SDG&E; Agrees to Lower Proposed Rate Hike : Utility: The agreement, only the second of its kind, is struck after talks with consumer advocates, city officials.

In an unusual move, San Diego Gas & Electric on Wednesday said that it has agreed to limit a requested 1992 electricity rate increase to $61 million, far less than the $78 million that the utility initially had sought.

What made the announcement unusual was that the utility negotiated with consumer advocates and the city of San Diego before taking its rate hike proposal to the state Public Utilities Commission.

The typical customer’s monthly gas and electric bill will rise by $2.48 to an estimated $65.42 on Jan. 1 if the proposed hike is approved by the PUC. Even with the proposed increase, SDG&E; will remain the “low-cost (electric) provider in the state,” according to Lee Schavrien, the utility’s manager of revenue requirements.

The rate agreement grew out of intense, pre-hearing negotiations that included SDG&E;, the City of San Diego, the PUC’s Division of Ratepayer Advocates and Utility Consumers Action Network, a San Diego-based consumer group. The agreement will be submitted to the PUC later this year and, if approved, will take effect Jan. 1.

“It’s unusual for this kind of case to be settled before anyone has filed any testimony,” said Michael Shames, executive director of UCAN.

The proposed settlement marked only the second time that SDG&E; and rate-hike opponents have reached agreement on all major elements of a proposed rate hike prior to full-blown utility commission hearings, Schavrien said. SDG&E; reached a similar agreement in 1989 that subsequently was endorsed by the PUC.

The proposed settlement was made possible by the fact that SDG&E; and the PUC’s division of ratepayer advocates were “not that far apart” on an appropriate rate hike, Schavrien said. The ratepayer advocates initially believed that SDG&E;’s rate hike should be limited to about $40 million, while the utility in March argued that it needed a $78-million rate hike.

But after reviewing “more current information,” SDG&E; lowered its estimate while Ratepayer Advocates increased its proposed rate hike, Schavrien said. The rate hike agreement covers costs--including environmental expenses, some capital improvements and inflationary increases--that SDG&E; will incur during 1992.

Shames predicted that a much more intensive review of the utility’s rates that is scheduled to begin in 1992 probably will not be solved in pre-hearing negotiations. The agreement announced on Wednesday came in part because the PUC “strongly discouraged” SDG&E; and other parties from broaching tough policy arguments that will surface in the upcoming review of SDG&E;’s general rate structure, Shames said.

The pre-hearing agreement “is becoming less unusual,” according to a spokesman for the PUC’s division of ratepayer advocates. “The commission is now on record as encouraging all parties to try and settle their differences rather than take them through lengthy hearings.”

SDG&E; “is always willing to sit down and talk,” Schavrien said. “If we can resolve (disagreements) we will. If we can’t, however, that’s what the (PUC) hearing process is for.”