Ruling Opens Door to California Rate Hikes

LOS ANGELES, CA -- (UPI) -- The door to even higher electricity bills for California residents was opened this past week, when regulators ruled that the state Department of Water Resources had the authority to pass on its increased costs for power on to consumers.

The California Public Utilities Commission ruling, issued in San Francisco, gives the DWR the freedom to recover costs that the state's major utilities have not enjoyed under the state's 1996 deregulation law.

Wholesale power prices have risen in the past year to levels well above what Southern California Edison and Pacific Gas & Electric are allowed to charge their customers. As a result, the two companies have been pushed to the brink of bankruptcy, DWR was forced to buy electricity on behalf of the utilities.

Some analysts said that the PUC's move was one that would reassure anxious power generators and that the state will be able to come up with the money to continue buying power, especially during the summer months when the use of air conditioners sends demand and prices for electricity soaring.

Power supplies in California and other parts of the West are expected to be very tight this summer, due to a drought in the Pacific Northwest that has restricted the production of hydroelectric power.

An official of Bonneville Power Administration, which operates the hydroelectric system in the Pacific Northwest, warned Wednesday that the low water levels will probably force the agency to halt the release of water that is used to accommodate the spawning runs of threatened salmon populations in the Columbia River basin.

Acting BPA Administrator Steve Wright told power industry leaders that previously announced cuts in water releases were not enough to insure adequate electricity supplies, and that the salmon likely would not get any additional water.

"As we walk through the year, things keep getting worse and worse," Wright told the Portland Oregonian. "We're hitting rock-bottom."