Edison to Freeze, Cut Rates, but Group Asks Immediate Action

While Southern California Edison recently announced plans to freeze and then significantly reduce rates, its move will not come fast enough for a group of local officials demanding an immediate reduction in charges.

Last month, Edison announced it would freeze rates through 1996 and implement a 25% rate decrease by the year 2000, pending approval from the California Public Utilities Commission. The investor-owned utility is positioning itself for a restructuring of the electric industry that will leave Edison open to competition from less expensive power companies, according to Carl Silsbee, Edison’s supervisor of regulatory economics.

Yet the Southern California Cities Consortium--an organization whose members include officials of Carson, Culver City, Gardena, Hawthorne, Inglewood, Redondo Beach and Lomita--has vowed to continue its fight for an immediate rate reduction. In its effort to cut California’s electric rates, however, the consortium may alienate the municipal utility industry.

Although the consortium risks a split with the municipal utility market, the group’s members are convinced their efforts have been effective in bargaining for lower rates with Edison. They credit themselves, for example, with influencing Edison’s decision to cut rates, although Edison says the proposed rate changes resulted from a combination of factors.

“This rate reduction has been in the works for a while,” said Mark Olson, Edison western area manager. The consortium “is just one of many voices that’s been heard.”

Consortium members argue that Edison, despite its recent announcement, is still not listening to their demands. And they hope to persuade Edison to take one of two actions.

Edison could roll back rates to where they were a year ago and cut those prices by 25%, said Culver City Mayor Albert Vera. Or it could send one electric bill to each city--a bill that includes charges for all residents--and then cut that bill by 25%, Vera suggested.

“By Edison sending one bill to City Hall, we could save enough money to reduce the utility tax by 5% to 6%,” Vera said. Culver City residents spend about $44 million on electricity.

But Edison’s Olson said it cannot legally negotiate special deals with individual cities.

In addition to fighting Edison’s current rates, the consortium is also challenging the utility’s position on how the electric industry should be restructured.

In a March 17 telegram to the CPUC, the consortium stated its opposition to a restructuring proposal that would have utilities pool their electricity--a proposal that Edison supports. Instead, consortium members support a plan, called “direct access,” which would allow cities to enter into direct contracts with companies that generate and sell electricity.

“We could save between $15 million and $18 million a year with direct access--that’s a 40% to 45% savings,” Vera said.

Municipal utility representatives, who do not fully support direct access, say the consortium’s position split the two groups.