Posted on 09/08/2005 9:18:37 PM PDT by SmithL
SAN FRANCISCO - Citing the need for jobs, the state Public Utilities Commission decided Thursday to let PG&E and Southern California Edison offer 25 percent electricity rate discounts to persuade employers to stay or expand in California or move here.
Job losses are "a hidden tax on every Californian," said PUC member Susan Kennedy, who sponsored the discount proposal aimed especially at light manufacturers, steel and plastic makers, food processors and cement producers.The panel voted unanimously to overturn an administrative law judge's decision that termed the discounts "an attractive lure that will draw free riders" and cause a multimillion-dollar revenue shortfall that would boost rates of other customers.
Instead, the PUC backed Kennedy's plan, which says that "instances of free-ridership would have to be as high as 75 percent" to outweigh its job creation benefits.
To limit abuse, Kennedy's plan requires applicants to sign affidavits that they would move jobs out of state without discounts. It also requires reviews of applications by a state Commerce Department office that "works to expand, attract and retain business."
But final decisions on who gets the ratepayer-funded discounts, which would be phased out over five years, rest with the utilities. PUC member Geoff Brown withdrew his proposal to require utilities to kick in their own money to pay for 25 percent of the program's cost.Both Kennedy's plan and the administrative law judge's brief cited the experience of Amy's Kitchen, a Santa Rosa food processor. Despite a general rate change that cut its annual electricity bill from $1.2 million to $927,000, Amy's Kitchen opened a new plant in Oregon. The expansion out of state was announced after the PUC balked at a special deal with PG&E that would have cut the processor's annual power tab to $695,000.
That was an embarrassing set back to the state's power regulators. Although the five-member PUC includes three appointees of former Gov. Gray Davis, it has enthusiastically embraced Gov. Arnold Schwarzenegger's campaign to make the state more sensitive to the needs of business.
Kennedy, who has spearheaded those efforts, also persuaded the PUC to approve a study of rules that would allow utilities to offer broadband communications over existing electric wires. She called the study "an important signal that California is not going to sit back and let other states take the lead" on a promising new technology.
But Brown worried that the commission was rushing ahead with rules that could give away assets worth billions of dollars without raising money to provide customers relief from the state's high electricity rates. Despite those concerns, Brown joined in the PUC's unanimous approval of the study.
The PUC also voted unanimously to oppose Proposition 80, an initiative on the November ballot that would write into law regulators' authority over all of the state's privately owned electricity sellers. The measure would also close the door on big electricity customers who want to shop from non-utility power sellers. "Most of what Proposition 80 would do is already underway at the Commission," according to a PUC staff analysis of the measure.
Still, PUC members fiercely attacked the initiative. "Passing Proposition 80 would be a huge mistake," said John Bohn. The measure should meet the fate of "a Thanksgiving turkey," said Michael Peevey, the PUC president. Rick Jurgens covers the energy industry. Reach him at 925-943-8088 or at rjurgens@cctimes.com.
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