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Utah OK in power crunch?

Their neighbors a couple states away may suffer financially from higher energy bills, but some officials believe Utahns ultimately will benefit as a result.

At the very least, they say, Californians probably will cut energy use, freeing up more power for use on the Western electricity grid.

"Utahns should be happy that California electricity consumers are seeing the real cost of their electricity, that they are being exposed to and will be seeing accurate price signals," said Jeffrey Burks, director of the Utah Office of Energy and Resource Planning.

"If Californians are consuming less electricity, for any reason, more supply becomes available in the entire grid to meet the needs of surrounding states."

The California Public Utilities Commission on Tuesday voted to allow the state's largest two utilities to raise rates as much as 46 percent as a way to prevent blackouts and keep the financially struggling companies viable. The rate hikes approved for Pacific Gas and Electric and Southern California Edison, effective immediately, are the largest in California history and follow 9 percent to 15 percent increases approved in January and an additional 10 percent scheduled for next year.

Although a tiered rate system will be used to protect low-income customers, rates are expected to climb 42 percent for Edison customers and 46 percent for PG&E customers. The average monthly residential bill before Tuesday's increases was $69.87 for Edison customers and $58 for PG&E customers.

By comparison, the typical Utah residential customer of Utah Power pays less than $46 per month. Utah Power recently received a 9.4 percent interim rate increase that added $3.85 to the typical bill, and Utah Power is hoping the Public Service Commission ultimately approves its 19 percent request fully. That would make the average bill about $50.

Some energy and governmental officials in Utah and California have pointed to California's failed utility deregulation effort as the cause of energy troubles throughout the West. They have contended for months that higher prices would be the only effective means — much more so than the threat of rolling blackouts — to get Californians to curb power usage.

"Do higher prices lead to reduced consumption? Yes, there's a lot of empirical evidence that people do respond to prices," Burks said. "Price signals do work in getting people to change their energy consumption patterns. Will it work in California? The jury's out, but I think it would have to have some effect."

Dave Eskelsen, spokesman for Utah Power, said the California commission's action "will have no direct effect on Utah" and probably no direct effect on the wholesale electricity market. Utah Power pays a steep price for wholesale electricity to meet demand during peak usage periods.

"We all need to conserve, to pay attention to increased efficiency and reductions in usage during the peak demand periods," he said.

Roger Ball, administrative secretary of the Committee of Consumer Services, said he's unsure what the overall impact of the California rate increase will be. Some customers will continue their habits of switching off appliances when not in use, while others probably will not change unless prices rise by a factor of 10, he said.

"The most important thing for Utah to realize from all this is that deregulation does not lead to lower prices," he said. "It leads to higher ones."

Earlier this month, a group of officials from Los Angeles visited Utah to explore the possibility of expanding generation at the Intermountain Power Project near Delta. Most of that plant's power is moved to Los Angeles and a few other cities.

During the trip, the officials said Californians seemed defensive, claiming the state already was excelling at conserving energy. S. David Freeman, general manager of the Los Angeles Department of Water and Power, added that the state could do more. Residents there, he said, would implement "the most aggressive plan you'll ever see," with the goal of cutting usage 10 percent this summer compared with last summer.

The increase approved Tuesday in California equates to 3 cents per kilowatt-hour. Utah Power customers had been paying about 6 cents per kilowatt-hour, but saw their prices rise about a half-cent with the interim rate increase. If the company gets the entire amount it is requesting, the cost would be a little over 7 cents.

"Utah has relatively low electricity prices, so even a 19 percent increase, in terms of what you'd pay per kilowatt-hour, doesn't translate into a huge price increase," Burks said. "And if you compare what people paid for electricity in 1985, they're paying about 25 percent less now than they did then."