California regulators OK Edison rate hike
Depending on who’s calculating, monthly electric bills for many residential customers of Southern California Edison Co. will increase by between $2 and $4 because of a rate hike approved Thursday by utility regulators.
Michael Peevey, president of the California Public Utilities Commission, said the rate hike would add $2 to the average monthly residential bill of $85 in Edison’s service area covering Central and much of Southern California, but not the city of Los Angeles.
Consumer groups projected that costs to residential ratepayers could be at least double the estimate from Edison and the PUC in 2009. Some homes that use a lot of energy could pay more than that, they said.
The decision allows Edison to raise rates by less than 2% a year in 2010 and 2011, but the amount could be affected by changes in the price of natural gas used to run power plants or electricity bought from other generators, the Rosemead utility said.
The increase is less than what Edison sought but more than an administrative law judge recommended.
The sharp difference between various cost estimates highlighted the complexities of the triennial rate-setting process, which Peevey likened to making sausage. “Reasonably minded people can look at the same set of facts and figures and come to different conclusions, much like we have here,” he said.
Edison estimated that 65% of its 4.3 million residential customers would see little or no change in their monthly charges because they participate in special programs for low-income families or consume little power. Business charges also will increase, although neither the PUC nor Edison made estimates available.
Edison said it would begin collecting the new rates April 4.
Peevey said the rate hike, which will provide Edison with an additional $2.1 billion over three years to upgrade transmission lines and buy equipment, was a modest but necessary investment that would boost the Southern California economy.
“California, like the rest of the nation, must invest a significant amount of capital into our energy infrastructure if we are going to meet our renewable energy and greenhouse gas reduction goals,” he said.
Peevey’s argument that modernizing Edison’s grid is a kind of economic stimulus program was echoed by witnesses during public testimony at the start of the San Francisco meeting. Local and ethnic chambers of commerce, utility workers unions and Edison employees said they were willing to pay higher electric bills in exchange for having a financially healthy company that could provide thousands of high-paying, permanent jobs.
Edison said the PUC’s approval would “produce $3 billion per year in infrastructure spending, 70% of which will directly benefit the local communities served by the utility” and create up to 38,000 jobs.
Consumer advocates said they saw no evidence in the lengthy PUC record that Edison would hire so many workers. They also challenged Peevey’s rate increase estimate as overly conservative.
“Claims that there will be minimal rate or bill impacts . . . are incomplete at best and seem to border on recklessness,” said Bob Finkelstein, an attorney with the Utility Reform Network of San Francisco. The new rates, he predicted, “will cause substantial hardship to SCE’s residential customers.”
The lone dissenter on the five-member commission, Dian Grueneich, agreed that raising rates was a bad idea “in the face of an economic crisis the size of which we have not seen since the Great Depression.” Edison, she noted, would have received plenty of money, $1.3 billion, to provide safe and reliable service under a competing rate decision written by a hearing officer.
“If ever there was a time to leave these dollars in the hands of Southern California Edison customers, it is now,” Grueneich said.
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