SCE Proposes Plan to Stabilize Rates, Protect Customers From San Diego-Type Rate Shock

November 17, 2000

November 17, 2000

ROSEMEAD, Calif., Nov. 17, 2000-Southern California Edison has filed with the California Public Utilities Commission (CPUC) a detailed ratemaking plan that would stabilize rates and protect customers from the wild price volatility of the state's seriously flawed wholesale electricity market when the current rate freeze ends.

"It is absolutely critical that the commissioners give immediate consideration to our proposal to ensure rate stability in order to prevent the type of rate shock that consumers in San Diego and south Orange counties experienced this summer when their electric bills soared as high as 400% due to sky-high market prices," said John R. Fielder, SCE's senior vice president of regulatory policy and affairs.

"Our plan would provide predictable, stable rates and maintain system reliability and service levels that our customers have come to expect."

In its filing, SCE indicates that it has fully recovered its costs associated with past utility investments, and is, therefore, required by state law to end its rate freeze.  This necessitates action by the commission to develop post-freeze customer rates.

The plan not only addresses customer protection through rate stability, but also provides for the recovery of the mounting undercollected electricity procurement costs that SCE and other utilities have been bearing for their customers since May.  For SCE alone, the undercollection is about $2.6 billion. 

SCE's plan would stabilize rates with minor fluctuations over a 5-year period, beginning Jan. 1, 2001.  Accomplishing this would require a rate increase of 9.9%, which translates to about  $5.50 per month for the average SCE residential customer.  Low-income customers would see a slight increase of 4.9% or about $2.15 per month.  This would place electric rates for SCE customers below 1996 levels, when adjusted for inflation.  

These rate levels would be maintained through 2002.  Beginning in 2003, rate adjustments could be made up or down, depending on whether market prices materially increase or decrease and whether procurement costs in those markets are being under- or over-recovered.  Normal rate changes in any six-month period would be 2.5% lower or higher.

Most importantly, SCE would continue to provide customers with a buffer against wholesale price spikes by using its borrowing power to temporarily finance any undercollections. 

SCE informed the CPUC that no additional rate increases would be needed to recover the undercollections.  The proposed five-year rate stabilization plan includes funds to recover past power procurement costs, assuming state officials are successful in repairing current market problems.

Click here for related attachment.

# # #

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.