PG&E Rate Hikes are coming, Cost of household electricity would rise 10.8% on average

Pacific Gas and Electric Co. said Thursday that it is seeking to raise electricity rates by $599 million next year, with the heaviest burden falling on Northern California households already girding for higher natural- gas bills this winter.

Under PG&E’s complicated pricing formula, the rate increases for residential customers would be much higher than those facing businesses and farmers. Households would pay an average of 14.28 cents per kilowatt hour, 10. 8 percent more than the current average price of 12.89 cents.

The company filed an application for the rate increase with the California Public Utility Commission. The application combines some rate proposals that the commission has already accepted, according to the company, as well as others that have not yet been approved.

The exact rate increase PG&E will receive, therefore, has not yet been determined. The company, however, said it expects a final decision by the utilities commission before the end of this year.

The projected electricity price for next year would push household rates even higher than they were four years ago, at the height of a statewide power crisis that triggered rolling blackouts through Northern California and drove PG&E into bankruptcy.

In June 2001, PG&E’s residential customers paid an average of 14.03 cents per kilowatt hour.

PG&E’s business and agricultural customers aren’t facing as severe a price shock, leaving their electricity rates slightly below the peaks reached in mid-2001.

A medium-size business would pay an average of 14.14 cents per kilowatt hour under PG&E’s proposal for next year, a 3.5 percent increase from the current 13.66 cents per kilowatt hour.

The average agricultural rate is expected to rise 3.8 percent to 12.15 cents per kilowatt hour next year.

“It looks like residential customers are really going to get hammered,” said Robert Finkelstein, executive director for The Utility Reform Network, a consumer watchdog group in San Francisco.

About 700,000 low-income households would be exempt from the increase, PG&E said.

The rate increase is particularly bad news for inland neighborhoods that rely on their air conditioners to cope with the heat.

For example, PG&E said a Central Valley customer who consumes an average of 750 kilowatt hours per month could expect to pay about $79 more for electricity annually. The utility said its average household customer who uses about 540 kilowatt hours per month would end up paying about $18 more annually.

“While no one likes to announce a rate increase, we owe it to our customers to provide them with the best information available about where rates are headed,” said Tom Bottorff, PG&E’s senior vice president of customer services.

The projected rate increases loom as another financial headache for households already pinching pennies to offset soaring gasoline prices.

PG&E and other utilities across the nation are already warning customers to expect to pay more to heat their homes this winter because natural-gas prices have been steadily rising — a trend that might accelerate because of shortages created by the devastation of Hurricane Katrina.

Although the wholesale prices for electricity have plunged from the record levels reached in 2001, PG&E’s customers have continued to pay some of the higher rates in the country.

A substantial portion of the added costs stems from a hotly debated agreement reached last year that enabled PG&E to emerge from bankruptcy. The bailout requires PG&E’s customers to pay above-market prices for electricity through 2012.

That bailout has helped enrich the shareholders of PG&E’s holding company. PG&E Corp. earned $485 million in the first half of this year, and its stock has climbed 15 percent so far this year.

source: SFGATE

Comments are closed.