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Homeowner Power Rates to Rise; Phone Bills Will Be Coming Down : PUC's Electricity Order Gives Break to Industrial Users

December 23, 1987|DONALD WOUTAT | Times Staff Writer

Homeowners will pay 4.9% more for electricity and industry will pay up to 6.6% less under new rates ordered Tuesday for Southern California Edison Co. by the California Public Utilities Commission.

The rates take effect Jan. 1 and will raise the typical residential bill by $1.82 a month to $42.87, according to the PUC. Edison's overall revenues will decline 0.6%, by $32.7 million, versus the utility's request for a $79-million increase.

Separately, the commission ordered slightly lower rates for Southern California Gas Co. customers. But the size of the decrease for specific customers will not be determined until April when the PUC is scheduled to overhaul all rates for natural gas.

The action on Edison is the first step in the PUC's realignment of the utility's rates so that they reflect what it costs to provide service to different types of customers. In recent years, industrial customers effectively subsidized the rates paid by residential users.

Similar steps were taken at Pacific Gas & Electric and San Diego Gas & Electric, but those PUC actions lowered rates for the various categories of customers. Only at Edison did rates go in opposite directions at once.

Edison had complained that earlier higher industrial rates--implemented to protect consumers from the skyrocketing energy costs of the 1970s--were encouraging its biggest customers to leave Edison altogether and build their own generating plants.

"The departure of these customers would result in large revenue losses which would be borne by all remaining customers," said Edison Chairman Howard Allen in explaining the shift.

However, consumer groups characterize that as an exaggeration and say Edison and other utilities are merely trying to protect their monopoly position in electricity generation.

"Only a few years ago, the PUC was encouraging industry to install its own generating capacity," said Michael Florio, an attorney for the consumer group Toward Utility Rate Normalization in San Francisco. "Now, there's been a complete flip-flop."

Rates to Be Phased In

The realignment will mean sharply higher residential rates over time. The PUC said it is phasing in the new rate structure over three years "to avoid large increases for some customers all at once." Similar changes are in the works for natural gas customers.

In addition to residential customers, small businesses will see their bills climb, but at a more modest rate of 0.6%, according to the PUC. Industrial bills will fall by 3.8% to 6.6% and agriculture will see an average fall of 0.9%.

The estimate of a $1.82 per month increase for homeowners is based on residential use of 500 kilowatt hours per month.

The main reason for the overall revenue decline ordered by the PUC is a reduction in the utility's authorized return on equity to 12.75%, from 13.9% this year and 16% as recently as 1985. The commission said today's lower levels of interest and inflation enable Edison to "attract and compensate investors" at the reduced rates of return.

Allen said that was "disappointing" but the rate decision in general was "fair to the company and its customers."

Similarly, the PUC authorized Pacific Gas & Electric, the main gas and electric utility in Northern California, to raise its residential electric rates by 9.2%, or $3.83 per month. Rates for farmers will climb 5.9%. But industrial rates were unchanged.

Rate of Return Lowered

Also Tuesday, the commission reduced the authorized rate of return for Southern California Gas Co. to 12.75% from 13.9%. It cited reasons similar to those in the Edison case.

That will mean a $3.1-million rate decrease, or 0.8%, for 1988. But the effect of the decrease on individual bills will not be known until the PUC approves a new rate structure for all California gas utilities in April. The lower rates will take effect May 1.

The commission acted in similar fashion toward the natural-gas side of Pacific Gas & Electric where it ordered a decrease of $18.2 million in its gas revenues because of a reduction in the authorized rate of return on equity. The lower rates were deferred to May 1.

At San Diego Gas & Electric, the commission ordered lower rates for all customers. But residential rates will decline just 3.1%, while big commercial customers will enjoy a fall of as much as 18%.

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