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7 Cities May Lobby Edison for Discounted Electric Rates : Utilities: Mayors hope to form joint powers authority to press their demand. But state agency must first be convinced their request is justified.

October 16, 1994|MARY MOORE | SPECIAL TO THE TIMES

Seven local cities have tentatively agreed to join forces and demand lower rates from Southern California Edison.

The mayors of Culver City, Hawthorne, Gardena, Lawndale, Lomita, Inglewood and Carson are discussing the possibility of forming a joint powers authority that the mayors believe will lead to lower electric bills.

On Wednesday, group members agreed to seek support for the effort from their respective city councils and to schedule a public meeting on the matter in two weeks. If the plan becomes a reality, it would mark the first time California cities have banded together to demand lower electric rates, said Kyle DeVine, spokeswoman for the California Public Utilities Commission.

Under the plan, the cities would form a joint powers authority. The umbrella organization would bargain with Edison for lower rates and--if, as some expect, the electric utility market is deregulated--buy power from the least expensive provider.

Leading the charge is Culver City, which for the past year has been debating a proposal--supported by Mayor Albert Vera--to take over local electric service from Edison in hopes of reducing rates.

Under the proposed joint powers authority, unofficially named the South Bay Joint Powers Commission, the seven cities would negotiate with Southern California Edison for a 25% discount on their cities' utility bills.

Before the cities could receive any discount on their rates, however, they would first have to convince the Public Utilities Commission, which approves utility rates, that the reduction is justified. So far, the commission appears skeptical. Said DeVine: "I'd be curious as to the reason why their rates should be lower."

Vera estimates that Edison annually sells $44 million in electricity to Culver City's 40,000 residents at a rate 40% more than that set by the Los Angeles Department of Water and Power. Edison charges 13.9 cents per kilowatt hour for its average residential customers, while the Department of Water and Power charges slightly more than 10 cents.

All of Edison's customers in the utility's coastal zone, where all seven cities are located, pay the same PUC-approved rate. The Los Angeles City Council sets the DWP's rates, which as a municipal utility is not governed by the Public Utilities Commission.

Edison officials, who have not commented in detail on the joint powers plan, say the disparity shouldn't be surprising.

"Sure the (DWP's) rates are lower--they don't pay taxes and other things that investor utilities have to pay," said Margo Wells, manager of tariffs for Southern California Edison.

In the long term, the joint powers group would buy electricity in bulk if the power industry is deregulated, which is now under discussion in California.

Under deregulation, cities could operate their own municipal utilities and then form groups to buy power from a single provider, such as Edison or the Los Angeles DWP, instead of negotiating prices individually.

Vera contends that some large industrial power users already receive rate discounts based on the large amount of electricity they use. "If (Edison) can do it for them . . . they can do the same for us," Vera said.

Vera says the joint powers proposal grew out of a preliminary study Culver City conducted earlier this year that showed the city could save up to $10 million if it took over Edison's distribution system. Edison has bitterly fought the takeover idea, which is still under discussion.

More recently, Culver City officials notified Edison that it must buy a business license to operate in the city. Edison has refused, although Vera said he has threatened to revoke Edison's right to operate there.

The mayors say they are convinced that economies of scale will work in their favor in the purchase not just of electricity, but also of other products and services ranging from automobiles to copying machines.

Said Hawthorne Mayor Larry Guidi: "If we stuck together . . . we could start quoting our own costs."

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