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CNN Today

California Public Utilities Commission Adds Surcharge to Electricity

Aired January 3, 2001 - 4:15 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOIE CHEN, CNN ANCHOR: As we said earlier, California's state utilities board today announced its plans for a rate increase. Let's go now to CNN's Greg Lefevre who's in San Francisco with details on that --Greg.

GREG LEFEVRE, CNN CORRESPONDENT: Hi, Joie. Well, if you have a home or an apartment here in the San Francisco area, expect about a 9 percent jolt in your electric rates and expect it very soon. But if you run a big business in this area, think 15 percent. That's an even bigger jolt.

The Public Utilities Commission here just a short time ago, imposed what it called a short-term emergency surcharge of one cent per kilowatt hour. To give you some real quick math, if you leave a light on at night outside your front porch, about a 100 watt, figure that's about $10 a year. Multiply that around the economy, that's a lot of money.

The reason why this is happening is that the utilities are paying a whole lot more for the electricity than they are able to charge consumers and they've begging the Public Utilities Commission for some kind of relief. Is this surcharge a fix? The PUC says, in a word, no.

(BEGIN VIDEO CLIP)

KARL WOOD, PUBLIC UTILITIES COMMISSION: What we're doing here is an interim order. It is not a solution to the problem of rates in California. If we were dealing with the problem of rates in California, for one thing, we wouldn't be ready for it. We don't have all of the evidence. We haven't...

(END VIDEO CLIP)

LEFEVRE: Now, why do they impose a surcharge? Well, the surcharge is real easy, just kind of tax on top of the everything else. It can be raised, lowered or dumped as the PUC requires and it doesn't require the utilities to go back through their rates and do a lot of different calculations. It can be imposed right away and done with.

Now, how did we get here? When the state of California decided to deregulate the electric utility industry in 1996, it did so on a partial basis. It deregulated the acquisition of electricity, that is the people who generate the electricity, but not the amount of money charged to consumers.

PG&E, for example, contends that it pays $0.15 to $0.40 per kilowatt hour to buy the electricity but is only able to charge about a nickel to the customers. PG&E and SDG&E, Southern California Edison say that they are losing somewhere in the neighborhood of $9 billion just in the last year.

So, where do we go from here? For the next 90 days, this particular surcharge will be in effect. During that 90 days, the PUC will investigate and continue to audit the two utilities, the Southern California Edison and Pacific Gas and Electric to see if their claims, their financial claims are correct. In the meantime, these two utilities will continue to press their claim they may need some kind of relief.

Joie, back to you in Atlanta.

CHEN: Greg, let me ask you, this, though. If you can do this for 90 days, can you just re-up this 90 days from now? Could the board come back and say, OK, we need another surcharge for another 90 days and another 90 days after that forever?

LEFEVRE: Absolutely. Absolutely, and with just as much ease as they did today, they could say this will continue on or they can raise it if they think that the utilities' financial claims are true. They could say, well, we'll raise it to $0.02 a kilowatt hour, something like that. It's very easily done.

CHEN: I imagine people would be screaming about that. Greg Lefevre in San Francisco for us today.

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