DRA Blasts Edison’s Proposed Rate Hike

The Division of Ratepayer Advocates slammed Southern California Edison’s proposal to increase its rates by a total of $4.6 billion over the next three years. In a massive 23-volume filing May 12 with the California Public Utilities Commission, the division told regulators who are weighing the utility’s 2012-14 general rate case they should cut it by about 80 percent, or $3.7 billion. “Our report finds bloated cost estimates in Edison’s request,” stated Joe Como, DRA acting director. The company should “be more sensitive to its customers’ finance needs,” he added. In its filing, ratepayer advocates stated Edison’s increase should be $833 million over the three-year period. In a prepared statement, the utility said the cuts sought by the division “would undermine the cornerstone of Edison’s 2012-2014 spending plan--infrastructure investment levels that would maintain grid reliability and public safety.” Edison claimed that the spending would create 10,000 new jobs a year in California. The utility added that its employee compensation levels “are currently slightly below market averages.” Edison maintained that its proposed compensation rates are necessary “to attract and retain” its “skilled workforce.” The rate hike proposal, according to Edison, would add between $2.50 and $9.50 to the average monthly residential bill. DRA’s filing sets the stage for public hearings on the rate hike request in the utility’s territory next month, followed by evidentiary hearings before a CPUC administrative law judge in July. The division zeroed in on many areas of Edison’s rate request, calling them “overstated.” It wants the commission to trim spending across the board over the three years, including on transmission, distribution, generation, power procurement, and nuclear plant maintenance as well as in the areas of labor and pensions. Among reductions the division specifically called for are: -Cutting the pension fund increase from $168 million to $53 million for the 2012 test year in the rate case; -Trimming the short-term incentive increases sought for executives from $148 to $59 million that same year; -Forgoing the requested increase of $17 million for executive benefits for its 2012 test year; and -Capping labor cost increases in 2012 at 2.8 percent instead of the 3.3 percent sought by Edison, with lower increases in the following two years than requested by the utility. In addition, DRA forecasts higher power sales and a bigger customer base than the utility projects, which would provide the company with higher revenue--even if rates weren’t increased--than Edison expects. For instance, Edison projects 4.97 million customers next year, while the division projects 4.99 million customers. Edison filed its general rate case late last year. Commission action on it could come by the end of this year.

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DRA Blasts Edison’s Proposed Rate Hike

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