Commentary : UCAN Inserts in SDG&E; Bills : Consumers Deserve a Free Ride

In the spring the Public Utilities Commission will decide whether UCAN, the Utility Consumers Action Network, may continue to insert its membership recruitment messages in the SDG&E; monthly bill four times a year, as provided in a prior PUC order.

UCAN has used those messages to recruit 67,000 members over the last 18 months and will argue for permission to continue inserting its membership appeals in the San Diego Gas & Electric Co. bills, for three basic reasons.

First, the premise underlying the earlier, experimental PUC order is still valid. In the past, the regulatory process by which the PUC sets SDG&E;’s rates was unbalanced in favor of SDG&E; because small ratepayers lacked the resources to hire lawyers and technical experts to represent their interests during SDG&E; rate cases.

In short, the supposedly fair “playing field” of PUC rate hearings was actually “tilted” in SDG&E;’s favor, due to its superior resources.

Now that UCAN exists, small ratepayers are, for the first time, able to play the rate case game on a “level playing field” because UCAN hires the legal and technical experts needed to represent their interests when SDG&E; requests a rate increase.

The cost savings from “piggybacking” UCAN’s membership recruitment message on the SDG&E; bill’s postage makes it economically practicable for the ratepayers to fund UCAN through very small membership fee donations.

Second, while UCAN was just a good idea when the PUC first granted it access to the SDG&E; billing envelope, today UCAN is an experiment that has succeeded and deserves to be continued. For example, in the first SDG&E; rate request opposed by UCAN, the PUC cut SDG&E;’s $56-million request by $36 million.

A key element in that December order was a requirement that SDG&E; increase its purchases of cheap power from utilities in Arizona and New Mexico, as proposed by a UCAN expert’s study, for a $6.7-million savings in 1985 alone. UCAN believes that the PUC should require SDG&E; to buy more Southwest power for even greater savings on our electricity rates, and UCAN will continue to pursue that goal in future cases.

A decision is pending in another case, in which UCAN is asking for a refund to customers of the millions of dollars that SDG&E; paid for oil tankers it never used, under a contract with Chevron Oil Co.

In recent months UCAN has lobbied Congress in favor of getting a share of cheap Hoover Dam power for San Diego, supported California Energy Commis sion regulations to require manufacturers to offer more-efficient refrigerators, and testified before state legislative committees on behalf of the interests of small ratepayers.

The third argument in favor of continuing UCAN’s opportunity to insert its membership recruitment message in SDG&E;’s bills is that the need for UCAN’s vigorous representation of the interests of small ratepayers in PUC proceedings is greater than ever.

For example, in its current General Rate Case, SDG&E; is asking for two-thirds of a billion dollars in rate increases in the period from 1986 through 1988, partly to pay for an increase in its profits.

In fact, SDG&E; Chairman Tom Page has announced a goal of getting SDG&E;’s rate of profit into the top 25% among utilities nationally, with no reference to whether San Diego can afford his ambitions. UCAN will be asking that question, among others, during the coming PUC hearings.

In a forthcoming case on natural gas rates, the PUC will try to balance the interests of small residential gas customers against the interests of large commercial and industrial customers as it establishes a new, long-term policy on natural gas rate design.

The new PUC policy will determine how the benefits of lower gas prices should be shared among gas consumers.

UCAN is concerned that SDG&E; is pushing for a policy of making residential consumers pay more so that commercial and industrial consumers can pay less.

Later this year, the PUC will review the construction cost overruns at the San Onofre nuclear power plants. If UCAN can convince the PUC that certain construction costs were caused by bad management of the construction process, a significant share of SDG&E;’s investment at San Onofre could be kept out of our rates.

Finally, SDG&E; has announced that it wants to create a new “holding company” that would own SDG&E; and seek new profits by investing in subsidiary businesses that would not be subject to PUC regulation.

UCAN will question whether SDG&E;’s management resources should be diverted to the creation and operation of new business--and diverted from concentration on cost savings at the utility. And UCAN will argue that the cash that is burning a hole in the pockets of SDG&E; management should be used to lower rates, not to gamble on new business investments.

To sum up, the PUC should renew its order granting UCAN the opportunity to insert its membership recruitment messages in SDG&E;’s bills for three reasons.

First, this low-cost recruitment vehicle is needed if consumers with little money to spare are to be able to fund an organization to represent them in SDG&E; rate cases.

Second, UCAN has proven that it can do that job capably. Third, a strong UCAN is needed to assure that small ratepayers are well-represented in several important decisions coming up at the PUC.