Esmael Adibi, director and professor of economics at Chapman University in Orange, believes the increases in California’s electrical rates this year will be largely offset by the 0.25% reduction in the state sales tax that took effect at the beginning of the year.
Adibi, speaking at a CPAs and business owners’ lunch at the Irvine Marriott last week, estimated the sales tax decrease will save consumers and businesses about $1.2 billion this year, compared with 2000.
Calling the average 9% rate increase an “energy tax,” Adibi said the higher rates applied for all of 2001 would cost Pacific Gas and Electric and Southern California Edison customers $1.6 billion more than if rates had stayed at 2000 levels.
“Most of this will be offset by the $1.2 billion saved with the sales tax reduction, canceling out most of the economic cost impact of a rate increase,” said Adibi.
He noted, however, that manufacturers and other heavy electricity users would take “a disproportionately harder hit” from the rate increases.
Adibi blamed the energy crunch mostly on state rules prohibiting Rosemead-based Edison and San Francisco-based PG & E; from signing long-term pricing contracts with power generators. Long-term contracts would have insulated the utilities from skyrocketing electricity prices on the short-term spot market, where they were legally required to buy power.
During last week’s presentation, Adibi also discussed Orange County employment growth, painting a rosy picture that predicts job growth will actually increase this year to 3.5%, with an expected 48,125 new jobs created in OC in 2001.
He said 2000 job growth reached 3.3%, for an estimated net gain of 44,452 jobs. He said he expects the actual numbers, once available, will be higher than his estimates for last year. n
