October 23, 2002

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Supervisors call for rate-hike study
Gonzalez, Daly want controller to analyze economic impact of PG&E increases

By Savannah Blackwell

Sups. Chris Daly and Matt Gonzalez have asked City Controller Ed Harrington to analyze the full impact on the local economy of recent hikes in residents' and businesses' electricity bills.

The request came at an Oct. 16 hearing of the San Francisco Board of Supervisors' Public Works and Public Protection Committee on the effect on local businesses of Pacific Gas and Electric Co.'s 40 percent rate increase, which the California Public Utilities Commission approved at the company's insistence in 2001.

"Since PG&E declared bankruptcy, utility bills have gone up by 40 percent," Daly said at the beginning of the meeting. "Many small businesses have been hurt, and some have even had to close their doors as a result."

At the end of the hearing, Daly said he wanted the controller to "look at the numbers." He specifically wants Harrington to review the Bay Guardian's recent report that the rate hike has taken $620 million out of the local economy (see "The $620 Million Shakedown," 9/4/02).

Executive editor Tim Redmond explained at the hearing that the paper relied on methodology used by Hofstra University economics professor Irwin Kellner, who recently studied the impact of a rate cut by the public Long Island Power Authority.

The reduction in rates, made possible after LIPA took over from the private Long Island Lighting Co., translated into a $10 billion boon to the Long Island economy, Kellner found.

Mindy Spatt, spokesperson for the Utility Reform Network (TURN), an organization that represents 30,000 small commercial and residential customers, told the committee PG&E's bankruptcy plan will force ratepayers to endure the 40 percent hikes "indefinitely."

"We hear all the time from small businesses, from the local corner store to the dry cleaners, that they are suffering," Spatt said. "PG&E got $10 billion extra from us out of deregulation rates. When they're making money, it's only their money. But when they're losing it, suddenly it's our money. If we don't get out from under [PG&E's control], our rates will keep going up."

Spatt said many small businesses have signed TURN's Feb. 27, 2002, petition to the CPUC demanding that rates be lowered.

As for PG&E, no representative from the company attended the hearing. But Matt Lonner, a PG&E governmental and public affairs official, wrote to the supervisors claiming that the utility has no control over the rate hike.

Considering PG&E has spent millions of dollars in legal fees attempting to push through its bankruptcy plan, which would make the increase more or less permanent, the letter was disingenuous at best, Spatt pointed out.

"That's really ironic," she said. "The key here is 3.5. That's how much higher [a kilowatt hour] than the cost of service rates are right now. And PG&E wants to make that permanent."

Meanwhile, PG&E is hassling San Francisco officials about some clients who are already benefiting from the city's public power service.

On Oct. 16 deputy city attorney Theresa Mueller told supervisors on the board's Finance Committee that City Attorney Dennis Herrera is trying to fend off a move by PG&E to take some commercial customers located at the Fifth and Mission Streets parking garage, a property owned by San Francisco.

The clients currently get their power from the city.

"PG&E is disputing [the city's right to serve] Mel's Diner and Asia Chinese Restaurant and Starbucks," Mueller told us. "And they're making threats about other [clients]."

PG&E did not return calls seeking comment

Under a long-term agreement with PG&E, San Francisco has the right to deliver power over PG&E lines to certain facilities designated "municipal load." In the case of city agencies, it's clear the business belongs to the city.

But in the case of commercial enterprises located on municipal property, it's less clear, Mueller said.

On Oct. 11 arbitrator Eugene Lynch ruled in favor of PG&E. Herrera's office is trying to figure out how to respond.

The revenues from the restaurants at the Fifth and Mission garage aren't that high, Mueller said. Rather, the issue is more that PG&E sees an opportunity to beat back the city's efforts, however modest, to expand its electricity business.

"It's really annoying," Mueller said. "It takes up PUC [workers' time], and it delays other projects from getting done."
E-mail Savannah Blackwell at savannah_blackwell@sfbg.com.