Sempra customers could face higher rates from CPUC decision

A rulemaking decision by the California Public Utilities Commission would tie electric prices paid by Investor-Owned Utilities to the costs of energy in the long-term energy contracts signed by Gray Davis in 2001. San Diego would be hardest-hit:

In the aftermath of the power crisis, regulators decided that the fairest way to spread the pain would be to charge each utility evenly based upon how much electricity its customers consumed.

Now, at the urging of the two northern utilities, regulators are poised to change the deal to a formula known as "cost follows contract." Put simply, consumers would be charged according to the actual cost suppliers are charging them under the long-term contracts.

The new formula would punish customers of San Diego Gas & Electric because the utility sold off almost all of its generating plants before the power crisis began. That means it's buying more electricity than its rivals, which held onto hydroelectric dams, nuclear facilities and other generating assets

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One of the failures of the deregulation scheme was that wholesale prices were deregulated while retail prices were not--forcing the IOU's to the brink of bankruptcy. The proposed revision appears to move away from this twisted thinking and charges utilities for the energy they use.