SCE Proposes 4-Point Market Reform and Rate Stabilization Plan

October 26, 2000

October 26, 2000

ROSEMEAD, Calif., Oct. 26, 2000- Southern California Edison (SCE) yesterday filed a 4-point plan calling on the California Public Utilities Commission (CPUC) to act by year's end to settle the financial uncertainty threatening state consumers and utilities resulting from California's dysfunctional electricity market. 

The utility's action plan was contained in a filing requested by the commission in advance of its Oct. 27 "pre-hearing conference" on market and cost recovery issues.

"Each day that passes, the consumers, utilities and economy of California are unfairly threatened by excessive wholesale electricity costs," said SCE Chairman, President, and CEO Stephen E. Frank.  "SCE believes that its 4-point proposal establishes a solid framework for ensuring stable, affordable customer rates and electric service reliability to support our growing economy."

Specifically, SCE petitioned the CPUC to take four immediate steps:

  1. Support market reform, including providing utilities greater freedom to contract for longer-term supplies of power, completing review of SCE's bilateral contract proposals, and urging other agencies to work to rectify market structure problems that have become apparent.
  2. Confirm that utilities will be permitted to recover their reasonable procurement costs incurred on behalf of customers.
  3. Protect customers by implementing a post-rate-freeze rate stabilization plan instead of the current approach that directs utilities to pass through volatile wholesale power costs.  Provide for a modest rate increase beginning Jan. 1, 2001 to avoid larger future increases.
  4. End the uncertainty about the disposition of remaining utility generation assets.

"Numerous studies by independent analysts have provided ample documentation of the serious obstacles that currently plague the California market," Frank said. 

The Market Surveillance Committee of the California Independent System Operator recently found that wholesale electricity prices in June of this year were nearly three times the level that would be experienced in a properly functioning competitive market.    Even though the summer power demand season is now over, wholesale prices continue to be unprecedented and unjustified.

"We propose an immediate modest increase in customer rates to avoid the type of rate shock experienced in San Diego and southern Orange counties this past summer," said Frank.  "We are confident that our plan will both protect consumers and utilities, whose financial integrity is essential to continued service reliability."

SCE's proposal supports the commission's recently announced intention to fast track the decision process on these critical issues.  The filing recommends a calendar of regulatory actions that would lead to replacing the current rate freeze with a long-term rate stabilization plan by January 1, 2001.  If approved, the proposed rate increase for utility customers would be less than 10%, keeping rates at 1996 levels when adjusted for inflation.

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An Edison International company, Southern California Edison is one of the nation's largest electric utilities, serving a population of more than 11 million via 4.3 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California.