Table of Contents Agenda 2 Request for Letter of ... - City of Kerman

KERMAN CITY COUNCIL850 S. Madera AvenueKERMAN, CA 93630Mayor – Gary YepDoug WilcoxCharlie JonesNathan Fox Phone: (559) 846-9380Raj Dhaliwal Fax: (559) 846-6199April 5, 2013The Honorable Henry T. PereaAssembly Member 31 st DistrictState Capitol, Room 4112Sacramento, CA, 95814Re: Support for AB 327 (Perea) Rate Payer Equity ActDear Assembly Member Perea:This letter is to express support for AB 327 – which would eliminate the rate caps and restrictions adoptedas part of ABX1 1 and SB 695, and would allow the California’s Public Utilities Commission (CPUC) toconsider and approve residential rate structure modifications, which are fair and reasonable, and are inline with the State’s energy policy goals and objectives.During the energy crisis in 2001, the Legislature passed ABX1 1 to protect California ratepayers fromrampant price fluctuations due to a dysfunctional wholesale electricity market. ABX1 1 capped rates in thelowest two tiers of residential electric service in addition to rates for low income customers on theCalifornia Alternate Rates for Energy (CARE) program. Since the energy crisis, the cost of electricity hasincreased due to rising fuel prices and State mandated and CPUC-created programs. As a result of the ratecaps in tiers 1 and 2, these increased costs have shifted to customers in the upper tiers. SB 695 providedlimited relief by allowing rates in Tier 1 and Tier 2 to increase by 3 to 5 percent annually through 2018based on the Consumer Price Index (CPI). A separate formula was established for CARE customers.However, this gradual rate increase does not address the issue of the increased costs of providing electricserviceAbsent reform, the gap between Tier 1 and Tier 2 rates and the upper tier rates will continue to widen,causing tens of thousands of customers to pay rates significantly higher than the actual cost of electricity.Before the energy crisis, the highest tiered rate was only 20 percent higher than the lowest tiered rate.Today, the highest tiered rate is between 2-3 times higher than the actual cost of service. Withoutlegislative changes, the CPUC has only very limited ability to fix this unfair residential electric ratestructure.15