Power source af­fects prices

Mu­nic­i­pal util­i­ties tend to charge less for elec­tric­ity than their in­vestor-owned peers.

Los Angeles Times - - CALIFORNIA - JEFF McDON­ALD jeff.mcdon­ald@ut­sandiego.com

In Sacra­mento, a fam­ily us­ing 500 kilo­watt hours of elec­tric­ity in Oc­to­ber was charged $58. Cus­tomers in Los An­ge­les, also served by a public util­ity dis­trict, paid $79.

Pa­cific Gas & Elec­tric charged $93 for the same power. South­ern Cal­i­for­nia Edi­son billed cus­tomers $97. And San Diego Gas & Elec­tric topped the South­ern Cal­i­for­nia Public Power Author­ity sur­vey at $116 for 500 kilo­watt hours.

The com­par­i­son of rates charged by public and pri­vate elec­tric­ity providers in Cal­i­for­nia shows a no­table dis­crep­ancy in the amounts cus­tomers pay for power, depend­ing on where they live and which provider serves them.

Es­pe­cially for heavy users, bills are higher at the in­vestor-owned util­i­ties SDG&E, Edi­son and PG&E, over­seen by the Cal­i­for­nia Public Util­i­ties Com­mis­sion. The com­mis­sion is re­quired to make sure the rates are fair and rea­son­able at the pri­vate util­i­ties, and doesn’t over­see the mu­nic­i­pal dis­tricts.

The util­i­ties com­mis­sion, which is the sub­ject of sep­a­rate state and fed­eral in­ves­ti­ga­tions into pos­si­ble fa­voritism and back-chan­nel com­mu­ni­ca­tions with util­ity ex­ec­u­tives, says costs are higher at pri­vate com­pa­nies in part be­cause they op­er­ate un­der dif­fer­ent rules.

“There are fed­eral and state reg­u­la­tory re­quire­ments that ap­ply to in­vestor-owned util­i­ties that do not ap­ply to pub­licly owned util­i­ties,” spokes­woman Ter­rie Pros­per said. “Pub­licly owned util­i­ties have ac­cess to very low-cost fed­eral pref­er­ence power from fed­er­ally op­er­ated dams that the in­vestorowned util­i­ties do not have ac­cess to, and many pub­licly owned util­i­ties have ac­cess to low-cost fi­nanc­ing that makes their cap­i­tal in­vest­ments much less ex­pen­sive.”

The mu­nic­i­pal util­i­ties say their rates are lower be­cause there is no profit mar­gin and their rev­enue is rein­vested into the public ser­vice.

“Sim­ply put: Money spent here stays here,” said Heather Ray­mond, a spokes­woman for the city of River­side, which has de­liv­ered its own wa­ter and power since 1895. “That’s great news for com­mu­ni­ties like River­side that have util­i­ties that are able to give back in the way of com­mu­nity sup­port.”

The public agen­cies have their own prob­lems as well, in­clud­ing in Los An­ge­les, where a re­cent au­dit found that $40 mil­lion of ratepayer money was spent on over­paid man­agers, per­sonal ex­penses and ven­dors hired with­out com­pet­i­tive bids.

Crit­ics have said the River­side util­i­ties depart­ment ar­ti­fi­cially in­creased rates to cover other city costs, and in Pasadena a city em­ployee was ar­rested in De­cem­ber and charged with em­bez­zling $6.4 mil­lion of power cus­tomer pay­ments.

For-profit util­i­ties say they do their best to keep rates and rate in­creases to a min­i­mum. They point out that they pro­vide more re­new­able power than most public util­i­ties and are work­ing to de­liver even more.

“Un­der the law, we can’t buy elec­tric­ity gen­er­ated from coal while the mu­nic­i­pal util­i­ties are per­mit­ted to do so,” said Rus­sell Wor­den, man­ag­ing direc­tor for state reg­u­la­tory op­er­a­tions at Edi­son. “And we have a greater num­ber of re­new­ables in our gen­er­a­tion port­fo­lio.”

Salary and benefits paid to ex­ec­u­tives at in­vestorowned util­i­ties — gen­er­ally higher than those paid by public agen­cies — also af­fect rates, con­sumer ad­vo­cates say.

Public salaries crit­i­cized at the Los An­ge­les util­i­ties depart­ment were $220,000, com­pared with $11.6 mil­lion in cash and eq­uity in 2014 for the chief ex­ec­u­tive of PG&E, an in­vestor-owned util­ity, or IOU.

“Public util­ity ex­ec­u­tives don’t make nearly as much as IOU ex­ec­u­tives do, and they are typ­i­cally smaller agen­cies with smaller staffs, so ex­ec­u­tive com­pen­sa­tion is a big cost driver,” said Stephanie Chen of the Green­lin­ing In­sti­tute, a Berke­ley non­profit group.

San Diego Gas & Elec­tric spokes­woman Am­ber Al­brecht said sev­eral fac­tors can re­sult in dif­fer­ent en­ergy costs im­posed by mu­nic­i­pal and in­vestorowned util­i­ties.

“This in­cludes the num­ber of cus­tomers, the type of cus­tomers, en­ergy con­sump­tion, if the util­ity has a ser­vice fee and the reg­u­la­tory process,” she said. “In our ser­vice area, our cus­tomers use less en­ergy, which means fewer [kilo­watt hours] to spread costs to main­tain a safe and re­li­able en­ergy net­work.”

Elec­tric rates charged by Edi­son, PG&E and SDG&E are di­vided into four tiers, the cost of each level climb­ing as more power is con­sumed. All three have ap­pli­ca­tions pending that would raise rates.

Ac­cord­ing to util­ity records, Edi­son charges res­i­den­tial cus­tomers a base­line min­i­mum of 14.88 cents per kilo­watt hour. The PG&E base rate starts at 16.35 cents per hour, and the SDG&E cost opens at 17.4 cents.

The Public Util­i­ties Com­mis­sion is now con­sid­er­ing a change to its long­stand­ing rate struc­ture. Un­der the so-called time-ofuse stan­dard, the num­ber of tiers would be re­duced to two and cus­tomers would pay slid­ing costs depend­ing on when they use the power they con­sume.

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