January 3, 2001
Southern California Edison Company (SCE) today released the following statement in response to the California Public Utilities Commission’s (CPUC) proposed decision on an interim rate increase:
ROSEMEAD, Calif., Jan. 3, 2001—Today's proposed CPUC decision, if adopted, will have a further negative effect on the financial viability of Southern California Edison.
Seven months after the onset of the power crisis, the proposed decision once again delays serious action by the state; grants only an interim and inadequate rate increase—wholly disproportionate to the actual cost of wholesale power; adopts new retroactive accounting provisions that will weaken utilities; and fails to address the critically important issue of SCE's right to recover in the future the actual cost of keeping the lights on for its 11 million California customers.
The proposed decision, if adopted, will make it likely that power generators will decline to sell sufficient power to California to meet customers' needs. There is no way that SCE, or any other privately owned utility, can continue to buy wholesale power at 30 cents per kilowatt-hour (kWh) and at the same time be forced by the state to sell it at 7 cents per kWh, which the proposed decision would provide to cover the cost of wholesale power purchases.
The issue of high wholesale power costs and lower retail rates has grown to crisis proportions over the past seven months. As in today's proposed decision, the state has repeatedly pointed the finger at the federal government for failing to put caps on wholesale power costs. However, this proposed decision defaults on the state's own responsibility to preserve electric system reliability by allowing utilities to recover their actual costs (with no profit) for purchasing the power needed by their customers.
Southern California Edison has filed federal lawsuits against the Federal Energy Regulatory Commission (FERC) and the CPUC. The federal lawsuit against the FERC seeks to put a hold on the dysfunctional wholesale power market by requiring the FERC to adopt traditional, cost-based rates for the generators selling into it. The lawsuit against the CPUC seeks to enforce the long-standing legal principle that states must pass through to customers federally tariffed wholesale power rates. The lawsuit against the FERC may result in a decision by the U. S. Court of Appeals as soon as Friday, Jan. 5. The lawsuit against the CPUC is scheduled for a decision on summary judgment on Monday, Jan. 8, in the U. S. District Court in Los Angeles.
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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.