The California state auditor will review the reasons behind ever-increasing rates charged to customers by San Diego Gas & Electric after a legislative committee in Sacramento unanimously approved the audit Monday.
“When our rates increased in January, I got call after call from people saying, ‘I don’t know if I can keep the lights on or feed my kids,’ ” said Assemblymember Tasha Boerner Horvath, D-Encinitas, who requested the audit before the Joint Legislative Audit Committee. “This is what people are dealing with.”
Acting California State Auditor Michael Tilden said his office will not only look at why SDG&E bills have shot up but also examine the process in which the California Public Utilities Commission approves rates for SDG&E and other investor-owned utilities in the state.
“Specifically, as part of the audit, we would take a look at CPUC’s general rate case proceedings over the last three years … and determine whether CPUC is really adequately protecting customers from excessive increases in utility bills,” Tilden told the committee.
The auditor’s office will also review the Public Advocates Office, the independent arm of the CPUC that is assigned to work on behalf of ratepayers, “and whether the Public Advocates Office at the end of the day is adequately performing its mission to obtain the lowest possible rates,” Tilden said.
Tilden estimated the audit would take about seven months to complete.
SDG&E’s director of customer pricing, Adam Pierce, told the committee the utility “would welcome an audit of the key drivers impacting utility rates, as well as the CPUC’s process of reviewing and ultimately setting rates.”
SDG&E bills have become a hot-button topic in recent months, with San Diego racking up the highest average energy price in the country in January through May, according to the U.S. Bureau of Labor Statistics.
Last month, SDG&E filed its general rate case with the CPUC. Essentially a budget request that estimates what the utility believes it will cost to maintain and upgrade the power system across its service territory from 2024 through 2027, the general rate case — if approved —is estimated to result in the bill for a typical customer with electric and gas services increasing $18.57 per month, or 8.7 percent.
At the beginning of this year, SDG&E raised its rates, with the class average for residential customers climbing 7.8 percent. The average price per therm for customers with natural gas hookups jumped 24.6 percent compared to January 2021, largely due to higher benchmark prices for natural gas across the country.
Assemblymember Randy Voepel, R-Santee, said he was all in favor of an audit. “You guys are either going to have to lower rates or freeze ’em, otherwise we’re in deep trouble,” Voepel said.
CPUC executive director Rachel Peterson told the committee her organization has been transparent in discussing what’s driving California’s high utility bills.
“They are primarily rising natural gas commodity prices, which drive the price of electricity generation higher,” she said, and investments in transmission and distribution that power companies make to reduce the risk of wildfires ignited by utility equipment, such as downed power lines. Those costs are passed onto customers through rates.
The CPUC’s five commissioners, Peterson said, are “working nonstop” to address the affordability issue.
“We’re all in agreement today that the rates are too high,” said Matt Baker, director of the Public Advocates Office. He said his office will carefully analyze SDG&E’s general rate case submission “to review any programs that we believe are not cost-effective” and “scrutinize every new capital request to make sure it is needed.”
The CPUC earlier this year conducted a two-day workshop that brought together members of the Legislature, utilities, consumer advocates and others to discuss ideas on reducing — or at least slowing — utility bills.
Among the suggestions was taking the estimated $2.7 billion a year that is passed through utility rates for Public Purchase Programs and funding those efforts instead through tax revenue, as part of the state budgetary process. Public Purchase Programs include energy efficiency plans and California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance Program (FERA), which provide low-income customers discounts on their monthly utility bills.
SDG&E has come out in favor of such a proposal, saying it would save average San Diego area customers about $90 per year on their bills.
The CPUC last month also released its annual report to the Governor’s Office and the Legislature. Running 131 pages, the report looked at what can be done to limit rate increases, trends in the state’s electric and natural gas bills and the costs of mitigating wildfires.
The paper, officially called the 2022 Senate Bill 695 Report, also offered a sobering forecast for customer bills. It projects double-digit increases between 2022 and 2025 for all three investor-owned utilities — SDG&E, Southern California Edison and Pacific Gas & Electric:
- 24 percent through 2025 for SDG&E, or an annual average of 6.4 percent
- 26 percent for PG&E, or an annual average of 6.8 percent, and
- 16 percent for Edison, or an annual average of 4.2 percent.
Overlaying all the discussion is the state’s goal to derive 100 percent of its electricity from carbon-free sources by 2045, which includes investments in such things as developing battery storage technology and building electric vehicle charging stations.
