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NV Energy's Greenlink Nevada Transmission Project Approved by PUCN

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Industry News

SDG&E Customers Start Getting Cash Back

LCG, Aug. 8, 2000--Residential and small business customers of San Diego Gas & Electric Co. who have seen their electric bills more than double in the last two months and have blamed it on deregulation will begin getting hefty checks this week that the utility says are "deregulation-related."

Householders, whose bills increased from about $50 per month to a little more than $100, will get on an average $260 cash. The typical small business will get a check for $870.

And theres more to come. The checks SDG&E is mailing out now are from a $390 million fund created by the companys ability to sell its power plants for an amount greater than their book value. There is another $100 million in a regulatory balancing account controlled by the California Public Utilities Commission that will result in a total $34 credit on the typical residential electric bill this month and next and will give the average small business customer a credit of around $128 over the two months.

When Californias landmark electric industry restructuring law was enacted, it was thought that it would take the states three investor-owned utilities until 2002 to pay off their stranded costs. In exchange for granting the utilities permission to issue bonds to refinance their stranded costs, the legislation froze residential and small business electric rates and granted those customers a 10 percent rate cut that began in January 1998.

When SDG&E paid off its stranded costs with the proceeds of its power plant sales, the rate cap for its customers went off, and they were exposed to wholesale market prices for power. Because the utility is required by law to buy all its power through the California Power Exchange, it was unable to enter into long-term bilateral contracts with generation companies for power at a fixed price.

The result was, when wholesale power prices soared during a June heat wave, and another one over the past two weeks, SDG&E customers felt the full effect. By now, the typical householder has paid about $150 more for power over the past three months than he might have expected.

That $260 check ought to cover it.

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