Green Trap

San Diego — Following the deregulation of the power utilities in California, a host of alternative providers began an advertising blitz; some promised environmentally conscious power generation, some offered lower rates, some both. Now, none of the companies that jumped into the electricity-selling market are taking new customers, and some have even thrown people back to San Diego Gas and Electric.

Those who were switched back may be the lucky ones; in October, a rate cap of 6.5 cents per kilowatt hour went into effect. The cap was retroactive back to June 1, 2000, and many SDG&E customers received bill credits or were mailed checks. Alternative customers were left in the dark and continue to pay the market rate for power.

One such customer is John Logan who, last April, switched to Tustin-based Commonwealth, which was promising lower rates. "It was green power," Logan adds. "That's a big thing for some people; it wasn't as big for me. I did it because it was five percent cheaper [per kilowatt hour] and because I just don't like monopolies. SDG&E was a monopoly."

It was soon after Logan switched to Commonwealth that rates started to climb dramatically, and in June of 2000, the utilities watchdog group, Utility Consumer Action Network, called for a ratepayer protest, which Logan decided to join. "When rates went up last summer," Logan recalls, "UCAN posted on their website that customers, as a protest, should pay no more than what we paid the year before. So that's what I've been doing. Now I've run up a balance of almost $1700."

The watchdog group's Jodi Beebe explains the idea behind the pay-half protest. "It was a way of protesting the fact that rates had gone up sevenfold in the summertime. We felt that, because there were many people out there who couldn't afford their bills without compromising other aspects of their standard of living -- rent, prescriptions, things like that -- we told them, 'Go ahead and pay half your bill because the situation is so outrageous that something must be done at the legislative level to do something about this.'"

The something that was done turned out to be the rate cap and rollback that went into effect in October. But it only applied to SDG&E customers; those who had taken part in the half-pay protest ended up ahead when the cap and rollback came through. But alternative-power-provider customers weren't included in the rate cap, and those of them who took part in the pay-half protest, such as John Logan, not only had to continue to pay the market rate -- currently about 23 cents per kilowatt hour -- they had past-due balances to deal with. Beebe says the protest was never intended for alternative-power customers. "People who actually called us," she says, "we told them, if they were with an alternative provider to pay the whole bill. But it's not easy to get that into a sound bite -- 'If you are with an alternative provider, continue to pay the bill. But if you're with the utility, pay half.' "

Now the piper wants to be paid. On January 27, Logan and his wife Sandra received a letter from San Diego Gas and Electric. "To help customers manage the higher energy costs that began last summer, SDG&E temporarily stopped all credit and collection actions on past-due bills through the end of the year 2000. With the start of the new year, now is a good time to make sure your account is current."

In addition to $513 in current charges, SDG&E wanted $1181 that Logan hadn't paid over previous months in protest of higher rates. He has made arrangements to pay the debt off with the utility. Asked why he, a Commonwealth customer, owes SDG&E money, Logan explains, "Commonwealth bills through SDG&E. It's very much like your long-distance bill being billed through your Pacific Bell bill."

But as he brings his account with the local utility up to current status, Logan worries about the possibility that he may have to pay that power a second time. When the rate cap of 6.5 cents per kilowatt hour was placed on SDG&E by the state legislature, a "balancing account" was set up by way of which the utility will be repaid the difference between 6.5 cents and the higher wholesale rate they paid for the energy. "There are a couple of ways the balancing account would be paid off," Beebe speculates. "One is by taxpayer funds. Instead of making our local economy absorb the entire cost, it would be absorbed by the entire state. The other possibility is the ratepayers of the utility would pay it off. When it became due in April 2002 or April 2003, depending on whether they extended the amount of time for the balancing account, the ratepayers would be held accountable for it. That would mean there would be a rate increase of a couple cents a kilowatt hour, and the customers of the utility would pay it off over time."

Such a rate increase could affect the customers of alternative providers as well, meaning that they will have been paying full-market rate for power, yet will still help pay off the debt of utility customers who will have been shielded by the rate cap. "So in essence," Logan complains, "I pay market rate money right now for electricity with my alternative provider, and I'm probably going to pay it again."

Beebe adds, "It's very difficult for the utility to know who has been contributing the balancing account, even if you've been with an alternative provider this entire time. It would mean SDG&E would have to single out two percent of the population and say, 'You don't have to pay it.' I think with the automated billing systems that they have, that may not be a very easy thing to accomplish."

In a December 30, 2000, Union-Tribune article, UCAN director Michael Shames advised power consumers, "If you're with SDG&E, stay there. And, if you're with an [alternative] energy service provider, you might want to stay there, too. Almost any step you take now will probably create complications."

Yet Logan says he was advised early this month by Shame's Network to switch to San Diego Gas and Electric to get under the rate cap. "I'm not going to do that," he says, "because I want to be able to legally prove that I shouldn't have to contribute to paying back the balancing account."