Industrial Customers Shortchanged in CPUC Rate Decision

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, Sept. 8, 2003 Share this on FacebookTweet thisEmail this to a friend

As the old saying goes, there is both good news and bad news, in this case relating to the Department of Water Resources’ lower revenue requirement for 2003.

The good news: the California Public Utilities Commission approved a one-time credit or refund for customers of the state's three investor-owned utilities due to DWR’s revised revenue requirement. The bad news: the decision provides industrial customers with a far more modest refund than they are entitled.

The rate refund, which will appear on customer's bills as a one-time credit, is due to a lower revenue requirement this year for the DWR, which had procured power for the state's investor-owned utilities from early 2001 until December, 2002.

Instead of fairly distributing the rate refund in proportion to the manner in which rates were increased in 2001, the CPUC decision provides for an across-the-board bill credit for all customer classes, which means that the more than 50% of residential customers who saw no rate increase due to DWR power purchases will be getting a rate refund, too.

Industrial customers were disproportionately impacted by the record rate increases approved by the CPUC in the spring of 2001 when rates for industrial customers increased by 80 to 100 percent while half of residential users saw no rate increase.

This massive cost shift from residential to large customers, in place since 2001, has cost California's economy in jobs and lost opportunities. California's electricity costs are nearly double the national average.

The general weakness in the manufacturing sector in California has been exacerbated by the burden of skyrocketing energy costs. According to the latest labor statistics, California has lost 300,000 manufacturing jobs since January, 2001, or 16 percent of the industrial workforce.
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