SDG&E Plans $390M Refund.

Customers of San Diego Gas & Electric Co. will see a refund of $390 million cash this summer -- usually the time when utility bills are the highest.

The average residential customer will receive about $260, while the average small-commercial customer will get about $870.

The refund, approved earlier this month by the California Public Utilities Commission, comes as a result of restructuring in the utility industry as SDG&E looks to become more competitive, said Edwin A. Guiles, president of SDG&E.

Customers will receive a check in the August billing cycle, Guiles said.

Investor-owned utilities in California issued "rate-reduction bonds" in December 1997 to refinance their debt related to investments made before utility restructuring. They also reduced rates 10 percent for their residential and small-commercial customers.

State regulators and legislators planned that the recovery period for the utilities' transition costs would be four years, ending by March 31, 2002, but SDG&E was able to recover its costs more than two years ahead of schedule -- by last July, Guiles said.

Guiles attributed SDG&E's success to the sale of its two San Diego power plants at prices above book value, as well as through an aggressive energy-purchasing strategy on behalf of its customers. Because the costs were recovered more quickly than anticipated, SDG&E is able to return $390 million to its customers, he said.

Once the excess money is returned, consumers may continue to see a savings. The "base" electric rates -- the portion of their bill that pays for the regulated delivery service of electricity to their home or business -- will be about 5 percent lower than rates before the industry restructuring in 1997, Guiles said.

The electricity commodity charge, meanwhile, will fluctuate with supply and demand in California's competitive marketplace and is no longer controlled by SDG&E, he said.

Fluctuating energy prices could mean lower bills for customers in San Diego's mild winters, but higher prices in the summertime. Customers who conserve, insulate their homes and limit their energy use in the hot summer months will save the most and also help the state meet electricity demands during peak-consumption periods, Guiles said.