Electricity Rates to Rise 3%, SCE Says
Just months after receiving more than $1.5 billion in rate cuts and rebates, customers of Southern California Edison will see electricity rates rise about 3% this year.
The rate increase announced Thursday will add about $1.50 to the monthly bill for an average household and about $3 to the monthly bill for a typical small business served by SCE, said Akbar Jazayeri, SCE’s director of revenue and tariffs. The increase is effective Jan. 1 and should begin appearing on customer bills next month.
Rosemead-based SCE blamed the rate hike on the hangover from California’s expensive power-buying binge during the energy crisis.
The California Public Utilities Commission on Thursday approved a request from the state Department of Water Resources for $4.65 billion to pay for electricity delivered this year from expensive electricity contracts signed early in 2001 to stave off blackouts and stabilize the faltering electricity market.
DWR needs an additional $500 million in 2004 because more megawatts will be delivered this year to customers of SCE, PG&E; Corp.’s Pacific Gas & Electric Co. and Sempra Energy’s San Diego Gas & Electric Co.
SCE customers will get about 31% of their power from the DWR contracts this year, up from 23% last year. The DWR power, which comes from a variety of sources, costs about 9.5 cents per kilowatt-hour, compared with about 6.9 cents per kilowatt-hour for electricity generated or procured by SCE, the utility said.
In addition, SCE believes its customers are being charged $500 million too much over 20 years for costs from the bonds that DWR sold to pay off $16 billion in electricity costs run up in 2001 and 2002 when the agency was forced to take over power-buying duties from the cash-strapped utilities, Jazayeri said. The utility will appeal that part of the PUC decision.
“Today’s CPUC decision is a reminder that, although we were able to reduce customer rates 13% last August, they are still higher than pre-crisis levels due to the ongoing costs of the state’s long-term power contracts and bonds,” SCE said in a statement. After electricity prices rose to record levels in 2000 and 2001, the PUC raised rates by about 40% and kept them high despite a subsequent decline in power prices.
The increase follows a 13% rate cut last year for customers of SCE, made possible because the Edison International unit finished paying offmore than $3 billion in energy crisis power debts under a deal with the PUC.
In addition, customers of the three utilities got a one-time $1-billion credit on their bills last year, amounting to about $40 for the average household, because the state had accumulated more cash than it needed to service the same electricity contracts.
PG&E; spokesman Ron Low said the increased revenue required this year by DWR was already calculated into a rate decrease of $670 million, or 6.8%, that was negotiated as part of a settlement with the PUC to get the utility out of Bankruptcy Court protection. The reduction would have been larger if not for the DWR revenue hike, he said.
San Diego Gas & Electric spokesman Ed Van Herik said the utility anticipates no change to its rates because the revenue it must send to DWR is little changed this year.
