ENERGY: Utilities seek to shift natural gas costs from business to households

SDG&E would collect an additional 96 cents from residents each month

By CHRIS BAGLEY - Staff Writer | Thursday, December 4, 2008 5:08 PM PST ∞

The utility that provides natural gas in San Diego County is asking for permission to shift $10 million in annual charges from large businesses to residential customers, a move that it said would spread the burden of social programs more evenly.

Surcharges on gas customers throughout the state cover the costs of discounts for customers who have low incomes and those who improve their energy efficiency. Those charges now amount to about $2 a month for a San Diego County resident who uses the average $45 worth of gas each month, said a spokeswoman for San Diego Gas & Electric Co.

SDG&E and the state's other two large utilities asked the California Public Utilities Commission for the change in December 2007. An administrative law judge recommended last month that the commission deny the application. Utilities and ratepayers can submit comments through Monday. The commission is tentatively scheduled to discuss the application at its Dec. 18 meeting in San Francisco.

If approved, the change would entail a 96-cent increase in the monthly surcharge on SDG&E's average residential customer while knocking $5 to $400 off some businesses' monthly bills, said Denise King, a spokeswoman for SDG&E and Southern California Gas Co., a sister company that serves Riverside County as well as other Southern California counties.

The surcharge varies mainly in proportion to the amount of gas each customer uses.

Under the proposal, surcharges would instead be based entirely on the cost of serving each customer. The distinction is important because a business that uses 10 times as much gas as a typical household might cost only four or five times as much to serve, gas company representatives said. The surcharges end up being 20 to 40 percent of businesses' total gas bills, compared with less than 10 percent for residential customers, they said.

And the surcharges stand to increase more quickly than the underlying costs because energy-efficiency incentives and other social programs are growing so quickly, gas company representatives said.

A program that covers gas-related efficiency improvements for households with moderately low incomes, for example, is expected to increase in cost next year to $50 million and to $78 million in 2011 for SoCal Gas, which serves most of Southern California outside San Diego County, according to budgets approved by the state regulator.

"We've had a lot of business customers ... who have told us ---- and have also told the PUC ---- that this is placing a disproportionate and onerous burden on them," said spokeswoman Denise King.

A spokesman for the California Manufacturers and Technology Association called the proposed method more "equitable."

Michael Galvin, the administrative judge, rejected that argument, saying that businesses might actually benefit more than residents from some of the social programs, such as those that promote energy efficiency. Galvin also rejected the businesses' and utilities' arguments that higher gas costs, let alone the surcharges, drive businesses out of California.

The surcharge would rise over the course of three years if the Public Utilities Commission approves the utilities' request. For the 800,000 households in San Diego County and southern Orange County that depend on SDG&E for gas service, that means a monthly increase of 32 cents in 2009, and equal increases in each of the two following years, King said.

SoCal Gas would collect an additional $1.20 a month from its customers, in three steps of 40 cents each. Customers of Pacific Gas & Electric Co. in northern California would see somewhat smaller increases.

Contact staff writer Chris Bagley at (760) 740-5444 or cbagley@nctimes.com. Bagley blogs about local economic trends at http://bizblogs.nctimes.com.