Consumer unit of PUC rejects rate hike request.

Citing excessive executive compensation packages, the consumer watchdog arm of the California Public Utilities Commission last week rejected a request from Southern California Gas Co. for a $139 million rate increase.

The Division of Ratepayer Advocates instead recommended a $68 million rate decrease for SoCal Gas in its review of rate increases from the Gas Co.'s parent company, San Diego-based Sempra Energy. The division also recommended gas and electricity rates in San Diego also drop.

The recommendations will be reviewed during a series of hearings conducted by the five-member California Public Utilities Commission, which is expected to vote on the requests by the end of the year. The first hearing is Aug. 6.

In making the recommendation, division director Dana Appling said, "It is patently unfair for consumers to be asked to pay for excessive executive and management bonus, compensation, and stock option programs."

Appling said division staff reviewed several cost components of Southern California Gas' request and concluded that the utility overestimated future employee benefits costs (including executive compensation) by $40 million and future base rate costs by $150 million.

Lee Schavrien, senior vice president of regulatory affairs for Southern California Gas Co. and San Diego Gas & Electric, said that his team has already identified items in the division's recommendation "that are in violation of federal and state laws with regard to pension contributions," and that there might be other errors in the division's calculations. He added that the division may be using more current economic assumptions since Southern California Gas and San Diego Gas & Electric submitted their rate increase requests last December.

"The gap between our number and their number will likely reduce between now and the time the hearings are complete," Schavrien said. Santa Clarita

BY HOWARD FINE

Staff Reporter