Michael Shames, third-year law student under Fellmeth at USD, petitioned the PUC to give a consumer advocacy group access to SDG&E’s billing statements.
  • Michael Shames, third-year law student under Fellmeth at USD, petitioned the PUC to give a consumer advocacy group access to SDG&E’s billing statements.
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By 1983, the year UCAN - the Utility Consumers Action Network — was founded, San Diego Gas & Electric Company’s residential rates had increased by more than 400 percent over what had been charged for the same service in 1973. Commercial and industrial users of SDG&E’s energy fared even worse: their rate increases approached 900 percent during the same period. People were angry, so angry that thousands of them joined UCAN, which pledged to fight the Goliath-like utility on behalf of residential and small-business customers. In a practice ruled unconstitutional by the U.S. Supreme Court in 1986, the California Public Utilities Commission, acting at the behest of the Center for Public Interest Law at USD, granted UCAN access to the utility’s bills four times each year for two years, for fundraising inserts and membership appeals. UCAN’s coffers filled steadily. The group raised nearly half a million dollars between 1983 and 1985 from membership dues alone. In terms of popular support, UCAN was off tO an auspicious start.

Garry DeLoss, UCAN’s first paid executive director

Garry DeLoss, UCAN’s first paid executive director

But unknown to the public, which was pouring money into the organization, UCAN was beset almost immediately by an internecine power struggle. The trouble started with the exodus of UCAN’s prestigious interim board of directors, an appointed body chaired by then-Mayor Roger Hedgecock and that counted among its members California Western Law School Dean Ernest Friesen; Joseph Fegan, chairman of the 1982-83 county grand jury; state Senator William Craven; county Supervisor Tom Hamilton; labor leader Joseph Francis; deputy city attorney Susan Huguenor; and Assistant U.S. Attorney Warren Reese.

Today UCAN cannot even account for all of its members. Its financial fortunes are in decline. Its literature is full of misleading accusations, exaggerations of its own accomplishments, and, occasionally, outright distortions. Its current executive director says he wants to quit and openly suggests that UCAN’s days as an antagonist of SDG&E may be numbered.

It’s Labor Day weekend, 1985. Garry DeLoss, UCAN’s $35,000-a-year executive director, and some of his friends are using the holiday to move furniture and office equipment from the organization’s first office in an old house in Golden Hill to more spacious quarters on Rosecrans Street in Point Loma. To save UCAN the expense of professional movers, DeLoss and his friends complete the move with a pickup truck. He wants to ensure that UCAN’s new headquarters are ready for the next meeting of its nine-member board of directors on September 16.

Fellmeth worked for Ralph Nader before coming to San Diego to join the district attorney’s office. Fellmeth served as UCAN’s interim executive director until DeLoss was hired.

Fellmeth worked for Ralph Nader before coming to San Diego to join the district attorney’s office. Fellmeth served as UCAN’s interim executive director until DeLoss was hired.

Two hours into that meeting — after he has introduced a new staff member, after his report on the budget, after his update on fundraising activities — DeLoss is informed by board president Jay Powell that he must leave the meeting; the board is going into executive session. It is about 10:00 p.m. Sometime after midnight, Powell and fellow board member Sue Woods walk into DeLoss’s new office, where he waits for news of the executive session. Powell and Woods have some bad news. The board would like for him to resign. They will give him a glowing recommendation to future employers and severance pay, but he is out the door. “You’re crazy,” says DeLoss. “You’re firing me, and I’m telling everybody why.” The September 1985 ouster of Garry DeLoss as UCAN’s first paid executive director was a watershed in the young consumer group’s history. Two board members resigned that night in outrage. A third threatened to quit but was persuaded to stay, even though she still regards the coup as “unconscionable.”

DeLoss’s fifteen-month tenure at the helm of UCAN had been a stormy one. He often argued with his bosses on the board. He angered allies by his single-minded approach to the business of UCAN, which he viewed as devoted solely to reducing rates for SDG&E’s residential and small-business customers. He enraged Mayor Hedgecock’s office by refusing to permit UCAN to become involved in politics at a time when the mayor, between perjury trials, desperately needed friends. He was a strong executive whose contentious style turned opponents into enemies. But DeLoss — a veteran consumer warrior who had worked for Ralph Nader for five years and had served two years as deputy director of the Massachusetts Energy Office — marked his administration of UCAN with solid accomplishments for the consumers he served. His fatal flaw was that he was impolitic.

Even before taking the directorship of UCAN in June of 1984, DeLoss says he was already arguing with a member of its board. He remembers that he learned from friends in Washington that Robert Fellmeth, UCAN’s interim director (and founder of the Center for Public Interest Law at USD), was attempting to involve UCAN in a California Public Utilities Commission decision regarding a San Francisco consumer advocates’ group.

It was in Fellmeth’s Center for Public Interest Law that UCAN was born. Fellmeth encouraged his students to become involved with various state regulatory agencies, including the Public Utilities Commission, and among those students was Michael Shames, a third-year law student who undertook an ambitious project: to petition the PUC to give a consumer advocacy group access to SDG&E’s billing statements, through which that consumer organization would solicit participation and inform SDG&E customers that they had an advocate against the company. Shames researched and organized the project, and Fellmeth acted as attorney of record. In March of 1982, the center filed its petition, and a year later, in April of 1983, the commission granted the request. The following month, an interim board of directors was named by Fellmeth, who served as UCAN’s interim executive director until DeLoss was hired.

What Fellmeth and DeLoss discussed via long distance, according to DeLoss, was a 1984 petition of the PUC, filed by a similar group in San Francisco, to gain access to the utility bills of Pacific Gas & Electric Company. UCAN’s own petition had been approved by the PUC almost two years earlier, and Fellmeth and several other board members — chief among them antinuclear activist Jim Jacobson and former CalPIRG official Sue Woods — wanted UCAN to fight the San Francisco group’s petition, if necessary taking legal action to the California Supreme Court.

The rationale for their stance was the democratic structure of UCAN, compared to the autocratic structure of the northern California group TURN (Toward Utility Rate Normalization). In a June 1984 memo to. the board, Fellmeth urged UCAN to fight TURN. Jacobson and Woods wrote their own memo as well. What they all objected to was the fact -that TURN, founded in 1973 and for years the country’s pre-eminent model of consumer advocacy, was dominated by its founder, Sylvia Siegel. Siegel appointed her board of directors from nominees suggested to her by a nominating committee. By contrast, UCAN was modeled by Fbllmeth and Shames after the Nader-inspired Wisconsin Consumers Utility Board, which featured an elected board of directors. In the view of Fellmeth and his allies, democratic election of the board was essential to legitimacy.

According to Siegel, however, there was a hidden agenda that had nothing to do with her group’s structure. She says the attempt to involve UCAN in an effort to prevent her own access to a utility’s mail was an act of retaliation for her earlier opposition to a Ralph Nader proposal that would have created a single, statewide Consumers Utility Board in California. Siegel refused to endorse the concept, thereby engendering a still-simmering feud with the Nader organization.

‘‘This [attempt to use UCAN against TURN] was Nader inspired,” she says. ‘‘Nader had some people on the first [UCAN] board, including Bob Fellmeth.” (Fellmeth had, in fact, worked for Nader before coming to San Diego to join the district attorney’s office in 1973.) ‘‘Both Nader and Fellmeth were pissed with me because I wouldn’t support their proposal.” Fellmeth denies Siegel’s allegations of a hidden agenda, calling her comments ‘‘silly and uninformed.” But he blames Siegel and TURN for the outcome of the 1986 U.S. Supreme Court ruling that the decision to give her group access to the utility’s bills was an unconstitutional infringement on PG&E’s First Amendment rights. The court didn’t address the internal organization of TURN in its decision, yet Fellmeth believes that had the parties to the suit been different, the outcome might have been different, too. “It was a bad test case,” he says. “You had an undemocratic organization given access to billing envelopes and a free-speech defense posed by PG&E.”

Despite TURN’S rebuff by the Supreme Court (which Siegel blames on inadequate legal representation), Siegel says the self-consciously democratic model advocated by UCAN is an invitation to disaster. “These people get so caught up with themselves that they create friction, instead of promoting the goals of the organization.” DeLoss could not agree more. He says he fought his new board on the TURN issue for months after his 1984 arrival in San Diego, arguing that the use of UCAN resources in the dispute had nothing to do with how much local ratepayers paid for energy. The battle, he said, was best left to other organizations. UCAN, he urged, should stay out of it, rather than make its first official action — its first use of ratepayer contributions — a fight with another consumer group in another utility service area.

After numerous discussions and a flurry of memos, DeLoss ultimately persuaded a badly divided UCAN board to stay out of the fight. But the stormy beginning of his fifteen-month tenure at UCAN was an omen: he wound up in almost perpetual struggle with his board members, who were elected in March of 1984 and who enjoyed affiliations with the Sierra Club, CalPIRG, the Legal Aid Society, the Center for Public Interest Law, and an anti-nuclear group called the Alliance for Survival.

One such struggle was against Jim Jacobson, a member of the Alliance for Survival, and board member Jay Powell, a Sierra Club official. Then-Mayor Hedgecock had allegedly tried to curry favor with voters by linking a city council resolution in support of UCAN’s attempt to win renewed access to SDG&E bills to the city’s approval of more than $100 million in tax-exempt industrial development bonds (IDBs). What Hedgecock partisans wanted was to force SDG&E to relent in its opposition to renewed UCAN access to its bills after the two-year trial expired, by making city approval of the bonds contingent on SDG&E’s agreeing not to oppose UCAN’s request to the PUC.

IDBs were created by provisions of the federal tax code in an attempt to encourage improvement of the nation’s infrastructure. In the case of SDG&E, the bonds are issued by the city, but it is SDG&E that pledges its corporate resources to bond purchasers toward payment of the interest and principal on the bonds. IDBs are a sort of marriage between government and the private sector: the government issues the bonds, whose buyers do not have to pay state or federal taxes on their profits at maturity, which encourages people to invest in the bonds. The beneficiary of the bonds, in this case SDG&E, benefits by borrowing money at interest rates as much as three percentage points lower than conventional loan sources.

SDG&E had previously used such bonds to construct the Southwest Powerlink, a 280-mile transmission line that hooks SDG&E to electricity sources in New Mexico, Arizona, and other energy suppliers in the Southwest. The use of the bonds saved SDG&E an estimated $310 million over the thirty-five-year life of the debt, savings passed directly to consumers in the form of lower utility rates.

In a June 21, 1985 letter to Hedgecock and the city council, DeLoss thanked a council subcommittee for its display of support for UCAN by linking the two issues — IDBs for SDG&E and renewed access for UCAN to SDG&E bills — but urged the full council not to approve the subcommittee’s action. DeLoss told the council that UCAN favored SDG&E’s use of the bonds “because the savings to ratepayers are significant.” But linking the two issues, he said, could endanger those savings, which would be contrary to UCAN’s goal of reducing rates.

DeLoss’s letter was supposed to have been an apology to the mayor urged on him by Jim Jacobson and Jay Powell following the city council subcommittee meeting, which DeLoss attended as UCAN executive director, Powell attended as UCAN board president, and Jacobson attended as UCAN’s paid, part-time public-relations agent. DeLoss remembers that he was stunned to learn at that meeting of the attempt to link approval of the bonds to the council’s endorsement of UCAN’s attempt to win renewed access to the utility’s bills. At a lunch recess, he warned Powell and Jacobson that if the proposal was not stopped, UCAN would take a severe beating in the press. Jacobson was to convey the message to Hedgecock’s office.

On June 14, DeLoss received an angry phone call from Hedgecock press aide Mel Buxbaum. DeLoss characterizes the conversation as heated, during which he and Buxbaum exchanged allegations of mishandling. Three days later, Powell and Jacobson visited DeLoss at his office for an impromptu, two-hour meeting. DeLoss held firm, despite arguments from Powell and Jacobson that DeLoss acted without clearance from the board. DeLoss regarded the matter as so obvious as not to require board approval. Besides, he says, had he not acted immediately (the next board meeting was weeks away), UCAN could have been irreparably damaged. Nonetheless, he says, Powell and Jacobson “ordered” him to attend a meeting the following day with two Hedgecock aides.

At that meeting, DeLoss again explained why the attempt to link the bond sales to the bill inserts was a bad idea and, at one point, accused Hedgecock’s staff of attempting to “stage manage” a battle in which the mayor would appear to be on the high ground against a greedy utility. Powell told the mayor’s staff that DeLoss would shortly issue an apology to the mayor for the fracas, and when DeLoss insisted no apology was necessary, Powell and Jacobson exploded in anger. He says, “They all but jumped to their feet, coming to a stop at the edge of their seats, faces beet red, everything but steam coming out of their ears. Powell said to me in a loud, harsh voice, ‘UCAN is not going to desert the mayor in his time of need.’”

Today Jacobson maintains that he and Powell considered Hedgecock an ally over the years and that DeLoss’s intransigence was an embarrassment to them. It was Hedgecock’s idea to link the two issues, he says, and it was DeLoss who — acting as a policymaker, instead of acting at board direction — scuttled the idea. Jacobson says he does not recall Powell making the remarks about abandoning Hedgecock during the meeting at the mayor’s office. “If Jay ever said that, it wasn’t in that meeting,” he says.

Whatever the merits of DeLoss’s claim that the bond linkage was political, UCAN today has abandoned its support of the industrial development bonds for philosophical reasons that have nothing to do with utility rates. Now pending before Congress is a measure that would allow SDG&E continued use of industrial development bonds, even if the utility begins providing gas to Baja California. Present law allows SDG&E tax-exempt status only if its service is restricted to San Diego and Orange counties, but the pending legislation would allow SDG&E to cross the international border without surrendering that status. PUC officials say that if SDG&E extends its customer base by including portions of Mexico, the overall effect would be to reduce its rates by spreading its fixed operating costs over more customers. But on the very day news of the proposal hit the papers, UCAN announced its opposition.

“My opposition is to the legislation that would extend the IDBs, not to the plan,” says Michael Shames, who replaced DeLoss as executive director. “I think I’m more of an economic purist than [DeLoss].” According to Shames, the shortterm benefit to ratepayers is outweighed by the market distortion created by IDBs. SDG&E’s use of the bonds, he says, gives the company an unfair competitive advantage over other companies in the private sector by giving the utility access to cheaper money not available to potential competitors. In addition, according to Shames, the bonds encourage SDG&E to pursue projects that would be otherwise too expensive without the government’s assistance. “If it’s cost-effective, a private developer will do it,” he says.

SDG&E officials are not optimistic about the company’s chances of winning approval in Congress of the plan because of pressures to reduce the budget deficit. Industrial development bonds, they say, may be eliminated altogether in coming years because the federal government is looking for ways to increase revenues, which are reduced by the tax advantages given to IDB bond holders. If IBDs are eliminated, they say, SDG&E ratepayers will be adversely affected by the loss to the company of the lower-interest loans. (The law permits SDG&E to use proceeds of the bonds only for construction of power transmission lines.)

In addition to the bond battle, DeLoss fought UCAN directors over other matters. He battled with them over a secretary who used her time and UCAN equipment to promote a Sierra Club project involving the Famosa Slough. DeLoss says he also told board member Jay Powell that UCAN would charge the Sierra Club if, as Powell wanted, that organization were to use UCAN’s office equipment to photocopy petitions gathered for Prop A, the growth-management initiative. He says Powell decided to have the copies made elsewhere.

DeLoss also angered board member Sue Woods, a former CalPIRG official, in July of 1984 by accusing CalPIRG of misrepresenting itself to contributors and by insisting on a door-to-door fundraising canvas that would compete with UCAN’s similar fundraising techniques. DeLoss ex-changed accusatory letters with CalPIRG officials over the matter, which had caused confusion among the public, some of whom thought they had joined UCAN by contributing to CalPIRG. Current director Michael Shames says that after he took office, he was able to patch up the hard feelings between CalPIRG and UCAN by agreeing that UCAN would conduct its canvass during a different time of year than-CalPIRG’s. Ultimately, UCAN abandoned its canvass altogether.

Other issues divided the board. Should UCAN concentrate most of its resources on rate-setting litigation before the Public Utilities Commission in 1985 or hire less expensive help and use the savings for community outreach and education? Utility rates are determined in a complex and arcane process involving two separate processes. General rate cases are heard every three years and deal with a utility’s cost of doing business based on the costs of labor, materials, and returns on the investments of shareholders. The hearings continue over eighteen months before an administrative law judge in a quasi-judicial setting in which the utility, the public staff of the Public Utilities Commission, big users like the navy and the city, and consumer groups like UCAN are allowed to present evidence and cross-examine witnesses. Ultimately, the judge will make a recommendation to the fall PUC, which determines the utility’s rates for the next three years.

DeLoss persuaded the UCAN board to hire a San Francisco law firm, at great expense, to handle the 1985 general rate case, which resulted in a $123 million rate reduction for SDG&E customers. But some board members, among them Robert Fellmeth, believed it was unnecessary to spend that kind of money.

According to Fellmeth, two issues were at stake: A.) UCAN could get the same results at less expense, and B.) UCAN could never recoup its overhead through the “intervenor fees,” which are fees the PUC awards to intervenor groups like UCAN and that are paid by the involved utility. That mechanism, says Fellmeth, is one way organizations like UCAN are funded. “You hire someone at thirty dollars an hour to do a S120-an-hour job, then collect the difference in [intervenor fees] to pay overhead costs,” says Robert Fellmeth, who maintained that UCAN would never collect sufficient reimbursement for the high costs of the San Francisco firm.

Fellmeth’s advocacy of intervenor fees as a funding mechanism for consumer groups created a good deal of controversy and bad press for UCAN soon after DeLoss’s arrival. While groups that “intervene” in utility rate cases and win an issue for consumers are entitled to compensation from the utility, those costs are in turn passed on to the utility’s customers. Some critics view intervenor fees as a clear conflict of interest for consumer groups, since their costs are being levied against the ratepayers they are supposed to protect.'Defenders, however, contend that the fees are equitable, since the amount of the fees awarded is always less than the overall savings to ratepayers as a result of the intervention.

It was just such a request for fees by Fellmeth — who took action independently of the UCAN board — that created a firestorm of bad press for UCAN the same month DeLoss arrived. Fellmeth had asked the PUC for $48,000 in intervenor fees for the role his USD center had played in the creation of UCAN. The San Diego Union termed his request “a shocking bill,” and KFMB television and radio editorials urged him to withdraw it. The Tribune said UCAN should support itself through voluntary donations, “not with hidden assessments from unsuspecting users.” Under pressure from the USD administration, Fellmeth finally withdrew the request. But especially irksome to his detractors was the fact that the creation of UCAN in no way affected rates for consumers at the time.

Fellmeth considers his treatment by the press on the issue of intervenor fees “unfair and outrageous.” He says the center was entitled to the compensation, which is why he did not check with the UCAN board (of which he was a member) before making the request. “I worked for the Center for Public Interest Law,” he says. “The Center for Public Interest Law did the work to set up UCAN. That was separate and apart from UCAN.”

While DeLoss was executive director, UCAN collected no intervenor fees for its work. Since his departure, the group has been awarded more than $95,000 in such fees, the bulk of it for DeLoss’s attack on SDG&E in the 1985 general rate hearings that cost UCAN around $180,000 in San Francisco attorneys’ fees. DeLoss maintains that the cost of such fees could have been recovered from membership renewals and a door-to-door canvass for new members, for which he had hired the canvass director from the Wisconsin Consumers Utility Board. But DeLoss’s board never allowed him to get the canvass under way.

In its last two annual budgets, the UCAN board has included anticipated intervenor fees as part of its expected income. Even Michael Shames has misgivings about collecting the fees. “I accept intervenor compensation,” says Shames, “but I think those things present conflict-of-interest problems”

UCAN suffered a sustained period of negative publicity following the board’s September 1985 vote to fire Garry DeLoss. According to several board members who served at the time, the vote came as a surprise and created suspicions that the thin majority that voted to oust DeLoss had secretly conspired before the September meeting to stage the coup. “It was premeditated,” recalls La Mesa Mayor Fred Nagel, who resigned from his UCAN seat in anger. “It had been planned out very thoroughly.”

Former board member Robert Spanjian, a North County industrialist who also quit over the firing, recalls that in the months leading up to the dismissal, the board had become factional, that debates grew bitter. Board member Tania Bowman, a paralegal with the Legal Aid Society, says she, too, almost quit but decided to stay on because of her commitment to UCAN’s goals. Nonetheless, she says, the ouster of DeLoss was a sorry chapter in UCAN’s short history, adding, “I felt very offended by what was done.” What was done, she claims, was secret collusion among board members — led by Jim Jacobson and Sue Woods — to create a majority to fire DeLoss, then to spring it on the rest of the board. She says Woods and Jacobson even went so far as to request r6sum6s and schedule interviews weeks before the board acted on DeLoss. Michael Shames supports those claims. He says Woods and Jacobson approached him several weeks before DeLoss was fired and asked him if he would take over as executive director on an interim basis.

Jacobson and Fellmeth deny any irregularity in the ouster. Fellmeth says there were no secret meetings, and Jacobson says that the board members who opposed the firing were “blind” to DeLoss’s faults. He plays down the significance of the five-four vote.

DeLoss refused to resign and turned down an offer of severance pay. Instead, he filed a twenty-five-page report with the Public Utilities Commission charging a variety of misdeeds by his former employers, ranging from Fellmeth s attempt to get intervenor fees for his USD center to alleged use of UCAN resources for Sierra Club projects to an alleged attempt to involve UCAN in the 1984 congressional campaign of USD law professor Robert Simmons.

DeLoss asked the commission to withhold approval of a second two-year period of bill inserts until after an investigation of his allegations. But three months later, in February of 1986, the matter became pointless to pursue when the U.S. Supreme Court ruled that such inserts were unconstitutional. UCAN was soon faced with a financial crisis that threatened its very existence. “The billing-envelope loss was devastating,” says Fellmeth. “We were on the edge of oblivion.”

Shames, who agreed to take over as interim executive director after DeLoss’s departure, says that what was to have been a caretaker’s job until a new director could be found turned into a more long-term situation. He quit a lucrative law practice, in which he earned $60,000 a year, to run UCAN for less than half that amount, and there is a tone of regret when he recollects his decision. “I made no commitment to be here,” he says from UCAN’s new headquarters — two tiny, cluttered offices in the rear of a law firm at 1400 Sixth Avenue, downtown. ‘‘I never applied for the job in the first place, nor did I want it.”

Shames’s task was formidable. In addition to the bitter aftermath of the DeLoss incident and a fractious board. Shames says he discovered that UCAN was virtually bankrupt. ‘‘I loaned UCAN $5000 to keep it going,” he says. Since then he has built UCAN’s cash reserves up to around $70,000, but with another general rate case looming, it is likely that most of that money soon will be gone. And even if UCAN spends all of it on the rate case, its resources are less than half of what was spent during the DeLoss administration on the 1985 case.

The steady decline of UCAN’s fortunes is reflected in yearly audit reports. At the end of 1984, the group had an account balance of $158,400. At the end of 1985, the balance had fallen to $64,500. By the next year, UCAN’s account balance was $61,100, and as of June 30, the consumer group had a little over $73,000 in the bank.

But the $10,000 increase between 1986 and 1987 was not achieved by an increase in popular support, which has fallen every year since 1984, if the payment of membership dues is used as a standard. Based on UCAN’s own records, during the period between July 1, 1986, and June 30, 1987, fewer than 16,000 persons joined UCAN or renewed their memberships. Participation in UCAN’s vaunted elections has dwindled. Board member Tania Bowman says she received more than 5000 votes when first elected in 1983, but when she was re-elected in 1984, she needed only several hundred votes to win. The $10,000 increase in funds between 1986 and 1987 was the result of an austerity budget imposed by Shames, a budget that has changed the character of UCAN. The executive director’s position was changed to part-time; office costs were cut sixty percent; all full-time employees were eliminated; canvass operations were discontinued; and UCAN’s legal intervention program was scaled back.

Under the 1987-88 budget, the group will have to dip into cash reserves to cover a projected $39,000 year-end deficit. Shames says he has agreed to handle much of the rate case litigation at a rate of twenty-six dollars per hour, well below what DeLoss spent on a San Francisco law firm specializing in utility litigation. But he is not troubled by the dwindling money or the tight budget constraints. He says UCAN can still effectively represent its constituency by concentrating its resources on the hiring of expert witnesses. He is hopeful that large industrial and commercial users will provide the heavy legal firepower at the rate hearings.

But Shames is a realist, above all else. With utility rates falling and the rate shock of earlier years gone. Shames suggests that UCAN’s days may be numbered. ‘‘I would like to see UCAN disappear,” he says. ‘‘I know I’m not going to be here after this general rate case. After this general rate case, frankly, I don’t see a need for an attorney at UCAN. UCAN may go into a holding position unless some new issues come up. But I think UCAN will play a more scaled-back role, maybe wait for the next general rate case. But I think rates by then might be reasonable. There may be no need for UCAN.”

Under Oversimplification?

Join Over 75,000 San Diegans — Help UCAN Pull the Plug on I SDG&E’s power,” importunes a recent UCAN pamphlet designed to solicit members. The 75,000 figure is highlighted in red ink. But no matter how you compute it, the number is incorrect. If you assume the figure refers to UCAN’s curVent membership, the number is wrong. If you think the figure refers to anyone who ever joined UCAN, the number is wrong. "We don’t know what our existing membership is right now.” admits Michael Shames. UCAN’s current executive director. “When people ask me, I estimate about 55,000.”

How then does UCAN, which prides itself on the fact that its board of directors is democratically elected by UCAN members, ensure the integrity of the election process? The simple, truthful answer is, it doesn’t. According to Shames, when election time comes around, ballots are simply mailed to anyone whose name appears on the membership list, which could include, by his own admission, people who joined the organization years ago but have never bothered to renew their memberships.

Shames contends that the 75,000 figure in the pamphlet is not meant to indicate current membership, but instead is a tally of all who have ever contributed. But this is also an inaccurate estimation. Using UCAN’s own accounting procedures spelled out in yearly audits, the total number of people who have at one time or another joined UCAN is actually in the neighborhood of 140,000. But because UCAN has never bothered to distinguish new members from renewal members, there is really no way to tell.

That is why, says Shames, he lowered an original estimate of more than 100,000 to the 75,000 that appears on the face of the pamphlet. He is not disturbed by the fact that it is incorrect. When you recruit members, he says, you have to oversimplify.

UCAN’s trouble with arithmetic extends to the interior of the pamphlet, where UCAN touts its own accomplishments for SEX5&E ratepayers. For example, the pamphlet says that UCAN “won a $137 million rate decrease for San Diegans.” But when confronted with SDG&E’s claim that the rate decrease was actually around $123 million and that UCAN was exaggerating by taking sole credit. Shames qualified the pamphlet’s assertion. The extra $14 million or so, he says, was added on to a decrease ordered by the California Public Utilities Commission in a 1985 general rate case. He is unsure of the exact source of the additional $14 million but says it comes from some other, later decrease ordered by the commission. Shames also concedes that UCAN’s role in the $123 million rate reduction was limited to about seven issues in the massive and complex case. Also involved on behalf of SDG&E consumers were the city attorney’s office and the staff of the PUC. UCAN did not. as its pamphlet suggests, fight the war alone.

More troublesome for Shames is the cover letter mailed with the pamphlets in UCAN’s most recent fundraising drive. The letter, under the signature of UCAN president Alan Razovsky, was written by Shames. Its first line reads, “It’s bad enough that SDG&E’s utility rates are the highest in the U.S...That assertion is false. Shames says he meant to say “among" the highest. SDG&E’s rates today are about fifth highest in the country, he says. Besides, the attack on SDG&E for its high rates is somewhat misleading. Because of the moderate climate in San Diego, area residents pay substantially less than people elsewhere in the country to heat and cool their homes.

According to an April 1987 study by the American Chamber of Commerce Research Association of 247 communities across the country, 218 communities had higher costs for heating and cooling an 1800-square-foot home than did similarly situated San Diegans.

The letter also asserts that “in the last year alone,” UCAN “uncovered possibly illegal dealings between SDG&E and former utility regulators” and “uncovered a $100 million payment for energy that was never used!” Both statements are oversimplifications of issues over which reasonable people might disagree.

The alleged $100 million payment for energy “never used” represents payments SDG&E was contractually obligated to make to an energy supplier in order to have access to energy when needed. The fee is paid not for the energy itself, but for access | to the energy. Such fees are called capacity fees and are a standard practice among utilities like SDG&E, which purchases around forty percent of its electricity from other suppliers because that is cheaper than generating the power itself. Without the payment of capacity fees, energy suppliers are unable to guarantee the availability of the supply. Shames says he knew that the $100 million at issue was not actually used to buy unused energy, but he insists the payment was still “an outrage.” The pamphlet, he says, was not suited for an adequate explanation of the complexities of capacity fees.

The “possibly illegal dealings" to which the letter refers involve testimony solicited from former Public Utilities Commissioner Victor Calvo, whom SDG&E hired because of his position on the controversial Southwest Ifowerlink, a 280-mile transmission line that hooks SDG&E to electricity sources in New Mexico, Arizona, and other energy suppliers in the Southwest. UCAN has filed a complaint with the Fair Political Practices Commission (FPPC), arguing that SDG&E violated state law by not first getting permission from the PUC before engaging Calvo’s services. The PUC, after the fact of Calvo’s hiring, granted an exemption to Calvo and permitted his testimony. The FPPC has yet to issue a ruling on UCAN’s formal complaint, filed last summer. In the meantime, SEX3&E has decided to withdraw Calvo’s testimony from the Powerlink proceedings. But despite that withdrawal and despite the PUC’s granting of an exemption and despite the fact that the FPPC has rendered no opinion. Shames insists UCAN’s public allegations of wrongdoing are appropriate.

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