Firms Acquiesce in High Court Affirmation of Closed-Door SCE Rate Hike Deal

Southern California companies large and small have quietly accepted last month's California Supreme Court decision upholding a 40 percent electricity rate hike negotiated privately between the California Public Utilities Commission and Southern California Edison. Meanwhile, consumer groups pledge to seek new strictures on the commission to prevent future closed-door deals. On August 21, the court ruled that the 40 percent rate hike in 2001-worth more than $3 billion-did not violate the state's electricity market deregulation or open-meeting laws. The rate hike allowed Edison to recoup losses suffered during California's electricity crisis when wholesale power prices rose and retail prices remained regulated, putting the squeeze on investor-owned utilities. The decision came amid two other developments on Edison's rates. One a 13 percent cut, on average, that took effect August 1. The other, a August 21 decision that exempted the company from filing a cost-of-capital application for 2004, allowing its 11.6 percent cost of capital authorized by regulators in 2002 to stand for at least another year. "It's a great thing for not only the utility, but for the restoration of stability to the electric system in Southern California," said John Bryson, Edison chair. He called the court decision "a complete win" and said it probably will clear the way for the company to begin paying shareholder dividends again. Moody's Investors Service on August 25 announced that it is considering upgrading Edison's financial rating. However, The Utility Reform Network?which mounted the legal challenge to the closed-door deal?called on Governor Gray Davis to "rein in" the commission. Another consumer group, the Utility Consumers' Action Network in San Diego, which closely followed the case, agrees with TURN. "It creates a loophole so large that al Qaeda could drive a munitions truck through it," said Michael Shames, UCAN executive director. He predicted consumer groups would seek action by the legislature to prevent future closed-door decisions by the state commission. However, Southern California businesses were more measured in their reaction. "In our heart of hearts, I don't think we felt there was a chance of getting a favorable legal decision," said the energy manager of one large company that pays more than $1 million a month for electricity. "This was a very special case brought up by the perfect electrical storm and will not open the door to regular closed-door negotiations at the utilities commission," said the manager, who spoke on condition of anonymity. While the cost of electricity remains a business-climate issue throughout Edison's territory, workers' compensation and other problems have eclipsed energy costs as leading concerns, explained Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation. Rates are "not the biggest drag," he said. "It's one concern of many." "It's not the hot-button issue that it was a couple years ago," added Brendan Huffman, staff director of the energy and environment committee of the Los Angeles Area Chamber of Commerce. Rather than buying from Edison, a variety of companies have switched to direct access to save money, he said. Others have implemented conservation measures, and a few have moved out of state. Restaurants, for example, are installing more energy-efficient appliances when it comes time to replace old refrigerators and stoves, noted Mark Taylor, vice president of the local chapters of the California Restaurant Association. California Supreme Court S110663 CPUC cost of capital docket D03-08-063; votes 3-2, Lynch and Wood opposing

Over 11K Stories!

| Independently Powered Energy News

Firms Acquiesce in High Court Affirmation of Closed-Door SCE Rate Hike Deal

vdharadmin

Related Posts

Using Free Casino Video Slots To Enhance Your Odds Of Winning

A Guide to Finding the Most reputable UK Online Casinos

FERC's Latest Settlements Reflect Dwindling Dollar Signs