CPUC Incentive Policy Allows Shifting of Funds

By Published On: January 6, 2012

The massive storm damage to Southern California Edison’s system highlights the possibility that money could be transferred between strategically planned investments to rebuild the distribution system into restoration work after outages under the California Public Utilities Commission’s Reliability Investment Incentive Mechanism. The money is raised from ratepayers. When utilities fail to meet the spending targets to improve their infrastructures, they must return the funds to ratepayers except when the spending shortfall results from transferring money to so-called “high priority” needs. Those needs include restoring service due to storms, replacing broken down equipment, installing equipment needed to serve new customers, and bolstering the distribution system to accommodate new load from electric vehicles. In 2011, Edison planned $832 million for reliability investments and $341 million for high priority needs, according to a filing with the CPUC. Included in the high priority category, was $57 million for storm damage repairs. In its 2012-14 general rate case, Edison plans to raise its budget for storm damage to $70 million in 2012, $72 million in 2013, and $74 million in 2014, according to information filed with the CPUC.

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