Redondo Beach Studies Ways to Cut Electric Costs

Redondo Beach is considering ways to cut local electric rates, including a move that could put the city in the power distribution business while putting Southern California Edison out of business in the community.

Electricity for Redondo Beach is provided exclusively by Southern California Edison and city officials have long complained that the utility’s rates are unreasonably high. To study alternatives to the utility, members of the City Council and the Environmental and Public Utilities Commission met with electric industry experts for more than three hours Tuesday.

The city’s latest grumblings come as the California Public Utilities Commission is proposing to deregulate electric utilities and create a competitive marketplace in electricity, something like the existing market for long-distance phone service. According to early projections, greater access could begin for large industrial customers in 1996 and be available to residential users by 2002.

The most dramatic course Redondo Beach is considering, known as “municipalization,” would put the city in control of distributing electricity by using its powers of condemnation. Edison could continue to generate electricity, but the city could choose to buy power from other producers.

Other proposals include forming a joint powers authority with other cities to bargain with Edison for a 25% discount in utility bills, and an Edison-backed proposal to create a separate entity to act as a power broker and sell electricity to customers from the company of their choice.

The municipalization plan is strongly opposed by Edison. “If the city were to municipalize, you’re trading one monopoly for another,” said Bob Jenson, Edison’s area manager.

Whatever course the city chooses, Councilwoman Marilyn White said, she wants to see power rates drop. Edison charges 13.9 cents per kilowatt-hour for its average residential customer in the South Bay; in contrast, the Los Angeles Department of Water and Power charges slightly more than 10 cents.

Critics of municipalization, including Stephen Garfield, the chairman of the Redondo Beach Public Utilities Commission, say the proposal is too costly and too risky for the city to consider. Garfield proposes that the city consider the proposal to form a joint powers authority, as well as the Edison-backed plan.

Supporters of municipalization cite other California cities that have taken control of the electric utilities and cut electricity rates nearly in half. Public utilities Commissioner Tom O’Leary, an outspoken opponent of Edison, believes residents could save several hundred dollars a year on their electric bills if the city operates the generating or distributing portions of the utility. “We’ve got to take local control,” he said.

O’Leary and Councilman Bob Pinzler have called for a study to determine the cost of operating a utility and its distribution systems. But Pinzler said he is not sure there is enough support to fund such a study, which could cost tens of thousands of dollars.