Background

In D.00-08-021, we considered and rejected a rate freeze proposed by the Utility Consumers' Action Network (UCAN). We recognized that wholesale electric markets are not workably competitive and issued an Order Instituting Investigation (I.) 00-08-002 to begin an investigation to consider the impact of the wholesale electric market on retail rates in SDG&E's service territory. As we explained in that decision, ratepayers in the service territories of Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (Edison) are shielded from increases in energy prices (both commodity and ancillary services) because these utilities' electric rates remain frozen. SDG&E, however, ended its rate freeze on July 1, 1999 (D.99-05-051).

In D.00-06-034, we determined that consumers must be aware of the price signals provided by the market and rejected PG&E's rate capping proposals. The Commission agreed with TURN that balanced payment plans, which each utility already has in place, offer a bill smoothing effect for residential customers and still allow these customers to be exposed to price signals.