As part of California’s 1996 plan to restructure the electric utility industry, the state’s three investor-owned utilities (Pacific Gas & Electric, Commonwealth Edison, and San Diego Gas & Electric) were mandated to freeze electricity at 1998 levels until the utility’s stranded costs were recouped. SDG&E completed this process last summer, bringing San Diego into the “competitive” market. The result is that SDG&E ratepayers are the first to experience “competition” in a marketplace that, comments BOMA, is not mature enough to be competitive at this juncture.
San Diego residents have faced a dramatic increase in electricity rates stemming from the unstable wholesale power market and this summer’s heat wave. According to BOMA San Diego, commercial office buildings have faced an increase from anywhere between 40 and 140 percent.
Seeking to find equitable solutions, Governor Gray Davis has ordered state regulators to roll back electricity rates in San Diego to last summer’s level, and members of the state legislature have introduced similar measures. Other possible “fixes” that are under discussion include a repeal of the California law; a price cap on wholesale power prices; rebates to customers from assets recouped through the sale of the San Onofre nuclear plant; and subsidies to ratepayers from the state’s reserves. The California Public Utility Commission has planned an emergency meeting for late August.
Many anti-competition advocates point to the San Diego situation as a failure of electricity deregulation. However, BOMA International and BOMA San Diego disagree, saying that it is evidence of price and market distortion caused by a lack of true competition and/or anti-competitive practices.
Based on a report from BOMA’s Potomac Currents
