Rate rebellion threatened as electricity crisis in California worsens

Official declares ratepayer rebellion

The threat of a rate rebellion came after California's top utility regulators approved a $100 million rebate for electricity consumers in San Diego, where bills have doubled and even tripled during this summer's hot spell.

Moments after the vote, officials who had come to the meeting from San Diego said the action by the Public Utilities Commission was too little, too late, and urged customers to refuse to pay more than what they paid a year ago.

"It is starting here, it is starting now. It is a ratepayer rebellion," said San Diego Supervisor Dianne Jacob. "We're telling people to go back to paying what they did in July 1999. What can they do? There are 3 million of us."

U.S. President Bill Clinton, meanwhile, directed managers of all federal buildings in California to take steps that would cut their power consumption by 5 percent.

In addition, Clinton ordered any federal agencies that generate electricity, and the Federal Power Marketing Administrations, to "maximize" the amount of electricity that can be delivered to California consumers.

Repeal of deregulation demanded

The crisis has spurred demands for a repeal of a complex 1996 state law that sought to boost competition in the state's $20 billion electrical power industry, then pass on the expected savings to customers.

Under deregulation, private utilities were required to sell off their power plants and open their markets to electrical resellers, and buy power on the open market, paying an amount that may fluctuate from day to day. For some customers served by San Diego Gas and Electric Co., however, that has meant bills 200 percent higher than what they're used to paying.

A report prepared by the state's utility commission staff for California Gov. Gray Davis stopped short of recommending that the new system be dismantled. But the 40-page study was sharply critical of deregulation, and predicted dire troubles to come.

New plants not yet built

Power grid areas in New England and New York had similar strains on electricity management in early June. But California is in particular trouble, because its growing high-technology industry has sharply increased demand.

At the same time, utilities have fallen behind in new power plant construction. Fearful their once-guaranteed profits would be jeopardized by deregulation, the power industry is at least two years away from seeing completion of any of the five plants now under construction.

"If you can't get those power plants built, then we can't have a competitive marketplace," said Greg Conlon, a former member of the California Public Utilities Commission.

Patrick Dorinson, spokesman for California's Independent System Operator, said the state's energy deregulation hasn't worked smoothly in conjunction with other traditionally regulated states.

"If you deregulate in California and your neighbors haven't, you've got a lot of different systems out there," he said.

A population boom in places like Phoenix has diminished the amount of power California can import from the Southwest. And in the Pacific Northwest, where the Bonneville Power Administration wholesales power to western states, water has been diverted this summer for such things as salmon runs.

"What California needs is a less congested transmission system," said Energy Secretary Bill Richardson. "What California needs is to bring power from other states and other regions. The lack of federal legislation to permit that is hurting California."