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Edison Wins Increase in Rates

Power costs paid by the utility's Southland customers will be up 17% for the year.

July 21, 2006|Elizabeth Douglass | Times Staff Writer

The combined wallop of the state's hot summer, high natural gas costs and rising electricity rates has left many Southern California Edison customers shocked at the size of their most recent energy bills.

And there is another hit to come: Starting Aug. 1, the utility will raise rates by 2% to 55% for medium and heavy energy users. It's the third rate increase this year for the Rosemead-based company. The next round, given final clearance Thursday by the California Public Utilities Commission, will bring the systemwide average increase to 17% for the year.

"Oh my God, there's another one?" Ann Willens, administrative director at the Palos Verdes Art Center, asked after hearing about Edison's upcoming price increase. "The last bill we got was $1,000 more than the previous bill. I was sure there was a mistake."

It was no mistake. Willens was merely seeing the cumulative effect of two big rate increases and running the air conditioner at the nonprofit center.

Next month's rate increase, retroactive to mid-January, first won PUC approval in May. The regulators said they approved the higher prices to fund infrastructure improvements at Edison.

The utility, a subsidiary of Edison International, serves more than 13 million people in a 50,000-square-mile area that includes portions of central, coastal and Southern California (but not the city of Los Angeles, which is served by its Department of Water and Power). About 800,000 of Edison's 4.6 million customers are businesses and institutions such as the Palos Verdes Art Center.

"The increases we're seeing -- they're off the charts," said Bob Finkelstein, executive director of the Utility Reform Network, a consumer advocacy group in San Francisco.

"We haven't seen any jumps like this since the failure of deregulation in 2001 and the bailouts that followed."

Edison estimated that the three rate increases this year combined would add about $10 to $37 to the monthly electric bill for a typical household using 550 to 750 kilowatt-hours of power. The 2006 increases for residential customers using 2,000 kilowatt-hours would total $370 a month, Edison said.

Although about half of Edison's residential customers won't be affected because of their low power usage, the utility acknowledged that 400,000 high-use households "have been exceptionally hard hit by this year's rate increases."

The size of the increases resulted from changes in how Edison allocated the hikes. Businesses, which used to pay disproportionately higher rates, are going to see some rates fall as some costs are shifted to residential customers.

To help ease the burden for mid-level residential users, Edison agreed to add a pricing tier at the high end of the scale -- a move that shifts more costs to the largest residential users.

Lynda L. Ziegler, Edison's senior vice president of customer service, said the company would notify hardest-hit ratepayers by mail.

"We don't want customers to be surprised," she said. "Because of the heat that we've already had, and some of the earlier increases, high-use customers are already seeing higher bills."

Edison is fielding more than the usual number of billing inquiries, Ziegler said. The company, she said, is "really pushing customers to do everything they can on the conservation and energy efficiency front."

In January, the utility raised rates 9% on average, citing in part higher costs for the natural gas used to generate most of its electricity. Those costs are passed on to customers under terms of state power contracts.

In February, Edison raised rates an additional 5.5%, which the company said would cover rising natural gas expenses from other electricity contracts.

"Edison's not making any money on the increase in natural gas prices," Finkelstein of the Utility Reform Network said. "But all this stuff about infrastructure -- that's just Edison trying to collect more money from customers. Only one small part of it is justified."

Because natural gas prices have not been as high as expected, Edison said, it may end up rolling back some of the earlier rate increases next year.

But under a rate plan approved in May, the utility will be allowed to raise overall rates by 1.9% in 2007 and 2.5% in 2008.

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