The rate hike hurts the economy

Sucking hundreds of millions of dollars a year out of San Francisco
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EDITORIAL Pacific Gas and Electric Co.'s latest rate increase simply ratifies what's been going on for many years: the private electric utility screws residential users and small businesses. If the California Public Utilities Commission goes along with the new rate plan, renters and homeowners will see their power bills go up more than 4 percent; small merchants will face a hike of nearly 7 percent. Meanwhile, rates for some of the biggest users will actually fall, by as much as 3.7 percent.

That's pretty shoddy environmental policy. For years activists have argued that the biggest users should pay higher rates, since that would give them the strongest incentive to conserve. Cutting rates for, say, big companies that leave their lights on all night or manufacturers that refuse to invest in the latest conservation technology will only lead to more waste — and thus to more energy use and more global warming.

But it's also bad economic policy. High utility rates hit hardest among those least able to afford them — and just as tax increases on the poor and small businesses disproportionately harm the economy, this rate hike will have lasting damage that goes beyond individual users.

Since San Francisco has a mild climate and a lot of residents and small businesses already work hard to conserve power, the rate hike may not seem catastrophic: if your monthly electric bill is $50, the additional charge will be just $2. But when that's multiplied by more than 300,000 San Francisco households (and close to one million in Northern California), we're talking significant money.

As we've demonstrated (see "The $620 Million Shakedown," 9/4/02), high PG&E rates suck hundreds of millions of dollars a year out of San Francisco and many times that out of Northern California. This rate hike will bounce that number even higher. And remember: San Francisco is the only city in the United States with a legal mandate, through the Raker Act, to establish a public power system.

And that ought to spark a new organized effort to bring public power to the city.

The city is already moving forward on Community Choice Aggregation, which will translate into lower rates — but will leave PG&E controlling the local grid. It's a good first step, but the second step — a full takeover of the grid and a city-run power agency — needs to be on the agenda as an action item. It's not clear how best to proceed, but there are great ideas out there. Sups. Tom Ammiano and Chris Daly, for example, have talked about requiring contractors to allow the city to lay electric cables whenever the streets are torn up, which would allow public power to proceed one neighborhood at a time.

But the economic impact of this rate hike ought to be enough evidence of the need to get rid of PG&E that organizers can start putting together concrete plans for the future.

PS If city hall proposed a 7 percent tax hike for small businesses, most would be screaming bloody murder and complaining about the larger economic impact. But the small-business community has never been actively involved in public power efforts. The rate hike is in effect a tax on those least able to pay, and small-business leaders ought to join the public power fight.

PPS The city, especially the Small Business Commission, needs to be fighting this late hike. And the commission should designate an ombudsperson to compile complaints about PG&E.