California regulators have approved a staggering set of electric rate increases - as much as 80 per cent in some cases - in a bid to narrow the gap between retail rates and soaring wholesale prices.
The hikes aim to raise $5 billion in sorely needed cash in 2001 to cover the cost of electricity in a state that has endured six days of rolling blackouts so far this year and seen its biggest utility seek bankruptcy protection.
The increases, the biggest in the state's history, were met with howls from outraged consumers and manufacturers who warned that the hikes could drive them out of business or out of the state.
The plan, to take effect from June 1, was approved in a 3 to 2 vote by the California Public Utilities Commission (CPUC) at a boisterous meeting packed with demonstrators calling the increase a product of corporate greed and government inaction.
The tiered price plan would hit industrial customers with a 49-50 per cent increase while big commercial customers like malls and hotels will see their rates go up 36-41 per cent.
The North American Electric Reliability Council, in an assessment of the US power grid released yesterday, warned that California faces up to 260 hours of blackouts this summer, when air conditioning pushes power demand to its annual peak.
"We aren't happy with the way the PUC voted," said Gino DiCaro, a spokesman for the California Manufacturers and Technology Association.
"Manufacturers at this point have three options: they can operate with exorbitant rate increases, they can take their operations to another state, or they can just close their doors.
"We're going to explore all available options and venues at this point to see if we can't mitigate this unequitable rate increase," he said.
Most residential customers face a punitive 12 per cent to 54.5 per cent rise in their monthly bills for all electricity they use in excess of an established baseline that takes into account "reasonable" power use in each of the state's climate zones.
The absolute top tier, reserved for the few homeowners caught exceeding their baseline by a hefty 300 per cent, would be clobbered with an 80 per cent rate increase.
Residents who keep power consumption within 130 per cent of their baseline - estimated by the commission at about half the state's homeowners - will see no price increase at all.