A Painful Step

By approving a whopping rate hike for big power users, the state Public Utilities Commission finally has recognized the grim reality of the electricity market in California, even if Gov. Gray Davis has not. Electricity costs more these days, even aside from the piratical rates charged by big generating companies at times during this emergency.

The increase, while probably necessary, will not by itself solve the crisis or prevent rolling blackouts this summer. The two biggest private utilities, Southern California Edison and Pacific Gas & Electric, still are saddled with as much as $13 billion in debt for past power purchases. State government still is shelling out some $50 million in daily power purchases and has committed as much as $40 billion to future power contracts. Davis continues to negotiate a takeover of the utilities’ share of the state power transmission grid in exchange for paying off some of the utilities’ debts.

Despite all the hand-wringing and arm-waving, nothing that state government has done since January has provided any significant new power generation or conservation. Consumers are right to wonder what happened to a promised statewide conservation campaign. After first ducking the power problem, Davis launched a flurry of initiatives early in the year, most of them still works in progress. But he still has not given the people an understandable, coherent plan for getting out of this fix. Worse, he refuses even to say how much the state is spending on power even as he plunges Sacramento into the power business for decades into the future.

The irony of Tuesday’s rate increase is that the state might have dodged much of the mess if it had raised rates three months ago. But Davis, seeking reelection next year, insisted that the crisis be solved “within the existing rate structure.” Late last week he attended a political fund-raiser at a Palm Springs golf club while his staff was being briefed on the need for higher rates, literally distancing himself from the act.

The rate increase, which will be drafted over the next 30 days, affects customers of Edison and PG&E; but not residents of Los Angeles or other cities with full municipal power systems. The stated intent is that bigger users, particularly businesses, will pay higher rates and be encouraged to save major amounts of power during the summer. Under one scenario, nearly half of households--low and medium users--would pay no more than they do now. The boost is also intended to compensate taxpayers for the state’s daily power purchases, although there is no assurance yet that the new rates will meet the full cost. The increase should be structured to give ratepayers some relief if lawsuits against power generators’ exorbitant pricing are successful in winning refunds.

Those skeptical ratepayers who believe that the crisis is just a big rip-off by the utilities and the energy companies will consider the increase more of the same. You can’t blame them, considering the lack of straight talk from the governor, including his dodging of the rate issue.

However, most state experts, including Davis’ own utilities commissioners, say the rate increase is a critical first step in solving California’s power problems. If Davis has a plan to fix the problem some other way, he should present it in detail to the people of California now.