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SoCal Edison to Raise Rates Three Times in '06; Gas Prices Main Cause

Between now and March retail electric bills for some Southern California Edison Co. customers could be increased three times, the Rosemead, CA-based Edison International utility announced Tuesday, and two of the three rate hikes are attributable to continuing high wholesale natural gas prices. Sempra Energy's Southern California Gas Co. utility said it expects retail gas bills to rise 45% to 55% this winter.

The first Edison rate hike -- an average of 9% slated for Jan. 1 -- is caused by a combination of the higher natural gas prices in some state power contracts Edison holds and by a recent California Public Utilities Commission decision to allocate a larger portion of the state contracts' costs last year to Edison's customers. Customers using smaller amounts of power -- about 40% of Edison's residential customers -- will avoid the increase, an Edison utility spokesperson said.

A second increase in the range of 5.5% to 6% will be effective in February to recover higher natural gas prices on Edison's own power purchases and for fueling its newly completed Mountainview plant in Redlands, about 70 miles east of Los Angeles.

Finally, a third increase is contemplated by Edison to cover the added cost of power plant upgrades and higher maintenance expenses, according to a report in the Los Angeles Times. The size of the increase has not been determined.

Edison's public-sector utility neighbor, the Los Angeles Department of Water and Power (LADWP), has maintained that it does not anticipate an electric rate increase. LADWP's rates have been frozen for almost a decade, although it is contemplating a surcharge to fund an accelerated renewable energy program.

LADWP has buffered itself against the natural gas prices somewhat through a purchase of extensive natural gas reserves in Wyoming on a group basis with about a half-dozen other Southern California municipal utilities and their financing arm, the Southern California Public Power Authority (SCPPA). When the public-sector utilities began receiving gas under the deal this fall it was for $5/MMBtu, compared to the market prices in the $12-14/MMBtu range, according to Bill Carnahan, SCPPA executive director.

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