3. Public Participation Hearings

Public participation hearings on the potential rate increases and tiered rate design for large customers were held in San Diego and El Cajon on May 22, 2001, and in Oceanside on May 23, 2001. Twenty-seven speakers participated in these hearings, including representatives of local government officials, nonprofit organizations, manufacturers, service businesses, a cold storage warehouse, hotels, restaurants, and agricultural customers. They commented on the impact of electric rate increases on the San Diego area economy generally and employment in particular; the impact of high electric bills on individual businesses, particularly those with competitors located outside of SDG&E's service territory; the adverse consequences of being classified as a large customer under AB 265 and proposals to change SDG&E's tariff rules regarding customer classifications; the difficulties faced by nonprofit organizations in establishing annual budgets in the face of volatile electric prices; the importance of time-of-use rate structures to some customers and the inability of other customers to adjust usage patterns in response to time-of-use rates; the difficulties many customers experience in attempting to achieve further reductions in consumption while maintaining business operations; the inequity of, and lack of justification for, tiered rates for commercial, industrial, and agricultural customers; the importance of maintaining a fair rate structure; and the importance of solving the underlying problem of the dysfunctional wholesale market and high wholesale prices.

Some speakers observed that SDG&E's customers were the first in the state to face large bill increases last summer, that large customers were left unprotected from high wholesale prices when AB 265 established a ceiling for small customers, that fairness dictates recognition of this contribution by SDG&E's large customers, and that there have already been business failures and layoffs due to high electric bills. One speaker stated that direct access customers have not benefited from the rate stabilization measures that have been enacted by the Legislature.

Public participation hearings on the increase to rates resulting from DWR's revenue requirement and related rate design issues for small customers were held in San Diego and El Cajon on June 11, 2001, and in San Clemente and Escondido on June 12, 2001. There were approximately 700 to 800 attendees in total, and approximately 125 speakers at these hearings. In addition, the Commission's Public Advisor received more than 800 letters and e-mails commenting on the rate increases resulting from DWR's revenue requirement.

Virtually all of the speakers were opposed to rate increases for SDG&E customers. Many of the themes raised at the large customer hearings were repeated. For example, several speakers addressed the adverse impact of additional rate increases on individual customers and the regional economy. Others are concerned that customers on fixed incomes are forced with choosing whether to have food, buy medicine, or pay their energy bills; and that bill assistance programs offered by social service organizations and nonprofit groups such as churches and social organizations have very little money to assist those who lack money to pay their energy bill. Many are concerned that more rate increases will follow the currently planned rate increases, and are concerned that the quality of life is being adversely affected because of the electric crisis, and that California is becoming a third world country because of these problems.

Several speakers addressed the response of government to the electricity crisis, questioning whether this Commission adequately represents the public, raising concerns about political contributions to legislators, and questioning why this Commission does not provide a check on prices charged by DWR. Some questioned the authority of the Commission to raise rates on behalf of the DWR in view of legislation that caps energy rates at 6.5 cents per kWh. Some speakers suggested that the State should use its eminent domain powers and seize power plants, or that the California Power Authority should build new generating plants. Other proposals to solve the underlying problem include the following: implement a windfall profits tax on the generators; trace the monies that went to the utility parent holding companies and make them pay the increases or recover the monies from them; pursue criminal actions and other proceedings to recover monies from and impose fines against generators; re-regulate power generation as a monopoly service; build more and larger generation plants to provide sufficient capacity; eliminate environmental review to build more plants; prevent new developments and prevent people from coming to California until there is sufficient generation; and promote renewable energy sources.

Several speakers noted that baseline amounts are unrealistic and fail to account for varying household size, home businesses, climate differences from area to area, or homes that are all electric or have to pump water. Some suggested eliminating baseline allowances altogether and having all customers pay the same rate. Others would encourage the use of time of use (TOU) meters for residential customers, and suggest that more outreach and education about the availability of such a tariff should be done by SDG&E. Others questioned whether there would be a refund mechanism to consumers in case the DWR requirement is less than the $915 million that had been requested. Some addressed the balancing account undercollections associated with the rate stabilization legislation, questioning amounts, and proposing to pay the undercollections now instead of accruing the undercollections. Finally, some want to have a choice of electricity provider, and believe that direct access should be preserved.

Public participation hearings enable decisionmakers to learn firsthand how ratemaking and regulatory proposals will affect the consumers of public utility services. We place great value on this form of public comment in our deliberations. While we accord sworn testimony greater weight than the factual statements made in comments at public participation hearings, these public comments help us to evaluate and balance competing concerns as we consider and resolve the difficult issues before us.