Edison Sues State In Effort to Back Bill Customers $2.64 Billion

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Utility Seeks to Avoid Clear Rules of State Law

Los Angeles–Southern California Edison, a subsidiary of Edison International, has sued the California Public Utilities Commission as part of the company’s on-going effort to illegally collect billions of dollars from its ratepayers. Through the suit, filed in U.S. District Court in Los Angeles, Edison seeks the right to charge customers an additional $2.64 billion to pay for this summer’s high electricity costs. The California Public Utilities Commission and California courts have already rejected similar requests by Edison and Pacific Gas & Electric. Under state law, electric rates are frozen until 2002 and companies may not pass through any costs of electricity, above the frozen rate, to their customers. PG&E recently filed a similar suit in Federal Court in Northern California.

Edison is desperately searching for some judge who will say that corporate profits are more important than consumers’ rights and state laws,” said Doug Heller, a consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR). “Edison‘s attempt to win a multi-billion dollar bailout by ratepayers has been rebuffed every step of the way so far because the state law that they helped write only allows electric utilities to charge ratepayers a single, frozen rate for electricity. They have no legitimate argument for shifting the failure of their deregulation scheme onto the backs of consumers, and we expect the Federal Court to protect consumers and disallow any back billing.”

Edison has recently filed reports with the Securities and Exchange Commission in which the company asserts that it will likely be allowed to collect more than $2 billion from ratepayers to make up for the alleged losses associated with this summer’s high energy prices. In October, FTCR testified to the CPUC that Edison was desperate to convince skeptical Wall Street analysts that they’ll eventually recover these “losses.”

Advocates consider this lawsuit another salvo in the utility companies’ effort to manipulate any legislative changes to California’s electricity system in a manner that hurts consumers. After the much publicized failure of electricity deregulation in California and the unwillingness of federal regulators to address the crisis, it is widely assumed that the electricity system will be reconfigured by the legislature and Governor Davis next year or through a ballot initiative in 2002.

Edison and the power companies are asking the governor and legislature to focus solely on ways to make consumers pay for utility “losses.” Consumer advocates, in contrast, argue that the state must not blame the victims — residential and small business ratepayers — for the energy crisis; instead, state leaders must acknowledge that the deregulation experiment has failed and that the state should develop a new energy policy. California ratepayers need an energy plan that protects affordable electricity rates for consumers and creates a California power authority to plan and develop publicly owned power plants, ensuring a reliable supply of electricity, according to FTCR.

Edison is using the Federal Court to demonstrate that they will fight consumers, politicians and any laws that get in their way. This should be a sign to the Governor that these companies need to be reigned in through a major reformation of our system for supplying energy to Californians,” said Heller.


Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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