PG&E criticizes California rate boost

A decision by California regulators to raise electricity rates elicited a mixed reaction Wednesday. Pacific Gas & Electric Co. said the decision did not go far enough. Allan Zaremberg, CEO of the California Chamber of Commerce, called for authorization to allow facilities to operate backup generators to help prevent blackouts this summer. Gov. Gray Davis scheduled a workshop Thursday to boost the number of peaking power units available this summer through an expedited permitting process.

Mar 28th, 2001


By the OGJ Online Staff

HOUSTON, Mar. 28�A decision by California regulators to raise electricity rates elicited a mixed reaction Wednesday.

Pacific Gas & Electric Co. said the decision did not go far enough. Allan Zaremberg, CEO of the California Chamber of Commerce, called for authorization to allow facilities to operate backup generators to help prevent blackouts this summer, rather than waiting until after blackouts occur. With the probability of blackouts still high, Gov. Gray Davis scheduled a workshop Thursday to boost the number of peaking power units available this summer through an expedited permitting process.

Zaremberg said the rate increase was probably "necessary" to keep the lights on. For the state or utilities to continue buying power for California, ratepayers must cover wholesale costs, he said.

But he called the timing unfortunate because the higher electric costs are coming at a time when inflationary pressures are building on California businesses.

Many already have experienced double-digit increases in health care premiums and workers' compensation premiums, and are paying higher rent, higher wages, and higher natural gas bills, he said.

Zaremberg said if there are any �silver linings,� it is that price increases will cut demand this summer, reducing the chances of blackouts. "Additional supplies also are critical," he said. "One action that will help provide additional power immediately is to allow facilities with backup diesel generators to operate the generators to help prevent blackouts, rather than authorizing such use only after blackouts occur."

Pacific Gas & Electric Co. indicated, while welcome, the 3�/kw-hr increase authorized Tuesday by the California Public Utilities Commission raises more questions than answers. The PUC's action "do not offer a comprehensive solution, fail to resolve the uncertainty of the crisis, and may even create more instability,'' Pacific Gas & Electric Co. Pres. Gordon Smith said in a statement.

Specifically, he said, the PUC's actions fail to resolve:

� The amount the state will collect for the power it is purchasing.

� Who is responsible for covering the "net open position.''

� Who will bear the burden of the PUC's rate increase and how much they will pay.

� What prices are to be paid to qualifying facilities for their generation going forward.

� How and when the value of the retained utility generating plants will be determined.

� When the rate freeze will end.

� How and when the utilities will recover uncollected past costs.

In a statement, Smith said these issues must be resolved to keep California from sliding deeper into crisis. And he criticized "illegal attempts" by commissioners to change the rules after the fact.

For example, he said, the commission has ordered the company to make payments retroactively to the state for the Department of Water Resources' electricity purchases, upsetting its efforts to treat all creditors in a nondiscriminatory manner.

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