Febuary 16, 2007

Editorial:

The Cost of Gas and Electricity Continues to Climb

Deregulation devastating low income families

In 1996 California State legislatures, by a unanimous vote and signed by Governor Pete Wilson, passed into law the deregulation of energy companies within the state. The intent was to create competition, which in turn was supposed to result in competitive pricing. This past month, one local homeowner presented his gas and electric bill for his modest home, which had surpassed the $200 benchmark for the second month in a row. The December bill had eclipsed $250! So much for competitive pricing.

The frustration level that this homeowner had reached was at an all time high. He was at his wits end and did not know where to turn. He had done what he could to keep the energy bill at a reasonable rate and nothing had changed in his home to drive the usage of electricity up. Adding to the frustration was that the home sat empty most of the day during the week, and still, his energy bill continues to climb each month. Every year since the deregulation, homeowners, renters, and business owners have watched their energy bill go through the roof.

For San Diego homeowners, and businesses, this continual price increase is not new. San Diego County area was the test market in 2000, when the first effects of deregulation took place. San Diego Gas and Electric, which had been heavily regulated, was part of the deregulation and had to sell its electricity generation stations to whole sale energy companies such as Enron and Reliant Energy. The effect of this was a sharp rise in energy prices and a loud outcry from San Diego. But to no avail. Through bad planning and heavy influence upon the politicians by the energy companies, deregulation was allowed to roll out throughout the state.

The results? Energy manipulation by the suppliers that drove up the price on the consumer, rolling black outs, PG&E went bankrupt, the state overpaying for energy contracts, and finally a recall election that ousted Governor Gray Davis and brought us Arnold Schwarzenegger!

On December 8, 2006, San Diego Gas and Electricity went before state regulators to begin the process to raise the rates in 2008. Coupled with electricity rate increases, on February 26, the San Diego City Council will consider a 6.5% rate increase for its residents. A proposal by Mayor Jerry Sanders raises the water rates to pay for infrastructure repairs that are way overdue and state mandated. The money that was supposed to be used for infrastructure was instead used on things like a Republican convention and a Padre ballpark.

Who is impacted the most by a sharp rise in utility rates — the low income/middle class family, which includes most of us.

While energy rates have shot through the roof, wage increases have not kept up with the pace. Just this year alone Congress passed the first minimum wage increase bill in more than a decade from the present day $5.15 per hour to $7.25 in two years. The bill is now before the Senate and is not yet law and may not become law.

A minimum wage increase does not begin to solve the problem. Regulation is needed in an industry that society cannot do without and where there is no real competition. At present, we are at the whim of the energy companies, and we receive no relief from the Federal Energy Regulation Committee. SDG&E offers help for low income households, but this information is not shared with low income communities. How do we know? You don’t see them advertising these programs in publications like La Prensa San Diego, a free publication. Meanwhile there are plenty of ads to aid the business community in the subscriber based Union Tribune.

This leaves it up to the State Legislatures, once again to take a look at deregulation which has been a failure for the consumer and with future prospects looking worse. It is time for the state legislatures and the governor to take a look at deregulation and to find means by which to regulate this energy industry and take rate increase out the hands of stock holders whose sole concern is profit margin!

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