State Approves Most of Proposed Edison Rate Hike

0
State Approves Most of Proposed Edison Rate Hike
A worker with Southern California Edison installs a covered wire transmission line.

Southern California Edison executives were generally pleased with the state’s decision in early August to allow the utility to tap ratepayers to raise $6.9 billion in revenue this year, even though that was $730 million short of what Edison requested.

That’s because the California Public Utilities Commission’s Aug. 19 decision authorized Edison, a subsidiary of Rosemead-based Edison International, to spend nearly $3.3 billion to reduce wildfire risk — mainly by covering roughly 4,500 miles of transmission wires with an additional layer of insulation.


“The decision authorizes most of the requested funding for our wildfire risk mitigation programs — specifically, our covered conductor program, the most cost-effective way to quickly and effectively reduce the risk of ignition and help reduce the frequency, extent and duration of public safety power shutoffs,” said Kevin Payne, chief executive of Southern California Edison.


This is crucial because Edison is still recovering from multibillion-dollar settlements to resolve claims from the 2017 Thomas Fire and 2018 Woolsey Fire. Edison transmission equipment was found to have played a role in igniting both fires. The utility’s total bill so far from those fires has topped $8 billion.


The commission also authorized Edison to spend up to $1 billion to purchase additional liability insurance to cover $460 million in claims from those fires. And the commission authorized spending to modernize the grid technology to accommodate two-way transmission (including customers putting excess power from their solar panels back onto the grid) and allow for energy storage.


“This proceeding created the opportunity for the CPUC to m
ake strategic decisions on the future of Southern California Edison’s capital investments, including grid modernization, responses to cyber security risks, and safety investments in response to climate change risks such as wildfires,” said Genevieve Shiroma, the CPUC commissioner assigned to Edison’s rate case.

All this additional spending over 2020 levels translates into rate increases for Edison customers. The commission estimated that a typical household will see its monthly bill increase this year by $12.41, or 8.9%.
Edison had sought an additional $730 million in spending, which would have meant the typical residential customer would have paid $16.77 a month, or 12.1%, more than last year.


An Edison spokesman said it’s typical in rate cases to have the commission reject portions of the utility’s request for additional revenue. The spokesman noted Edison requested $5.53 billion in its last rate case before the commission in 2018, but ultimately the commission authorized $5.12 billion, roughly $400 million less.


This time around, the commission pointed to one portion of Edison’s request: $131 million to handle “costs associated with executive compensation and SCE’s employee bonus programs that do not benefit consumer interests.”


The Edison spokesman said the company disagreed with the assertion that this spending does not benefit consumer interests. Nonetheless, the spokesman said Edison intends to live within the revenues authorized by the commission’s decision. And he said the $730 million gap is not as big as it would appear. He noted Edison’s revenue request was submitted in 2019, before the pandemic and at a time when capital improvement costs were higher.


He added that Edison has no need to cut costs through layoffs or reductions in compensation to meet this lower-than-requested revenue allowance. And he said the company would not tap shareholders to absorb some of this differential.

Previous article 7 Leases Signed for San Pedro’s West Harbor
Next article SpaceX Delivers NASA Supplies to Space Station
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

No posts to display