Southern California Edison Co. on Thursday won approval from state regulators to cancel a planned rate increase and to boost the region's power supplies with a new energy contract and the construction of a high-voltage power line.
The California Public Utilities Commission also adopted a rule that prohibits the state's investor-owned utilities from buying or generating electricity from sources that are dirtier than modern natural-gas-fired plants. The action is considered vital to cutting greenhouse gas emissions, which contribute to global warming.
Gov. Arnold Schwarzenegger applauded the commission's decision, which he said "sends a clear signal to developers of dirty coal ... that we're not interested in their product."
As expected, the commission approved an Edison request to cancel a 6% rate increase that had been planned for last fall and then postponed to 2007.
The utility said it no longer needed the increase because of lower-than-expected natural gas costs in 2006 and unusually high revenue gained when power bills soared during California's heat wave last summer.
Under rates set to kick in with February bills, the price of power will fall for the heaviest residential users, such as homeowners in the San Gabriel Valley. The average residential customer will see a slight increase, to 15.1 cents a kilowatt-hour from the current 14.9 cents a kilowatt-hour. The rate hike would have pushed that cost to 15.9 cents.
Edison, a unit of Rosemead-based Edison International, is the state's second-largest investor-owned power utility, serving 4.7 million business and residential customers in Central and Southern California.
The commission also voted 3 to 1 to approve an expensive 10-year power contract that would supplement Edison's supplies beginning in August. Under the contract, a subsidiary of NRG Energy Inc. would revamp a retired gas-fired facility in Long Beach to provide the utility with 260 megawatts of power during peak-demand periods.
The deal fulfills an order from commission President Michael R. Peevey, who directed Edison to buy more power for this summer in case California faced another heat wave like the one that scorched the state and strained the electrical grid last July.
Under state confidentiality rules, terms of the Edison contract weren't publicly disclosed. But several consumer groups that were privy to the details labeled the power deal too costly and unnecessary.
Mike Florio, senior attorney at the Utility Reform Network, was one of the critics.
"It's inefficient, it costs a lot of money because they're doing it so fast, and there's no need for this additional capacity for next summer," he said.
Peevey defended the agreement as providing "an important insurance policy" for the summer.
Commissioner Dian Grueneich dissented, saying, "We should not require ratepayers to assume the cost of an expensive 10-year contract for an inefficient plant, of which the best thing that can be said is that the plant will likely never run."
Also Thursday, the commission approved construction of a 230-mile, high-voltage transmission line that would carry power from southern Arizona to the Palm Springs area, running roughly parallel to an existing transmission line. A second segment would extend 41.6 miles from Palm Springs to Hemet.
The $590-million project, which requires additional action from two federal agencies, could be completed in 2009 and would carry 1,200 megawatts of electricity -- enough to serve about 1 million homes.