Legislative Update: Fall 2009

The Ratepayer Protection Act (SB 695) recently signed into law by the Governor is the result of tense and difficult negotiations between utilities and consumer groups, and will provide long-term protections for utility customers throughout California.  In response to mounting pressure from the utility companies and from some customers, the Ratepayer Protection Act updates protections won by TURN in the wake of the deregulation disaster, limiting baseline increases for residential customers of PG&E, SDG&E and SoCal Edison.

After unchecked market manipulation necessitated huge rate hikes, the legislature passed AB 1X, a law freezing rates for a “baseline” amount of electricity, in order to keep a necessary amount affordable for everyone.  But that meant higher, above-baseline energy users shouldered all of the many rate hikes won by the utility companies on top of their deregulation bailouts.  Those higher use customers have been begging for relief.  With the utility companies quietly lobbying in Sacramento for total elimination of the freeze, TURN and our allies fought for, and won, a more consumer friendly solution.

The Ratepayer Protection Act limits baseline rate increases to no more than the Consumer Price Index plus 1%.   An additional cap ties baseline rates to the system average rate, guaranteeing that residential customers will benefit from the same type of discounted rates enjoyed by large industrial customers.  Increases for low–income customers who are entitled to special CARE rates will have further limitations.

This doesn’t mean TURN won’t continue to oppose unjustified and unfair utility rate hikes, or cost allocation schemes.  It just means that whatever rate hikes the utility companies do win will be distributed more equally, so that large households and other who use a lot of electricity won’t see their bills climbing quite as astronomically. Lower end users may end up paying a little more in order to relieve the pressure on their higher use neighbors, whose bills are likely already in the hundreds.

The Ratepayer Protection Act also expands vital consumer rights, assuring adequate and equitable funding for low-income programs, priority energy saving assistance for high-energy users, and strict limits on the utilities’ ability to force Time Of Use (TOU) rates on customers.

In response to intense pressure from large energy companies and industrial and commercial customers, the Ratepayer Protection Act permits a phased–in reopening of direct access under strictly limited circumstances and with stronger regulatory oversight, including renewable energy requirements and protections against the cost-shifting that occurred during the deregulation disaster.  

The Ratepayer Protection Act represents a net gain for consumers.  Two years of advocacy by the Division of Ratepayer Advocates, Utility Consumer Action Network, and The Utility Reform Network, with utility companies, the California Public Utilities Commission and others has yielded a bill that not only expands consumer protection, but sets the stage for future collaborations that protect consumers as well.