Testimony Before the Federal Energy Regulatory Commission
Chairwoman Dianne Jacob

November 14, 2000

Mr. Chairman, thank you for coming to San Diego this morning to hear comments on the Commission's recent report on the California electricity market. I will not repeat my testimony I presented to you last Thursday in Washington, D.C. but rather expand upon it. Your Commission recognizes that our electricity rates are unjust and unreasonable and that the market is dysfunctional. Now, it is time to take the next step.

Once again, I urge you to order refunds retroactive to May 1, 2000. I believe you have the power to do so and we will provide more detail in our written comments. San Diego consumers are the innocent victims of a dysfunctional market and rightly deserve to be paid back for the electricity overcharges they have suffered.

This dysfunctional market has resulted in excessive profits for generators at the expense of the people and businesses in San Diego and that is wrong! Let me demonstrate.

Major unregulated corporations that are generators or marketers of electricity in California have recently announced their third quarter earnings reports. It should not come as a surprise that many of these companies are reporting record third quarter earnings. Results of our preliminary review (Exhibit A) show the profits for approximately a dozen of these firms. As you can see, the profits of these companies are up to the tune of over $2 billion and are well above historical returns. A handful of these firms are producing profits that are multiple times what their profits have historically been.

Companies such as Dynegy and Enron have produced record profits. Industry analyst Carol Coale of Prudential Securities recently stated, " California clearly drove the positive momentum at both of these companies. And you probably just saw the beginning of a string of strong reports." Dynegy has already fully recovered the cost of the plants that it acquired in Long Beach and El Segundo. It is well on its way to covering the cost of Encina and Carlsbad plants. As you are all well aware, it has historically taken upwards of 20 years to pay off the capital investment in these resources. Profiteering this summer has enabled these generators to pay down their debt much quicker than anyone expected. What will their profit levels look like next summer when their debt is paid down and all of their one-time write-offs have been recorded?

Other firms with substantial investment in California such as NRG and Calpine also had record quarters. Let's look at this situation objectively. Dynegy, up 124 percent; NRG, up 342 percent; Enron, up 76 percent; Calpine, up 123 percent; and San Diego ratepayer bills up 733 percent (Exhibit B).

Exhibits C and D show the direct correlation between the excessive profits of California generators and electricity costs in San Diego. Is there any question that San Diegans are paying for these excessive profits caused by a dysfunctional market that we did not create?

Investment doesn't require the expectation of excessive profits - only reasonable profits. And, generators never had a legitimate expectation of earning or keeping excessive profits.

Finally, I have an updated list of the hardships suffered by individuals, businesses, non-profits, schools, hospitals and others in San Diego as a result of the outrageous electricity overcharges.

San Diego County ranks as the 37th largest global economy, generating almost $100 million in goods and services annually. Our people are in trouble. Our businesses are in trouble. Our economy is in trouble. We need your help!

 

 

 

 

 

Impact of Electricity Rate Increase on San Diegans

 

Public Agencies
San Diego County schools	Annual bills increased from $30 million to $75 million
San Diego hospital system	Increase of $500,000/month
Ramona Cemetery District	1999 = $4,000, 2000 = $12,000
County of San Diego	Will cost the County an additional $9.3 million/yr
Businesses
Abel Laboratories	R&D lab whose bills doubled even thought there was no research being conducted at the time
Ameron International	Bills have doubled, they have had to raise prices
Cutting Edge Products, Inc.	7/00=$740, 8/00=$1,982, 9/00=$2,074
Annie Oakley's Restaurant	Increased from $1,400 to $6,500
Borrego Valley Foods	Increased from $4,000 to $7,000
Buck Knives	Increased from $50,000 to $70,000 (Afraid they will close and that 300 plus workers will lose their jobs)
Burro Brand, Inc.	Rates more than tripled, increased from $300 in March to $750 in June to $1,500 in July
CAT Computer Systems	Bills have risen from $128 to $182 in two months and they are looking to move in anticipation of continued increases
Chiquita's Mexican Retaurant	Increased from $1,200 to $3,000 (Raised prices by 2%, may lay off some of the 25 employees)
Clever Promotions	Increased from $60 to $140
Dairy Queen	Ice cream cone prices raised 10 cents (one location)
Devany's Bakery	Out of business Oct. 14th
Dixlieline Lumber	Some bills jumped from $7,000 to over $10,000
Elams Hallmark	Considering shortened store hours
Erreca's, Inc.	Bills went from $3,000 to $8,200
Experience Coffee	Increased from $645 to $1,250 (Raised coffee prices 10 cents)
Family Foods Market	Increased from $12,000 to $25,000
Florist	Increased from $800 to $2,000
Four Seasons Flower Shop	Summer '99 = $3,300, Summer '00 = $6,000 Increasing prices
Factory 2-U outlets	Increased from $36,000 to $56,000
Fletcher Hills Farms	Increased from $1,000 to just under $3,000(Out of business after couple owned it for 30 years)
Golden Goose (coffee shop)	Increased from $500 to $1,300
Hardware store	Increased from $1,000 to $2,000
Hygrometrix, Inc.	Bills tripled in two months
Jaycraft Corp.	Bills have doubled and they are forced to absorb the costs since their prices are fixed
J.F.K. Tax Service	7/99=$170, 7/00=$377
Kathy King	Raised price on all food/drinks & laid off one employee
Kensington Village Cafe	65% higher than same time last year will significantly raise prices or go out of business, 12 employees would lose their jobs
Ladybug Art Calligraphy	6/99=$270, 6/00=$581
Lynn's Restaurant Bill	nearly tripled, went out of business
Marotz, Inc.	Rates increased 300% from $500 to $2,000 They are considering relocation
McDonald's in Escondido	Raised burger prices
North Park Main Street (represents small businesses)	Average increase of $300-$400 per Business
Olhausen Billiard Manufacturing	7/00=$17,562, 8/00=$30,219
Poway Road Mini Storage	Increased from $879 to $2,392 in one month
San Diego Space and Defense Technology Consortium	Bills have tripled and they are on a fixed cost contract
San Diego Ice Arena	One month jump of $12,000
Senior Flexonics, Katema Division	Bills went from $90,000 to $250,000 over a 6-month period
Small Business Finance Corp.	8/99=$1,495, 8/00=$4,896
Southland Envelopes	$20,000 higher in July than in June
Spooner's Woodworks	5/00=$2,500, 7/00=$7,000
Taylor Guitars	Increased from $20,000 to $50,000/ month
Tiger Reprographics	Bills more than doubled in a month
Venice Pizza, Normal Heights	From $1,100 to $2,350 50 cents more per pizza and 25 cents more per pasta
Westin Hotel	$40,000 higher than usual
Younglin Market	5/00=$508, 6/00=$898
4J's Ranch	5/00=$157, 7/00=$501
Non-profit Organizations
California Center for the Arts	6/99=almost $46,000, 6/00=$68,000
Museum of Photographic Arts	Was approximately $7,500/month, $12,000 in May, $22,000 in June
Salvation Army	Nearly doubled to over $9,000
Senior citizens center	Increased from $1,500 to $4,000
St. Vincent de Paul	Increased from $20,000 to $40,000 Will cut support staff or reduce services
San Ysidro Health Center	Increased from $6,400 to $13,000 May scale back outreach program and limit support staff
First United Methodist Church	Forced to reduce community outreach and other programs
San Carlos United Methodist	Increased 57% or $800 in July, Increased Church another $600 in August
Seacrest Village Retirement	Seniors' bills have gone from $17 and $25 to Communities $95 in August
Residential
Dennis Branham	6/00=$190, 7/00=$362
Bob Scurlock	300% to 400% increase
Bill Cox	7/00=$348, 8/00=$460
William Milton	7/99=$198, 7/00=$517
Merrilee Boyack	7/00=$200, 8/00=$432 (Includes 2-week vacation)
Tamara Bailey	From $133 to $179 to $279
Kathleen Alesi	7/00=$365, 8/00=$700
Kitty Miller	From $54 to $91 to $100 (Usage decreased 12.5%)
Robert and Jacqulyn Powell	5/00=$90, 7/00=$249
Robert Putney	Usage decreased 24%, bill increased 125%
Kurt Myers	5/00=$150, 6/00=$281
Gail Ann Kerna	5/00=$72, 8/00=$365