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Los Angeles Times

Southern California Edison is increasing the pressure on state regulators to allow it to pass high wholesale electricity rates on to customers through an initial rate hike of nearly 10% plus new authority to set its own rates–a combination that could mean bigger electricity bills for several years.

In a filing late Thursday with the California Public Utilities Commission, SCE called its proposal a “compromise position” to avert financial disaster at the utility, which provides electricity to 4.2 million residential and business customers.

The utility, a subsidiary of Edison International in Rosemead, also argued that its proposal would cushion customers from a much larger rate jump if stubbornly high wholesale electricity rates were passed straight through, as happened this past summer in San Diego and south Orange County. There, the 1.2 million electricity customers of Sempra Energy’s San Diego Gas & Electric saw rates jump five-fold and bills double and triple before the state Legislature capped rates.

Consumer activists said the SCE proposal would harm ratepayers by forcing them to pay for the failings of a deregulation scheme they never sought.

“This should be considered a particularly outrageous opening gambit and should not be given serious political consideration,” said Douglas Heller, consumer advocate at the Santa Monica-based Foundation for Taxpayer and Consumer Rights.

“They’re trying to make us pay for failures of their system rather than saying let’s stop this experiment,” Heller said. “We will press the governor, the Legislature and PUC not to accept this.”

In its filing, SCE formally asked the PUC to grant a 9.9% increase, beginning Jan. 1, so that the utility can collect over time the $ 2.6 billion in wholesale electricity costs that customers have not paid because of a rate freeze. The company said the increase, which it first signaled in a filing Oct. 25, would raise rates by about 1 cent a kilowatt-hour and would boost the average monthly bill of about 500 kilowatt-hours by $ 5.50.

Even with the proposed rate increase, SCE said residential and small-business customers would still be paying less for electricity, if four years of inflation are taken into account, than they paid before 1996. Assembly Bill 1890, which deregulated the state’s electricity industry, froze rates at 1996 levels and gave customers a 10% bill reduction. That legislated discount, financed with rate-reduction bonds, expires at the end of 2001.

The typical August residential bill of $ 96.90–which includes energy usage plus taxes and other fees–would increase to $ 102.40 with the proposed 9.9% rate increase. In August 1996, the typical August bill was $ 107.66, SCE said. For low-income customers, who get a 15% reduction off their bills now, the proposed rate increase would be 4.95% and add $ 2.15 a month.

SCE also asked for authority, beginning in 2003, to adjust rates up or down by 2.5% every six months depending on what its wholesale electricity costs are. SCE proposed merely filing an advice letter with the PUC to change rates rather than going through a lengthy hearing process. That authority would last for three years under the proposal.

The utility asked the commission to end the rate freeze so that new rates could be implemented, contending that pending power plant sales would pay off the last of the utility’s so-called stranded costs–nuclear plants and other assets deemed uneconomical under deregulation. Under terms of AB 1890, the freeze is to be lifted for each of the state’s big investor-owned utilities once it pays off its stranded costs or on March 31, 2002, whichever comes first.

SCE on Thursday filed a lawsuit in U.S. District Court asking for the right to recover wholesale costs through retail rates.

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