Comments Before the California Public Utilities Commission
on the Issue of Direct Access

February 21, 2002

Thank you for the opportunity to speak before the Commission today. Before I discuss the issue of Direct Access, I have a quick thank you.

Since the state began grappling with its wild and uncertain electricity market in the summer of 2000, members of this Commission have been exceedingly helpful in maintaining communications with ratepayers in San Diego County.

Commissioners Brown, Wood and Lynch have each traveled to San Diego to hold public hearings. They've given the San Diego community the opportunity to express their feelings concerning the San Diego Gas and Electric Balancing Account, various rate increases proposed by SDG&E and most recently, electric baseline allowances.

Last summer, members of this commission approved San Diego's rolling blackout reduction program, which calls for private backup generation in the event of a rolling blackout. We hope to never need the program, but we're tremendously thankful for the opportunity to put the program together.

This commission has done its best to keep San Diego County ratepayers "in the loop," as they say. I appreciate your efforts and I know my constituents do too.

I'm in San Francisco today on behalf of the San Diego County taxpayers who have to pay the electricity bills of County-owned facilities including libraries, sheriff's stations, animal shelters and other County buildings. I'm here to urge your support for a September 20th 2001 deadline for Direct Access contracts.

More than one year ago, this Commission allowed energy customers to shop around for cheaper power by entering into Direct Access contracts with private providers. The commission allowed a September 20th deadline for these contracts.

San Diego County was particularly excited about this opportunity to escape the exorbitant prices of the state's wholesale power market. Remember that San Diego was the first region in the state to experience the effects of deregulation in the summer of 2000. Electric bills in San Diego quadrupled. Ratepayers had a $750 million balancing account hanging over their heads. You can imagine how anxious local officials were to find ways to save taxpayers money.

San Diego County viewed Direct Access as a crucial lifeline thrown to us by the Commission.

Acting in good faith, San Diego County entered into an agreement with a private provider prior to the September 20th deadline. It's an agreement that could save San Diego taxpayers $11 million over the next three years.

Many of the County's largest employers have entered into similar agreements. These are businesses wholly dependent on electricity. They must have reasonable and stable electric bills to stay competitive, not to mention- to keep San Diegans working.

Last month, when the Commission issued its draft ruling rolling back the deadline for Direct Access contracts to July 1st 2001, San Diego County was stunned. We felt like we'd had the rug pulled out from underneath us. It takes months of staff time to negotiate a contract. I was frustrated. My colleagues on the Board were frustrated. It makes it difficult to put together a workable County budget for taxpayers when we can't estimate our electric bills and plan for our electricity costs. The region's largest employers were also frustrated.

SDG&E reports that Direct Access accounts for nearly 20 percent of its total load. If Direct Access is suspended as of July 1, 2001, many of these customers will face "stranded costs."

These "stranded costs" will do to the key players in the San Diego economy exactly what "stranded costs" did to the state's three utilities during the peak of the electricity crisis. These "stranded costs" could mean bankruptcy and near bankruptcy for San Diego's largest employers. This could prove detrimental in our current economic climate.

I understand that Commissioner Brown has issued an alternate draft ruling, which would preserve the commission's original deadline for Direct Access contracts of September 20, 2001.

I believe Commissioner Brown's ruling strikes a good balance. It respects the rights of large energy customers to seek alternative providers and it protects the pocketbooks of smaller residential customers.

I respectfully urge your approval of Commissioner Brown's alternative ruling allowing customers to enter into contracts prior to September 20, 2001.

I thank you and San Diego's economy thanks you too.