Electricity Rate Preference for Residential & Small Business Signed Into Law

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

Capitol Update, Sept. 26, 2003 Share this on FacebookTweet thisEmail this to a friend

In Washington, social security is often referred to as “the third rail.” In other words, it is sacrosanct, don't touch it. At the State Capitol in Sacramento, the same could be said about residential electric rates.

Even the possibility of residential rates going up, or the suggestion that costs might be shifted to residential ratepayers, makes policymakers uneasy. Meanwhile, when electric rates go up for large energy users, or costs are shifted their way, the discomfort felt by legislators and the Governor's office is decidedly less acute. For many, it is a viable option rather than a doomsday scenario.

In 2001, at the height of California's electricity crisis, the Legislature approved AB 1X, which exempted residential customers at or below 130 percent of baseline usage – roughly half of residential customers – from rate increases. This caused a massive cost shift to industrial customers, who were subjected to rate increases of 80 to 100 percent.

So it comes as little surprise that the Legislature approved and the governor signed into law a bill that puts residential and small commercial customers’ interests ahead of large commercial and industrial users.

Senate Bill 521, authored by Senator Debra Bowen (D-Marina del Rey) requires the California Public Utilities Commission's Office of Ratepayer Advocates, in revenue allocation and rate design matters, to primarily consider the interests of residential and small commercial customers.

SB 521 fundamentally alters the mission and duties of the ORA by narrowing its focus to a subset of customers. CMTA and numerous other business organizations opposed the measure, arguing that the ORA should represent the interests of all ratepayers in all proceedings.

The new law also enables advocates for “small commercial” customers to receive intervenor funding. The intervenor compensation program allows intervenors at CPUC proceedings to have their expenses covered, including attorneys fees and expert witness fees, if the CPUC determines they couldn't otherwise afford to participate.

CMTA had urged the author to at least amend this section of the bill to create an intervenor funding “firewall” so that intervenor funding be retained within the customer class on whose behalf the intervenor is advocating. Currently, industrial customers contribute to intervenor compensation even though the funding goes toward intervenors that advocate for small users and against the interests of industrial customers. The author declined to adopt CMTA's recommended amendments.

The new law will take effect Jan. 1, 2004.
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