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Vital rate cut survives
1 January 1998
Generators of clean energy breathed a sigh of relief last month when a bid to undermine the basis for California's mandatory 10% price cut for residential electricity consumers failed. The price cut is an integral part of the state's package to deregulate its energy market from January 1. Energy analysts say the main opportunity for marketers of wind and other renewables is over the next four years while consumers get the mandatory rate cut. It looked in danger when an attempt was made to halt sales of the utility bonds which will raise money to help utilities finance the cut. On December 4, the state Supreme Court denied a petition by consumer groups to block the issuance of $7 billion in bonds. The Consumers Union and The Utility Reform Network (TURN) say that consumers will not reap a 10% rate cut as intended under deregulation, because they will have to pay finance charges for the bonds over the next ten years. The bonds, authorised by the state legislature and California Public Utilities Commission, have been selling briskly. By November 25, Pacific Gas & Electric had sold $2.9 billion of the bonds, which yield a higher rate than similar corporate securities. A second attempt to try and wrest more benefits for consumers has also been launched by the same consumer groups. On November 24 they filed a petition for a proposed ballot initiative calling for a 20% rate cut for small businesses and consumers. The initiative would also prevent the utilities from charging customers directly for the utilities' stranded costs (see above) The groups need signatures of 600,000 voters to get it on next year's election ballot.
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