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THE REGION : Cities Urged to Press for Power Rate Cuts

October 30, 1994|MARY MOORE | SPECIAL TO THE TIMES

With the state considering deregulating the electric industry, cities should seize the opportunity now to negotiate lower rates from Southern California Edison or begin planning to run their own utilities, according to experts in municipal utilities.

Representatives of the Los Angeles Department of Water and Power, the investment banking firm of Prager, McCarthy & Sealy and the Los Angeles law firm Shelby and Alexander & Associates last week told the South Bay Joint Powers Consortium that the threat of new competition in a deregulated electric industry will force Edison to renegotiate contracts. The industry experts urged the group to press Edison soon to lower rates, but also cautioned it against jumping at the first discount that Edison offers.

Mayors, city council members and staff personnel from the eight localities that form the consortium--Culver City, Hawthorne, Lawndale, Gardena, Carson, Torrance, El Segundo and Lomita--continued their ongoing discussion last week on whether they should form a joint powers authority and demand a 25% discount from Southern California Edison on their utility bills. When the California Public Utilities Commission deregulates the electric industry, as is now planned, the cities together would buy their power in bulk from the least expensive supplier.

Hosea Alexander, an engineer with Shelby and Alexander, recommended that the group form a joint powers authority within a year to buy power and acquire Edison's systems in each of the cities involved. It will cost roughly $500,000 for the group, he said.

Negotiating with Edison will not be easy, the experts agreed, particularly if some cities in the group leave the Edison system to run their own utilities.

"It's a long, hard, bitter and dirty fight," said Winston Peterson, managing director of Prager, McCarthy & Sealy, which has set up the financing for several municipal utilities in California.

But Edison could be forced to take a more conciliatory stance in the face of competition from the DWP. Alan Vallow, director of the DWP's Regulatory Policy Group, said the agency is eager to sell the cities at least some of the power they will need.

Vallow said the South Bay Joint Powers Consortium will probably attract other member cities, which would increase the consortium's influence and further pressure Edison to lower rates.

"Once the dike breaks, there will be a flood of other cities that will want to join on," Vallow said.

The consortium last week also elected Dr. James Boulgarides, a Culver City council member, as its chairman, and Carson Mayor Michael Mitoma as vice chairman.

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