READER’S EDITORIAL: PRICE GOUGING BY SDG&E—RESULTS OF DEREGULATING A MONOPOLY: A PARTIAL VICTORY

Editor's note:  After receiving a refund for excessive charges to relocate a gas meter, Joel Harrison says he found a new form of overcharging--this time for “estimated” meter readings when his yard was easily accessible to the meter reader. Neighbors were also overcharged, according to Harrison. How many other homeowners were, too? If this has happened to you, please post a comment in the comment section below.

By Joel A. Harrison

November 16, 2010 (San Diego)--In a previous OpEd published by East County Magazine (ECM) on October 1st, I explained how SDG&E charged me over four times what my plumber would have charged to relocate my gas meter. Thanks to intervention by the California Public Utility Commission (CPUC) and ECM publishing my OpEd, a week ago I received a refund for $839 of the $1,599 I paid SDG&E. I consider this a partial victory because SDG&E, as a predatory unregulated monopoly, still received approximately twice what a competitive market would have allowed.

However I've since found new forms of overcharging by SDG&E.

Along with the refund, SDG&E e-mailed me a recalculated bill, which I detail below to show the absurdity of these charges.

On October 12, I received a phone call from the CPUC informing me that SDG&E wanted to “settle” my case and would do so if I allowed them to dig a 3’ by 3’ trench in order to test the soil for asbestos. I said “NO!” and followed-up with an e-mail to the CPUC with my OpEd from ECM attached, which CPUC forwarded to SDG&E. I wrote in my e-mail that my plumber said the pipe did not contain asbestos, the original contract did not mention testing the soil, and that if the pipe had contained asbestos, Miramar landfill would have taken it for free after I had a local lab test it for $35.

On October 18, I received an e-mail from CPUC stating: “Mr. Harrison, SDG&E recalculated their cost and submitted a new bill…I hope this is more acceptable to you. Please let me know so I can advise SDG&E. Thank you.” Exhausted from battling with SDG&E for almost a year, though still twice what my plumber would have charged, I e-mailed back my acceptance. Below is SDG&E’s letter and recalculated bill:

RE: Gas Relocation Service Costs

In order to properly account for the recent work performed at your request to relocate your gas service and meter, we have reviewed the actual crew charges for that work. Your original service order billing was calculated to relocate your existing service and remove the portion of service pipe that was de-energized as a result of the relocation.

The original service pipe was installed within a period that a coal-tar protective wrap was commonly used to prevent corrosion of our gas line. Samplings of coal-tar wrap have been found to contain asbestos fibers. Our normal process requires that we take four samples of the pipe wrap and have them tested by a certified laboratory. This sampling is performed by an independent, licensed Industrial Hygienist. Due to the short length of pipe involved, SDG&E calculated that it would be more cost effective to just remove the pipe on your property and handle and dispose of it as asbestos containing material.

SDG&E sent a gas crew to perform the relocation and removal of the service line and a gas meter man to relocate your existing meter. The daily time for these employees has been reviewed and your relocation costs have been recalculated based on the actual charges to your service work. The gas crew spent 1.5 hours on your job which included 1 hour on site and 1/2 hour in travel from the site where they worked prior to your job. The gas meter man charged 1.1 hours to your service work, which includes his travel time.

The relocation of your service and meter cost $760. This is based on a Material cost of $35, Labor of $340, Equipment of $81 and Administrative costs of $302. This cost does not include any removal charges since your plumber offered to dispose of the de-energized gas line. In discussing this job with the crew members, the de-energized pipe was identified by one of our crew members as being a threaded fitting pipe which did not have any wrap. Your plumber also stated that the pipe contained no asbestos material. Prior to having that information we had planned to test the remaining pipe for asbestos containing material and if it had tested positive, we would have surveyed the area of the removed old service pipe to make sure no contamination of your property had occurred. No further testing or field survey will need to be performed.
 

Your original service relocation billing was calculated as $840 for the rerouting of the gas service line and meter relocation and $759 for the removal of the old pipe for a total of $1599. Your final costs are $760 so we will be processing a refund of $839 which you should receive within 30 days.

Let’s go through this point by point:

1. The gas meter was located on my property; yet I had to use SDG&E to move it. I have two windows in my bedroom, one behind the bed facing a narrow passage way between the side of my house and fence and one facing my patio. In an emergency I risked landing on the gas meter directly under the latter window, so I decided to move it and replace the window with a door. Not only did the gas meter endanger an emergency exit; but SDG&E’s own safety regulations bar gas meters being under windows. However, this regulation is recent and the location of my gas meter was, thus, “grandfathered” in.

2. SDG&E told me that if I didn’t remove the dead pipe they would place a notation on my property deed that there was asbestos on my property. However, if I dug the trench, they would remove the pipe without charge. With the help of CPUC, I obtained a partial breakdown of the charges from SDG&E which showed they were not charging me for “removing” the pipe; but $760 for its disposal. Though my plumber and SDG&E’s workmen said the pipe did not contain asbestos, even if it had, they were charging me $760 to remove their pipe that they had placed on my property, something I could have done it for free at the Miramar landfill. After I had removed the pipe they wanted to test the soil for asbestos. If there was trace asbestos where the old pipe had been removed, then there certainly would be trace asbestos in the soil around the remaining active 30+ feet of pipe on my land connecting my house to the line in the alley.

3. Though not in the original service order, the first “breakdown” I received with help of the CPUC stated “We will install 10 feet of gas service pipe,” and the second breakdown, also received with the help of the CPUC, stated “We shall install approximately 5-10 feet of gas service pipe.” Obviously this is SDG&E’s version of the old saw of fitting a square peg in a round hole. In this case, installing 5–10 feet of pipe in a three foot hole.

4. My plumber and every plumber I have ever dealt with charges by the hour for actual work done plus materials. SDG&E charges not only for the work done but also for travel time, equipment, and administrative costs.  The job took, according to SDG&E, total four person hours. My plumber, highest of three bids, charges $120 per hour for him and his assistant. Add the $35 for materials and my plumber would have cost me $275. So, in a competitive market, SDG&E’s labor cost would be higher than my plumber’s. And still they added equipment costs of $81 and administrative costs of $302. My plumber has an office manager whose job is built into the hourly charges. As far as I can tell, ADMINISTRATIVE COSTS ARE JUST CODE FOR PRICE GOUGING BY AN UNREGULATED MONOPOLY.

Ten years ago we deregulated public utilizes with the promise that it would lead to lower costs. A nightmare year of obscene price increases, manipulated brown-outs and black-outs, our very standard of living, the health of our economy, under siege and finally we partially re-regulated, giving the California Public Utility Commission the power to oversee rate changes. That was not enough.

We need to return to the previous total regulation of public utilities. As my two Op Eds make quite clear, unregulated monopolies act as predators. They don’t charge what the market can bear because there is no market. They price gouge.

CPUC does not have jurisdiction over charges such as relocating of gas meters. I don’t know if I was just lucky and found someone at CPUC who was willing to go the extra mile for me or others would also have used their “moral authority” on my behalf. What I believe is that without East County Magazine’s publishing my OpEd and CPUC’s help, I would not have received a refund from SDG&E. In fact, without CPUC’s help, I doubt I would even have gotten a breakdown of SDG&E’s charges which it took several rounds to get. The first “breakdown” simply created two meaningless categories (see my previous OpEd.

Estimated Utility Bills – Adding Insult to Injury

While all of the above was going on, I received my SDG&E bill for July, approximately three times the previous months. At the far right was the word “Estimated.” I phoned SDG&E. I was told that sometimes the meter readers can’t access the meters, e.g. dog in yard, gate locked, etc., so they “estimate.”

I pointed out that my gate wasn’t locked, the dog was not in the yard, and, in addition, on a previous occasion I had seen the meter reader standing in the driveway with a scope reading the two meters. I also questioned the “estimate.” On my bill was the percent change from the previous month and same month last year. No way could any estimate based on prior data have resulted in this bill. 

The SDG&E representative insisted I pay the bill and that adjustments would be made to credit any overcharges with the following month’s reading. I refused and asked to speak with a supervisor. The supervisor requested I go out and read the meters. They had recently put in a smart meter, so the numbers covered only a few days. She said they would divide by the number of days, then multiply by 30 to get an estimate.

The following week I received a bill for $10 more than the previous. I was furious and contacted the CPUC who in turn phoned SDG&E’s corporate office. Shortly thereafter, a bill for one-third the first one arrived and I paid. Enclosed with the corrected bill was an apology letter from SDG&E.

My neighbors paid their “estimated” bill which went from from $55.13 to $277.36. Shortly after I received my corrected bill, the neighbors received a letter from SDG&E stating: “A review of our records indicates that an estimated meter reading was used to process your last bill. This resulted in your account being billed incorrectly. Your account has been re-billed to correct this situation. The enclosed bill reflects the adjustments made to your account.”

SDG&E did not refund their overpayment; but instead chose to apply it to subsequent bills, all the while earning interest on monies that did not belong to them. SDG&E’s Rule 17 makes it clear that “estimated bills” will only be applied if access to the meters is not available and that the “estimates” will be based on prior usage. If access was possible and an estimate was used, SDG&E considers this a “Billing Error” and refers to Rule 18 C: “Billing Error Resulting in Overcharges to the Customer: If either a residential or nonresidential service is found to have been overcharged due to billing error, the Utility will calculate the amount of the overcharge, for refund to the customer.”

Even if the estimates were done by a “rogue” employee, someone anticipating their job would end with the advent of smart meters, SDG&E’s response was WRONG:

1. Their computer system should have caught a pattern of grossly high ESTIMATES;
 

2. If their computers were not programmed to do this, once aware of this, all estimates should have been adjusted and refunds mailed out immediately. Obviously they were aware of the overcharge to my neighbor; but chose to keep the money, earn the interest, and apply it to bills over subsequent months.

I have contacted the CPUC about this. I can only hope that they will investigate. SDG&E could be earning interest on bogus overpayments by thousands of households.

UCAN (Utility Consumer’s Action Network)

As I wrote in my previous OpEd, as a long time member, I contacted UCAN, asking for their help. After eight months I received an e-mail from Michael Shames, UCAN’s director, stating “Just to make sure that you and I are on the same page as far as facts are concerned, my staff has done a tremendous amount of leg work on this case. I definitely expect that anyone who deals with my staff do so with integrity and an appreciation of real facts, not wishful ones.” I do not have a law degree as Mr. Shames does or 25 years of experience dealing with public utilities and the CPUC. However, with a half dozen phone calls, a half dozen e-mails, and one OpEd, I obtained a refund of over half what I had paid. They wasted my time and then insulted me (see my previous OpEd).

I believe in Consumer Advocacy groups. However, by analogy, over the years I’ve read reports of charities where only 10 cents of the dollar actually go to their stated purposes and others where over 90 cents of every dollar actually helps people with other charities lying somewhere in between. Yet, the worst charities and the best all claim to be doing tremendously valuable work. Every newsletter I receive from UCAN presents itself as doing excellent work on our behalf. Perhaps, an independent audit/investigation of UCAN is called for. How much do they take in and what do they spend it on? In any case, I won’t be renewing my membership!

Call to Action

With the publication of this OpEd, I intend to send an e-mail with both OpEds attached to all five SD County Supervisors, my State Assembly Person and Senator, city council members, and various media outlets with a follow-up phone call. In addition, I will start a chain e-mail asking everyone who agrees that our Public Utilities need to be reregulated to do the same. If you agree that utility companies should not be allowed to exist as unregulated monopolies, that this is not a case of free markets, that they need to be regulated, then I suggest you do the same. There is an old saying, “government is the enemy except when you need a friend.” Without regulation and a strong California Public Utility Commission, there is nothing between us and predatory unregulated monopolies like SDG&E.

The views expressed in this editorial reflect the views of the author and do not necessarily reflect the views of East County Magazine. If you wish to submit an editorial for consideration, contact editor@eastcountymagazine.org.