the country whose customers have been exposed to prices in the volatile wholesale electricity market.
Baum said "no one�including SDG&E�foresaw this summer's huge run up in prices."
Under state law, SDG&E is required to purchase power from the California Power Exchange (Cal-PX) on behalf of customers who have not chosen an alternate energy service provider and pass the price of that power onto customers with no mark-up.
SDG&E customers now pay two primary charges on their bill: one for the regulated delivery service SDG&E provides and the other for the wholesale market price of electricity from the Cal-PX. The regulated delivery charge for SDG&E's services is lower today for residential customers than it was before deregulation, but the wholesale electricity price�the pass-through charge to customers from the Cal-PX�has more than quadrupled in the past 2 months.
To lower prices, Baum called for fundamental changes in the wholesale market structure serving California customers. Until this is accomplished, Baum recommended instituting targeted caps on the bids power generators can make when selling to the state's utilities through the California Independent System Operator (ISO) and the Cal-PX.
He also criticized a new state law capping consumer rates as a short-term fix that does nothing to address serious structural flaws in the California market. By requiring SDG&E to pay market price for electricity but sell it at a fixed price below market, "the new law simply creates a loan for our customers with a huge balance that will come due 2-3 years from now," Baum said.