Southern California Edison Proposes Eliminating Scheduled New Year’s Day Rate Increase

December 20, 2006

December 20, 2006

The utility also recommends lowering some rates in 2007.

ROSEMEAD, Calif., Dec. 20, 2006 – Southern California Edison (SCE) has proposed eliminating a 6% residential rate increase originally authorized by the California Public Utilities Commission (CPUC) for Aug. 1, 2006, and postponed until Jan. 1, 2007. 

The utility also has informed regulators that some of its current rates can be lowered early in 2007.  SCE based these rate proposals, in part, on moderating power plant fuel costs, the factor that drove up electricity rates one year ago.  

The residential rate increase previously set for Jan. 1, 2007, was approved to fund the utility’s stepped-up infrastructure replacement and expansion program.  SCE has informed the CPUC this major investment program can continue without higher rates due to lower-than-forecast fuel and purchased-power costs and higher-than-forecast electricity sales. 

“The past year has been a very difficult one for many of our customers because of higher utility costs and rates,” said Lynda Ziegler, SCE senior vice president of customer service.  “As a result, we are especially pleased to provide some good rates news during this holiday season.”

SCE predicts that in 2007 its residential customers will pay an average of about one cent per kilowatt-hour (kWh) less than the authorized average August 2006 rate.  To accomplish this, the utility proposes lowering tiers 3, 4, and 5 of its residential rate structure by the amounts shown below.  Tiers 1 and 2 are frozen by law.

Residential Rates – Past, Present, and Forecast (shown in cents per kWh)

Dec.
‘05 
Current Authorized Aug. ’06  Deferred Forecast ‘07
Overall residential average 12.2¢ 14.9¢ 15.9¢ 15.0¢
Tier 1 Baseline allotment* 11.8¢ 11.8¢ 11.8¢ 11.8¢
Tier 2  1%-30% over baseline 13.7¢ 13.7¢ 13.7¢ 13.7¢
Tier 3  31%-100% over baseline 16.6¢ 22.3¢ 22.8¢ 21.4¢
Tier 4  101%-200% over baseline 19.8¢ 31.2¢ 35.2¢ 24.9¢
Tier 5  More than 200% over baseline 19.8¢ 31.2¢ 47.5¢ 28.4¢

*Baseline kWh allotments are set by the CPUC, and vary by climate zone. By law, baseline and tier-2 rates are frozen.

This means residential customers in areas such as the San Gabriel Valley and Inland Empire (SCE’s baseline region 17) could see a 2% average rate reduction for monthly usage reaching tier 3 – approximately 900 kWh.  Their rate reduction could be as much as 11% for monthly usage reaching tier 4 – approximately 1,400 kWh.

After reviewing cost and sales forecasts, the CPUC will set SCE’s rate structure for 2007.  Most rate changes are expected to occur in February. 

“Last summer’s heat wave was a dramatic reminder of the value of making our homes and businesses as energy-efficient as possible,” said Ziegler.  “Even though next summer seems a long way off, we urge our customers to take time now to review the energy and cost saving ideas we offer at www.sce.com.  One example, our Summer Discount Plan provides customers with as much as $200 in bill credits during the summer.”

SCE also forecasts slightly lower business rates in 2007, with the exception of street lighting.

Business Rates – Past, Present, and Forecast (shown in cents per kWh)

Dec. ‘05 Feb. ‘06 Current Forecast ‘07
Small- & medium-size businesses 13.2¢ 15.7¢ 15.7¢ 15.0¢
Large power users 10.1¢ 12.2¢ 11.9¢ 11.1¢
Agricultural and pumping 09.2¢ 10.8¢ 11.3¢ 11.1¢
Street lighting 13.9¢ 15.4¢ 17.0¢ 17.9¢

Regulators predetermine SCE’s annual revenue needs, setting rates based on utility costs and customer usage forecasts.  When costs are lower than forecast or sales are higher, both of which occurred during 2006, the utility’s revenue surplus is returned to customers via a rate adjustment at the beginning of the next year. 

SCE reminds customers to use electricity wisely during the current holiday season.  Rates remain higher than last December and usage can increase during the holiday season.

Related Facts

  • By law, utility cost increases such as higher fuel, purchased-power, and infrastructure costs, must be borne by those whose usage reaches the higher tiers because baseline and tier 2 rates are currently frozen.
  • 2006 electricity bills were adversely affected by three factors:  First, at the beginning of the year, rates rose by approximately 15% due to higher costs for natural gas, the fuel used to generate more than half of California’s electricity.  Second, a hotter-than-normal June and a record, 1-in-50-year heat wave during July drove up usage and created even higher bills.  Third, when usage increases, the state’s tiered rate system bumps customers into higher rate tiers, resulting in higher per-kWh costs.
  • Lower recent and forecast natural gas costs contributed to positive outlook for electricity rates in 2007.

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An Edison International (NYSE:EIX) company, Southern California Edison is one of the nation’s largest electric utilities, serving a population of more than 13 million via 4.7 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California.