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California residential electricity rates are the highest in the nation — by far. A major reason is that the California Public Utilities Commission, the so-called regulator, schmoozes Wall Street, promising to keep the profits of the state’s publicly held utilities — Sempra Energy, Pacific Gas & Electric, and Southern California Edison — higher than utility profits elsewhere. Those profits come out of ratepayers’ pockets.

Richard Rider

Jacksonville Electric Authority tracks electricity rates around the nation, based on monthly 1000 kilowatt hours usage. In July of this year, the most expensive utility was Southern California Edison at $260.50 for 1000 kilowatt hours. Edison has shot to first place in recent surveys, greatly because San Diego Gas & Electric (part of San Diego–based Sempra) stopped providing data to Jacksonville recently after it got too much bad publicity for consistently being the most expensive, or among the most expensive, of the utilities. But Richard Rider, chairman of San Diego Tax Fighters, asked San Diego Gas & Electric to reveal its rates for certain inland customers, representing the bulk of the City of San Diego. The local utility charges a whopping $336 per 1000 kilowatt hours. “That’s 29 percent higher than the highest utility on the [Jacksonville] list — [Southern California Edison],” says Rider. I asked San Diego Gas if it wanted to dispute Rider’s number and never heard back.

The costs at Pacific Gas & Electric are difficult to calculate because it charges different rates to different communities. Like San Diego Gas & Electric, it doesn’t submit its rates to Jacksonville. Four years ago, its rate was $241.93 in Fresno. That rate no doubt has gone up considerably since then, says Rider, putting Pacific Gas among the most expensive.

Get this: in the July 2014 Jacksonville survey, the median for United States electric utilities was $123.91. Rates at San Diego Gas & Electric, Pacific Gas & Electric, and Southern California Edison are more than twice the national median. “What is little known by California residents is how astonishingly high California electricity rates are compared to just about any place,” says Rider.

Mike Aguirre

Mia Severson

Why? The California Public Utilities Commission boasts to Wall Street that it will keep the state utilities’ profits high. San Diego attorneys Mike Aguirre and Mia Severson were able to get commission documents showing its friendliness with securities analysts. For example, in 2011, analysts from Bank of America Merrill Lynch, RBC [Royal Bank of Canada] Capital Markets, and other investment firms were busy lining up interviews with commissioners, particularly the CPUC president, Michael Peevey.

“The commission continues to support strong rate base growth at the utilities,” exulted a Bank of America Merrill Lynch analyst in 2011. (The rate base is the value of a utility’s assets.) “The commissioners generally noted that California ROEs are on the higher end and will likely trend down, but not likely to industry averages.” (ROE is return on equity, or the rate of return on money invested by stockholders. The commission is assuring analysts that California utilities’ profits will continue to top profits of other states’ utilities.)

“A premature departure of President Peevey from the CPUC could further spook the [stock] market” because he has been so indulgent providing for utilities’ earnings, said an analyst for RBC Capital Markets.

Peevey learned of analysts’ reports, as well as Pacific Gas & Electric internal reports, because Brian Cherry, an executive of the company, emailed them to him. Cherry was later fired after emails he exchanged with commission officials clearly showed that those officials were trying to make sure the company’s financial penalty for its role in the 2010 San Bruno pipeline explosion would be sharply lowered. After the emails were published, Peevey recused himself from the vote on the punishment.

Why does Peevey put utilities’ profits first? For one thing, he is a former president of Southern California Edison. Wall Street analysts (wink, wink) say he wants the companies’ profits robust enough to finance greenhouse gas initiatives. If you believe that, you deserve to pay sky-high bills each month.

Basically, the commission pleases Wall Street by issuing inscrutable documents in language that financial analysts, but not consumers, can understand. Commissioners and administrative law judges make bizarre, disingenuous statements that almost invariably boost utilities’ profits and ratepayers’ bills.

A classic case is the commission’s maneuvering to make ratepayers cough up $3.3 billion over the shuttering of the San Onofre nuclear plant. Steam generators built to last 40 years failed after 2 years. The commission hired an expert, Dr. Robert Budnitz, to look into the failure. In an early report, he wrote just what the commission didn’t want to read — that his study would address critical questions: “What error(s) led to the tube failure(s)? Who made those errors?” The commission, which didn’t want to think about errors, tucked his initial study away and refused to provide it to the press until pressured to do so.

Said Aguirre and Severson in a filing with the commission, “[Edison] used its backdoor access to commissioners Peevey and [Mike] Florio to keep [the investigation] off the [commission’s] agenda for at least five months.” The stall continued, and the commission, Edison, SDG&E, and a purported watchdog, the Utility Reform Network, “pieced together a secret plan to end [Budnitz’s] investigation,” noted Aguirre and Severson.

Suddenly, those four groups came out with an announcement: they had reached a compromise to decide how much Edison would get from ratepayers. They never mentioned it would cost ratepayers $3.3 billion, but Aguirre caught it and notified the press of this gross deception. Nonetheless, administrative law judges approved the so-called compromise, and unless there is a delay or commissioners vote down the gift (very unlikely), Southern California Edison will be richly rewarded for screwing up and then screwing ratepayers, including SDG&E customers. The commission vote is slated for this Thursday, November 20.

Edison is so confident that the commission will do its bidding that it has filed a document with the Securities and Exchange Commission stating that the effect of the so-called compromise will not have “a material impact on future net income.”

Aguirre and Severson argue that the commission cannot make a decision without permitting Dr. Budnitz to complete his study of what went wrong. “A record is required before any allocation can be determined just and reasonable” under the utilities code, argue Aguirre and Severson. “The proposed decision puts the utilities first and ratepayers second.” The commission is “shooting the ratepayers first, then asking the utilities questions later.”

Wall Street loves it.

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Comments

shirleyberan Nov. 19, 2014 @ 8:46 a.m.

I hate it - no impact on their lifestyle - seriously sickos - we can't pay their bills. Bumbs.

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Don Bauder Nov. 19, 2014 @ 9:26 a.m.

shirleyberan: This week (tomorrow, Nov. 20), the CPUC could make a decision on San Onofre that will run your rates even higher -- much higher. If the CPUC acts as expected, utility ratepayers will pick up the tab for $3.3 billion of San Onofre costs -- ratepayers getting charged for while the facility was not operating. If this goes through, it will be ethically reprehensible -- but then again, that is what the CPUC is; ethically reprehhensible. It exists to jack up utility profits and utility stock prices at the cost of consumers. Best, Don Bauder

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bleudogsd Nov. 20, 2014 @ 8:53 a.m.

Don: What happened with Fiorio investigation back in Sept that ruled that this proposed settlement unfairly favors the utility shareholders at the cost of ratepayers?.

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Don Bauder Nov. 20, 2014 @ 9:57 a.m.

bluedogsd: Here is what you are probably alluding to: Florio initially objected to the so-called settlement. Then it was agreed that SCE and SDG&E take any net proceeds of SCE's litigation with Mitsubishi Heavy Industries, and share it equally with ratepayers and shareholders. This proposal, of course, was another part of the scam, because there is no justification for ratepayers picking up any part of this tab. After Florio's suggestion was adopted, he declared that the settlement "results in just and reasonable rates."Ha ha ha. Or is there something else you are alluding to? Best, Don Bauder

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danfogel Nov. 19, 2014 @ 7:30 p.m.

don bauder, this is something I look at on a regular basis. You might want to look at it. It tells me a different story. http://www.electricchoice.com/electricity-prices-by-state.php

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Don Bauder Nov. 20, 2014 @ 7:28 a.m.

danfogel: Electricchoice.com is put out by Eisenbach Consulting of Tyler, Texas. It seems to measure residential and commercial electric rates throughout California -- municipal operations, small-town operations, etc. The column focused on the large, publicly-held utilities: Sempra, PG&E and SCE. These Electricchoice data could be useful. Best, Don Bauder

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danfogel Nov. 20, 2014 @ 9:11 a.m.

don bauder my bad. I provided the wrong link. This is the one I meant to use, which is from the DoE. http://www.eia.gov/electricity/state/
I understand that you are focusing on Sempra, PG&E and SCE. This report looks at the average cost of electricity per state from all sources, which I think is the truer measure.

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Don Bauder Nov. 20, 2014 @ 10:03 a.m.

danfogel: These data could be helpful in certain contexts. The data show California -- a collection of all its electric utilities, public and private -- has quite high rates. Best, Don Bauder

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MichaelValentine Nov. 19, 2014 @ 8:07 p.m.

Enron and Ken Lay didn't leave an impression on the CPUC? Jeez.

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Don Bauder Nov. 20, 2014 @ 7:29 a.m.

MichaelValentine: The Enron scams in deregulated California didn't seem to sway Peevey. Best, Don Bauder

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CaptD Nov. 20, 2014 @ 8:18 a.m.

Ratepayers have been getting "SHOCKED" by their bills for far to long thanks to the cozy relationship between the CPUC and our Utilities.

Lots of good info here: http://sanonofresafety.org/2013/09/30/10012013-san-diego-cpuc-hearing-on-san-onofre-costs-2/

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Don Bauder Nov. 20, 2014 @ 10:09 a.m.

CaptD: If customers of Edison and SDG&E are paying 50% more than customers of municipal utilities, there is certainly cause to raise hell. Best, Don Bauder

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CaptD Nov. 20, 2014 @ 8:22 a.m.

Here is an update on the continuing story about the 3+ Billion Dollar replacement steam generator debacle that our Utilities want SoCal ratepayers to pay for:

CPUC MEETING THURSDAY ON $3.3 BILLION BAILOUT SETTLEMENT FOR SAN ONOFRE

Where: California Public Utilities Commission (CPUC) HQ, 505 Van Ness Avenue, Room 2103, San Francisco, CA 94102 When: Thursday, 11/20 9:30am What: Commission meeting where the five-member governing board of the CPUC will approve or deny the proposed decision to adopt the $3.3 billion settlement.

The meeting will be WEBCAST at this address: http://www.californiaadmin.com/cpuc.shtml

--> Please note that you need "RealPlayer" to successfully play the video. Visit Real.com to download the free player (do not pay for the premium player, you do not need that!

Ratepayers! Call in to express your views: You can call in and express your views and/or send an email with your comments to: Telephone: 866-849-8390 or 415-703-2074 Email: [email protected]

BACKGROUND On Jan 31, 2012, the San Onofre Nuclear Station had an emergency shutdown due to errors made in the design of new steam generators (4) which were replaced as little as 11 months earlier. The plant has never restarted and in June 2013, the plant operator, Southern California Edison (SCE) decided to close the plant permanently and discontinue questionable attempts to restart the plant. The CPUC is the regulator and they are required to review any plant that is no longer operating. They attempted to start this review in mid 2012, but in secret negotiations with CPUC President Michael Peevey documented in emails, the start of the OII was delayed until October of 2012. We are still trying to prove inappropriate further negotiations to split the proceeding in to phases, and place the most important phase last -- the actual investigation into the prudency of the Steam Generator Replacement Project -- so that it would never occur.

On March 27 of this year, SCE, SDG&E, TURN (The Utility Reform Network, a ratepayer advocacy group located in SF), and ORA (the office of Ratepayer Advocacy, an arm of the CPUC that is suppose to represent ratepayers) provided a settlement document to the world that was "fait accompli" already done and allowing no changes or negotiations by other parties. The settlement was for $3.3 billion, $1.4 billion less than the original (ridiculous) request by SCE and SDG&E, but requiring that the ratepayer cover the losses incurred by SCE and SDG&E, while still allowing them to pursue litigation with their subcontractor Mitsubishi Heavy Industries (MHI) and their insurance carrier NEIL (Nuclear Energy Insurance limited)

Cont.

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CaptD Nov. 20, 2014 @ 8:22 a.m.

Cont:

They held a ridiculously short evidentiary hearing, but Attorney Mike Aguirre was able -- in his cross examination of SCE President Ron Litzinger -- to get the admissions that there was nothing in the record to allow the Commission to adequately evaluate the claims of ratepayers, that SCE acted imprudently, and thus the settlement is unfair.

Now, months later, the question is finally before the Commission, and will be voted on at the meeting mentioned above,

Meanwhile, last week, Citizens Oversight and a number of ratepayer plaintiffs filed a class-action lawsuit in federal court to stop the illegal "taking" of rates from consumers for a plant that has generated one watt of power for nearly three years. Ratepayers are STILL PAYING for the plant as if it were still operating.

REFERENCES: http://www.copswiki.org/Common/ShutSanOnofre -- Our project to stop the restart of the plant http://www.copswiki.org/Common/StopTheUnfairSettlement -- The project to stop this unfair settlement. http://www.copswiki.org/Common/M1518 -- The federal lawsuit complaint. http://www.copswiki.org/Common/M1441 -- Excerpts of the settlement evidentiary hearing. All law students should watch and study this to see an accomplished trial attorney prod SCE President Ron Litzinger to admit the settlement is unfounded.

CONTACT: Ray Lutz, Citizens Oversight 619-820-5321 / [email protected]

1

Don Bauder Nov. 20, 2014 @ 10:14 a.m.

CaptD: It's possible the CPUC -- which is under pressure on several fronts -- will delay the decision today. Best, Don Bauder

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Don Bauder Nov. 20, 2014 @ 10:11 a.m.

CaptD: That information is useful. Yes, there were errors. Then why in the world should ratepayers have to pay for those errors? Those errors should be charged to shareholders. Best, Don Bauder

1

Don Bauder Nov. 20, 2014 @ 11:10 a.m.

CaptD: Aguirre and Severson pointed out these corrupt moves in their federal lawsuit filed earlier, stating that the so-called compromise -- which passed this morning (Thursday) -- was rife with actions that violated the CPUC's own rules. Best, Don Bauder

1

AlexClarke Nov. 20, 2014 @ 9:43 a.m.

IID (Imperial Irrigation District) is ratepayer owned and supplies electricity to the eastern Coachella Valley while SCE (Edison) supplies western Coachella Valley (Palm Springs). Edison has tiered rates and while charges less during the summer months it charges the full tiered rates during "shoulder months" during which the temperatures can be over 100 degrees. IID has no tiered rates which are lower by 40% or more than Edison. A typical single family home in the Edison area during the summer will have bills over $300 IID customers bills will be $200 less. For profit stockholder owned Vs. Nonprofit ratepayer owned.

1

Don Bauder Nov. 20, 2014 @ 10:16 a.m.

AlexClarke: One wonders if Imperial Valley, in which incomes are very low, could afford Edison. Best, Don Bauder

1

Don Bauder Nov. 22, 2014 @ 8:04 a.m.

sierramartinez: This is trade puffery. California is NOT cleaning up its act. The situation is just the reverse. Best, Don Bauder

1

Don Bauder Nov. 23, 2014 @ 10:45 p.m.

eastlaker: The cost of electricity is part of the sunshine tax. Best, Don Bauder

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