Regulators approve electric rate hike; many bills will rise

State regulators have approved a rate hike that will allow Southern California Edison to collect an extra $2.1 billion in gross revenue over the next three years.

The hike will raise the average residential bill $2 or so, to $85 a month, officials said. The utility says that, when expected sales growth is factored into the equation, customers will see a net increase of $1.4 billion.

Some details of the proposal changed on the dais, but regulators granted the utility $106 million for incentive pay for rank-and-file employees, and $17 million to study the feasibility of re-licensing San Onofre Nuclear Generating Station, where licenses expire in 2022.

Thursday morning, the California Public Utilities Commission chose the greater increase of two rate hike proposals before it, on a 4-1 vote. Emerging victorious was a slightly-scaled-down plan penned by commission president - and former Southern California Edison executive - Michael Peevey.

The rejected proposal would have given SoCal Edison a much smaller gross increase - some $1.4 billion over three years. That was not enough.

“I cannot support a decision that would leave California hamstrung,” Peevey (pictured right) said. The less-expensive rate hike “would require deferral of vital infrastructure projects and potentially lay off hundreds of workers,” he said.

Commissioner Dian Grueneich was the only one to disagree.

“If ever there was a time to leave these dollars in the hands of Southern California Edison’s customers, now is the time,” said Grueneich (pictured below right).

The smaller increase was robust and prudent, she said. It would have saved ratepayers $765 million over the next three years, while still allowing SoCal Edison to invest in infrastructure.

Grueneich took particular exception to SoCal Edison’s claims that the smaller increase would force it to lay off 1,000 workers. “Edison’s claim defies logic,” she said, suggesting the utility was ”crying wolf.”

Dozens of passionate people testified before commissioners began their discussion, ardently urging them to grant SoCal Edison the larger rate increase.

Edison was painted as a corporate white knight, providing jobs and stability to workers and taking an active role in communities by investing in social welfare and local nonprofit programs.

The heads of Asian, Hispanic and black business and church groups stressed the need for investment and jobs. Edison employees - linemen, engineers, trainees - thanked Edison for allowing them to support their families and earn a living.

“I don’t want a rate increase, but I also don’t want to see the loss of 4,500 existing jobs,” said Barbara Sullivan of the National Black Business Council, citing numbers that have been floating about. “I’m also excited about the possible gain of some 40,000 new jobs that the decision could facilitate.

“Recently I was in a country where we were without electricity for a time - no fun,” she said. “I was also stuck in Kennedy airport years ago when power went out in New York City. It was unreal, almost surreal. The 2 percent increase will result in a $3 billion annual boost to the Southern California economy, and God knows we need that now.”

In a prepared statement, SoCal Edison said that the hike “will make possible stepped up infrastructure spending during the next three years in order to ensure that SCE customers continue to have a safe, reliable electricity supply. The decision will produce $3 billion per year in infrastructure spending, 70 percent of which will directly benefit the local communities served by the utility. This includes the creation of as many as 38,000 new jobs, an employment boost just when it is most needed.”

The Utility Reform Network, a consumer advocacy group which opposed the hike, found those statistics laughable.

“Edison is taking advantage of economic concerns to drive through rate hikes that can only add to the pain,” TURN executive director Mark Toney said in a prepared statement. “The CPUC did all Edison customers a disservice today.”

That sentiment was echoed by the Division of Ratepayer Advocates, the PUC’s independent consumer advocacy arm. This decision gives Edison “excessive revenue increases,” it said in a prepared statement. It puts the cumulative revenue increases at more than $2.1 billion over the next three years.

“The cumulative amount of the increases and the resulting rise in electric rates will impose an additional financial burden on Edison’s Southern California customers and households during these difficult economic times,” said DRA Deputy Director David Ashuckian in the statement.

According to the DRA’s analysis:

• In 2009, the utility will get an extra $495 million.
• In 2010, it will get that extra $495 million, plus another $205 million.
• And in 2011, it will get the extra $495 million, and the extra $205 million, and another $219 million.

Edison provides different numbers - the ones used above, less revenue from increased sales. It says the projected increase in rates are as follows:

• In 2009, an extra $308 million.
• In 2010, an extra $183 million.
• And in 2011, an extra $143 million.

“As a regulated utility we don’t pocket revenue from sales increases, it must first be subtracted from any higher revenue collection authorizations,” wrote Edison spokesman Gil Alexander in an email.

Edison has several programs in place to help low-income households, and many of them will actually see a decrease in monthly bills, Peevey said. SoCal Edison has about 13 million customers.

A general rate case. Peevey said, is part science, and part art. “It’s sausage making at its best - or at its worst.”

Peevey put his fellow commissioners on notice that he wanted to put executive compensation under the microscope. “It may be fine; it may also demand greater scrutiny than has been the case in the past,” he said. “I put you on alert that we will be talking about this going forward.”