The California Public Utilities Commission opened a two-day hearing in San Francisco aimed at collecting the public input they say is necessary in determining how much of a rate hike they will grant to utility companies that are straining under the increasing debt load caused by the recent surge in natural gas and wholesale electricity prices.
"We are the cheese in the middle of the cheese sandwich," summed up Roger Peters, a spokesman for Pacific Gas & Electric, the utility that serves San Francisco and much of Northern California.
PG&E and Southern California Edison have been clamoring for an end to the rate freeze that was built into California's electricity deregulation plan to protect consumers from major price increases in their electric bills.
The two utilities have warned that they face bankruptcy if they are forced to continue paying wholesale power prices that are far above what they may charge their customers.
Utility officials have said that a raise of as much as 30 percent will be needed to end the dire threats and keep their access to corporate credit markets open.
The PUC board will decide Jan. 4 how much of a rate hike they will grant.
A 30 percent rate increase might actually be seen as not so drastic in San Diego, where San Diego Gas and Electric Co. is not bound by the rate freeze and residential power bills have more than doubled and in many cases have tripled this year over 1999 prices.
Self-styled consumer advocates, such as the aptly named Bill Power of California Congress of Consumers, told the PUC board that the run-up in prices was the result of "unscrupulous profiteering" by energy producers that have enjoyed a seller's market in California for much of the year.
His contention took the form of a class-action lawsuit filed this week by a Los Angeles antitrust attorney who alleged that major natural gas providers conspired to restrict the supply of gas in California to keep prices at skyrocketing levels.
Attorney Carole Hadler told KNBC television that the alleged conspiracy created "an artificial scarcity of the most important fuel for the generation of electricity."
Gov. Gray Davis on Wednesday visited Washington, where he briefed President Clinton on the situation.
"I have said to the [power] generators, 'You ought to take the long view,'" Davis told reporters outside the White House. "'If all you do is extract every dime you can get from California, you may win the battle, but you will lose the war,' because either the legislature or through the initiative process, they will eliminate your right to deregulate electricity in our state."
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