[BETA] Fortnightly

The California Public Utilities Commission (CPUC) has rejected claims that an experimental performance-based rate plan for San Diego Gas and Electric Co., a combined electric and natural gas utility, was yielding "perverse results" and should be modified in keeping with the PUC's purposes in establishing the experiment. According to the Utility Consumers' Action Network, the utility had earned a profit that exceeded its authorized return by 114 basis points while the plan was in effect. The consumers group also complained that the utility had earned a total of $7 million in performance incentives under the program.

According to the PUC, the financial figures used by the consumer group contained eight months of operations under traditional regulatory methods and only four months of performance under the new rate plan. The PUC found a midterm evaluation of the plan the most appropriate vehicle for a review of the holding company and industry structure issues. It also noted that the plan contained its own earnings-based triggering mechanisms for a formal review of 300 basis points above the benchmark rate of return. Re San Diego Gas and Electric Co., Application 92-10-017, Decision 96-04-057, Apr. 10, 1996 (Cal.P.U.C.).

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