The Southern California city was the first in the state to feel the impact of unregulated energy prices when San Diego Gas and Electric began passing on certain costs to consumers. Owned by Sempra Energy, San Diego Gas and Electric was the first to meet state qualifications that allowed it to pass on the costs.
Economists say San Diegans have paid $800 million more this year for the same amount of power they got in 1999. New, higher power bills have some businessmen reeling.
Law spawns outrage
An energy crisis has developed throughout California in recent months, with the state sometimes reaching the point where it is down to its last 5 percent of electricity. Authorities say a lack of adequate power plants is at least partly to blame for the shortage.
At the same time, utilities such as Pacific Gas and Electric have been caught in a crunch: while they pay market prices for power, a deregulation law passed by legislators in 1996 has prohibited them from passing all of the price increase on to their customers.
The Legislature put a price cap on bills for residents and some small businesses. The cap came with a catch, however.
Beginning in 2002, customers will have to pay the difference between what they are being charged today and the actual cost of energy production covered by the utility.
In essence, consumers will face an old-fashioned balloon payment.
"You're talking four, five, six thousand dollars that we're gonna have to come up with," said Linda Johnson, who operates Valley Cleaners. "Where's that money gonna come from?"
Consumer group: deregulation hurting economy
Sempra energy officials see the cap in a different light.
Stephen Baum, the chief executive officer, said he views the cap as a loan that Sempra is making to consumers. The loan represents the difference between what electricity actually costs to produce and what the utility charges consumers.
"You will have to pay that loan back sometime, but we're trying to fix the problem at its source, the wholesale market," he said.
Michael Shames of the Utility Consumer Action Network said deregulation is proving detrimental to the city's economy.
"People are going out of business," he said. "People are choosing to move their businesses. People are choosing not to come to San Diego."
And in less than two years, that effect could spread to all of California. In 2002, full deregulation takes effect and all deregulated utilities in the state will be free to pass on their costs to consumers.
The Associated Press contributed to this report.
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