Edison Proposes Business Retention Discount

Southern California Edison applied for discount electric rates that could affect 4 percent of its business customers. The utility?s offer is to counteract a business climate that might otherwise drive away business because of the cost of electricity. ?This is our effort to address a serious economic issue in our territory,? said Edison spokesperson Gil Alexander. Edison field staff have recently learned that numerous companies may close and move out of state or drop planned expansions in part because of the cost of electricity, he explained. Edison proposed discounts to qualifying firms that would start at 25 percent and decline by 5 percent a year until being phased out over five years. Edison is seeking to offer the discount?similar to one the utility offered during Southern California?s deep recession and economic restructuring in the 1990s?through 2006. Only companies with a 200 kW demand would be eligible for the discount. That includes 12,000 medium-size to large firms out of the utility?s 300,000 business customers, Alexander said. Edison?s proposed eligibility criteria would aim the discount toward the manufacturing sector, he said, which has lost 288,000 jobs over the last five years. However, the rate application filed with the California Public Utilities Commission April 6 comes on the heels of a California Independent System Operator report that notes demand is growing so far this year at 4 percent?in part as a result of increased economic prosperity. California Manufacturers & Technology Association president Jack M. Stewart welcomed the effort to reduce electric rates but said that Edison?s proposal would impose ?strict requirements that may allow only a few companies to qualify.? The association has complained that manufacturers have yet to see significant discounts in electric rates, even though rates have come down for residential customers. Edison maintains that its discount will pay for itself by retaining and expanding its customer base, allowing it to further spread out its fixed costs, according to Alexander. However, consumer watchdogs are concerned that the cost of the program may be shifted onto other customers. ?The day that pigs will fly is the day we?re likely to see a program like this pay for itself,? said Bob Finkelstein, The Utility Reform Network executive director. ?If they give those customers a discount, where?s the shortfall going to come from?? Finkelstein said TURN will participate in the proceeding before the commission. The organization may recommend that the proposed discount be limited to specific industries that are threatened. Otherwise, Finkelstein said, it might be like a decade ago when ?business development rates fell almost entirely on other ratepayers to cover the shortfall.? Sixty-six companies with 20,000 employees took advantage of the rate discount in the 1990s. Under Edison?s proposal, executives at companies seeking the discount would have to sign legal affidavits indicating that without the lower rate they would either close their doors and relocate out of state, not carry out a planned expansion, or locate a new plant out of state instead of in Southern California. Alexander said that Edison would conduct a ?rigorous review? to verify those claims before enrolling any company in the discount program. Edison hopes to begin offering the discount by the end of the year.

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Edison Proposes Business Retention Discount

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