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Bill Supported by LB-area State Lawmakers Lowenthal, Oropeza, Havice & Karnette Quietly Laid Groundwork for Latest SCE Rate Hike

Rate Hike Means LB City Hall Will Get Another Utility Tax Windfall

Ass'yman Lowenthal Reacts, Says if Core Residential Customers Significantly Impacted, He Thinks Legislature Will Consider "a Range of Options"

(March 28, 2001) -- Citing legislation passed with the support of LB area Assemblymembers Alan Lowenthal, Jenny Oropeza, Sally Havice and Senator Betty Karnette earlier this year, the CA Public Utilities Commission approved the largest electricity rate increase in CA history. The increase will impact many LB customers of Southern California Edison (SCE).

The PUC cited AB1X in imposing the rate increase within a still to be finalized "tiered" system that penalizes those who use more electricity and exempts some consumers (see below).

A PUC document describing the increase indicates roughly 55% of residential customers could see an increase in their electric bills if their usage remains the same. Under the tiered system, consumers who exceed a state allowed minimum will be impacted.

The net increase in LB residential bills is unclear as of this posting since the PUC has yet to determine exactly how its 3 cent per kilowatt hour increase will be distributed among users (that will be decided in the next few weeks). However, the net increase in residential bills will likely be less than the 40%+ suggested elsewhere, although it's unclear how much less.

Because the electricity rate itself is only one component of monthly charges, the net impact on monthly residential bills may be an increae of roughly 25%-30%. This too is subject to several variables (see below).

Some of the state's poorest consumers (up to 175% of poverty level) and residential consumers who use less than 130% of their minimal "baseline" allocation won't see any rate increase. The biggest brunt of the rate increase will be borne by larger users and businesses. Non-poverty status residential consumers who use 30% more than their "baseline" allocation (about half of average residential use per month) can also expect to be impacted by the rate increase.

AB1X, passed with the support of LB area legislators, quietly laid the groundwork for a PUC rate increase (details below). On January 31, 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."

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.

AB1X limited residential rate increases to use exceeding 130% of the baseline amount (i.e. 30% higher than the baseline amount). It's presently unclear what this will mean in real terms to many middle class LB homeowners.

Your baseline rate (which differs for different types of users) should be printed on your suggests consumers check their SCE bills to get a rough estimate of the extent to which, if at all, their usage may exceed their "baseline" amount. (If you wish, let us know at "").

Former Green Party senatorial candidate Medea Benjamin, who delivered the keynote address to the inaugural meeting of LB Citizens for Utility Reform days earlier, stood in the PUC chambers with supporters carrying yellow signs saying "We Won't Pay" and "Public Power Now!"

Rate hike means another utility tax windfall for
LB City Hall

The SCE rate hike is expected to produce another utility tax windfall for LB City Hall, whose utility tax will be 8% effective April 1. Prop J, passed by nearly 70% of LB voters over City Hall's objections in November, cut the former 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, and will be offset to some extent by additional city electricity costs.

Like the utility tax, City Hall's additional electricity costs will also ultimately be paid by LB taxpayers.

Local elected officials laid groundwork for rate increase

AB1X, enacted into law earlier this year with the support of LB area legislators Lowenthal, Oropeza, Havice and Karnette, quietly laid the groundwork for a PUC rate increase without mentioning it directly.

The PUC rate increase decision says 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."

LB area Assemblyman Alan Lowenthal reacts

In a telephone interview with within hours of the PUC action, 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."

Does 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... "

Utility campaign contributions

State records indicate Assemblyman Lowenthal accepted $5,000 in contributions from Edison International, the parent company of Southern California Edison, during his 2000 Assembly re-election campaign. This was the largest amount given to a LB state legislative candidate by that utility. After winning re-election, Assemblyman Lowenthal returned the money. asked Assemblyman Lowenthal if this let him get the benefit of the contribution during his campaign while letting the utility get its favored candidate elected essentially for free. He replied:

"I stand on my integrity. When I was running for office, there was no issue around energy issues and accepting campaign contributions from anyone, especially any kind of energy producers. As soon as I became aware of that issue, I returned it. I was one of the few legislators that did return it. I don't really see that as an issue, what Edison did or didn't get is not really the issue. I try to do the best I can."

The San Francisco based consumer advocacy group "Global Exchange" (headed by Medea Benjamin) had called on CA legislators to return utility companies' campaign contributions. Ms. Benjamin told she was glad Assemblyman Lowenthal did so "because so few state legislators did, only 10 out of 119, and it's good if you respond to a grassroots public pressure campaign." She added that the symbolism in returning the money is more important than the money itself because $5,000 means little to Edison and she believes giving it back "gives them a black eye."

State records show LB area Assemblywoman Jenny Oropeza received $3,500 in contributions from Edison International in 2000; Assemblywoman Sally Havice received $750 and State Senator Betty Karnette received $1,000.

The records also indicate legislators of both political parties and various political groups received contributions from Edison International.

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