(May 15, 2001) -- In a move stemming from legislation passed earlier this year with support from LB area Assemblymembers Alan Lowenthal, Jenny Oropeza, Sally Havice and Senator Betty Karnette (details below), the CA Public Utilities Commission (PUC) has finalized the largest electricity rate increase in CA history. It will directly affect thousands of LB residential and business customers of Southern California Edison starting June 1.

The state legislation (detailed below), which authorized the PUC to raise rates to repay the state for money now being spent to buy electricity for SCE, didn't specify how high the rate increases would be or on whom the increases would fall. The elected legislators left that to the non-elected PUC.

The legislation allowed the PUC to raise rates on residential consumers using 30% more than a state decreed minimum "baseline" amount (i.e. 130% of the baseline). We explain LB's baseline figure, below.

Residents who use less than 130% of the baseline will not see a rate increase, nor will some residents who meet very low income criteria.

Businesses don't have a baseline figure and will pay the rate increase imposed on their commercial category. We also indicate the rate increase affecting businesses below.

The bottom line: if your home uses more than 130% of the baseline level, you'll be hit by the rate increase. If you're a commercial user, you will also be impacted.

Finally, the PUC increase is a "tiered" system, so that as the consumer's electricity use reaches various PUC decreed "tiers," the consumer's rates get higher, effectively penalizing consumption.

Your electricity consumption is shown on the front page of your last SCE bill. But caveat: the "baseline" drops slightly (by 3 kWh over 30 days) for most LB residents from June 3 to October 7, and you could use significantly more electricity during the summer if you use your air conditioner. Older models could easily propel you into 200% to 300% of baseline where you would feel the full brunt of the rate hike.

Below are details on LB's June-October baseline residential figure and the 130% level that triggers the rate increase for most residential customers.

Nearly 20 years ago, the state legislature enacted a law implementing the concept of a "baseline" level for residential consumption of electricity and gas. The baseline is supposed to represent roughly 50%-60% of average residential user's consumption in the summer and 60%-70% in the winter. The precise baseline amount is set by the PUC and varies by season and region.

The baseline is lower from June-October (for most LB residents, roughly 3 kWh per month lower than the rest of the year) and also varies by geographic area; hotter, inland areas get higher baseline allocations than cooler, coastal areas where the baseline is lower. All of LB (from the coast to NLB) is in one PUC baseline area.

[There's an additional "medical baseline allocation" for qualifying customers (requiring electrically powered medical life support of mobility equipment) but in most cases, the baseline amount is what the PUC says it is.]

Here's the baseline bottom line for LB residential users:

Starting Sunday June 3, 2001 at 12:01 a.m. (and continuing through October 7), the LB baseline amount will be 9.1 kWh per day, meaning 273 kWh per 30 days). [The baseline for all-electric homes is 10.0 kWh per day.]

Thus, the rate hike will affect most LB residents when their usage is 30% higher than that amount or 354.9 kWh within a 30 day period.

Baseline amounts only apply to residential customers. Business do not get a baseline exemption; their increases are specified below.

The state legislature (Assembly and Senate) has the power (if not vetoed by the Governor) effectively to counteract the PUC's order if it so chooses.

The latest SCE rate hike comes on top of a "temporary" 9% (residential) to 15% (large business) SCE increase approved in early January, 2001 that the PUC has now made permanent. Another increase of roughly 10% has reportedly been approved for next year.

According to a PUC release, residential customers who use between 130%-200% of baseline will see an average monthly bill increase of $4, or a 6% average increase in their total bill. Those using between 200%-300% of baseline face an average monthly increase of $21 or a 20% bill increase. Residential customers who use over 300% of baseline, will have a $71 average monthly increase or a 37% bill increase.

Small and medium businesses (4.1 cents/kWh for both flat and time-of-use customers) will see a 36% increase; industrial, time-of-use rates would go up 4.25 cents/kWh or 49% increase; agricultural, 2.0 cents/kWh flat rate or 15% increase; and 1.8 cents/kWh for time-of-use customers or 20% increase.

A list of rate comparisons on the PUC's web site indicates:

Rate Comparisons
SCE
Customer Class	New Rate	Current Rate
Residential (For usage above 130%)	22.4	15.2
Commercial	15.6	11.5
Industrial	12.9	8.6
Agricultural	11.9	10.1

Tiered Rate Comparisons
SCE
Tier (Percent of Baseline)	New Rate	Current Rate	Percent Increase
Tier I (0 - 100%)	13.0	13.0	0%
Tier II (100 -130%)	15.2	15.2	0%
Tier III (130 -200%)	19.7	15.2	30%
Tier IV (200 - 300%)	23.7	15.2	56%
Tier V (Over 300%)	25.9	15.2	71%
Average	16.8	14.2	19%

In January/February 2001, the CA legislature approved AB1X, a bill that effectively laid the groundwork for recovering money being spent by the state (through the Dept. of Water Resources) to buy electricity for utilities like SCE. When the PUC adopted its basic rate increase in March, its decision explicitly cited AB1X (see below).

AB1X was supported by LB area state lawmakers Senator Betty Karnette, and LB area Assemblymembers Alan Lowenthal, Sally Havice and Jenny Oropeza. The bill didn't mention the PUC rate increase explicitly and didn't specify how much the increase would be or on whom it would fall. It left that to the non-elected members of the PUC.

The PUC's March rate increase notes that under AB1X, the PUC "is directed to designate a portion of the existing generation rates of PG&E, Edison, and SDG&E in effect as of January 5, 2001 as the California Procurement Adjustment (CPA). The statute anticipates that the utilities will collect the CPA revenues from retail customers" and transfer some portion of those revenues back to the CA Dept. of Water Resources (CDWR) which has been buying power for utility customers because energy wholesalers wouldn't sell power to the financially strapped utilities.

The PUC decision further notes, "AB1X authorizes CDWR to establish revenue requirements sufficient to recover its costs and to communicate those requirements to the [Public Utilities] Commission. As AB1X requires the Commission to provide for recovery of DWR's revenue requirements, it necessarily authorizes the Commission to impose an increase in customers' electric bills..." [our emphasis added].

The PUC's findings of fact also cite the state legislature's approval of AB1X:

"On February 1, 2001, the California Legislature enacted and the Governor signed AB1X, which authorizes DWR to purchase power and sell it to retail customers of PG&E, Edison and SDG&E. AB1X directs the Commission to designate a portion of existing generation rates as the CPA. In describing the calculation of the CPA, AB1X refers to the rates that are in effect as of January 5, 2001 as the beginning point for the calculation. In accordance with the Legislature's clear intent, we therefore make permanent" [the rate increase the PUC previously allowed in January, 2001.] Since AB1X requires the Commission to provide for recovery of DWR's revenue requirement, it necessarily authorizes the Commission to impose an increase on customers' electric bills, whether that increase is described as an increase in "rates" payable to utilities or an increase attributable to DWR's delivery of electricity."

On January 31, 2001, the CA Senate approved amendments to AB1X by a 19-14 vote, then sent the final bill to the Assembly on a 27-8 vote. LB area Senator Betty Karnette voted "yes" on both votes. The next day, the Assembly passed AB1X as amended 54-25. LB area Assemblymembers Lowenthal, Havice and Oropeza all voted "yes."

In a March telephone interview with LBReport.com shortly after the PUC adopted the underlying rate increase (but before the allocations decided on May 15), LB area Assemblyman Alan Lowenthal said "the legislature will look closely at who is impacted by this. If there is a significant rate increase to the core customers, the residential customers, then I think we would be looking at a range of options."

Did Assemblyman Lowenthal support legislative relief? "If the core customers, residential customers had to pay a significant rate increase, then I'd look at that, yes." Does he support going beyond looking? "I have to see that; I'd have to take a look at that," he said.

Assemblyman Lowenthal also said he thinks the prices now are "artificially high and have been manipulated by the generators and the profits that were taken out by the utility companies."

He said, "We're going to have conserve more. We're going to have to make sure that we don't totally rely on one source of energy, that we look for renewables as much as possible..."

He added, "I don't think it's ever going to be the day where people just expect it [electricity] to be there, you just flip a switch and it's going to be at a very, very low price... "

The SCE rate hike is expected to produce another utility tax windfall for LB City Hall, whose utility tax is now 8%. Prop J, passed by nearly 70% of LB voters over City Hall's objections in November, cut the 10% utility tax to 9% retroactive to October with further 1% reductions annually. By Council vote in February 2001, the scheduled October 2001 reduction to 8% was accelerated to take effect on April 1.

The full amount of City Hall's latest windfall is presently unclear, since it will be offset to some extent by additional city electricity costs. However, like the utility tax itself, City Hall's additional electricity costs will also ultimately be paid by LB taxpayers.