Proposal to Increase Edison’s Rate Case Set for a Vote

A proposed California Public Utilities Commission decision, scheduled for a Nov. 4 vote, allows Southern California Edison to collect $5.16 billion in base revenue for 2015. The pending general rate case, a decision which Edison International has eagerly awaited, shaves $353 million off of Edison’s 2015 request and is $474 million, or 8.4 percent, below currently authorized revenue.

“The cumulative adopted effect on rates by 2017, relative to present rates, is a 1.27% increase,” states the proposed decision by Administrative Law Judge Kevin Dudney.

The utility’s revenue requirement in 2016 of $5.43 billion and $5.7 billion in 2017 also would be authorized under the regulatory proposal released last month.

Edison International’s Oct. 28 8K Security & Exchange Commission filing projects an 8 percent annual rate base increase from 2015-2017.

”The Proposed Decision “is VERY generous to the utility by any metric,” said Bob Finklestein. The Utility Reform Network general counsel. He said Edison should be thankful, particularly for the revenue approvals unrelated to safety. That includes “having ratepayers cover more of the incentive compensation payments they make to workers and executives, or changing the ratemaking treatment of customer deposits, or permitting rate recovery of the costs of removing poles without first testing those poles to see if removal was warranted.”

The CPUC proposal approves capital expenditures of $3.4 billion this year, which is $300 million below Edison’s request. Edison projects $4 billion in annual infrastructure investments to 2018 and beyond.

“The impact of current capital expenditures on current revenue requirements is small, but the cumulative impact is powerful over time as the value of the capital assets (including rate of return and cost of removal) is repaid by ratepayers,” according to the CPUC proposal.

Edison points out that its residential rates are 27 percent higher than the national average, at 16.4 cents a kWh compared to 12.9 cents kWh. The higher charge is attributed partly to the state’s renewable mandate.

The annual rates of return are set a 7.9 percent over the three-year cycle.

If the CPUC adopts the pending rate case, Edison’s rate base would be set at $17.47 billion this year, $19.23 billion in 2016 and $20.7 billion in 2017. —Elizabeth McCarthy