Small Businesses Can’t Afford Edison’s Big Rate Hikes

Many valley renters, home-and business-owners may face a one-two punch next year with both Southern California Edison and Southern California Gas Co. seeking rate increases.

Many valley renters, home- and business-owners may face a one-two punch next year with both Southern California Edison and Southern California Gas Co. seeking rate increases.

Edison is requesting that the California Public Utilities Commission approve a rate hike that would equal nearly $9 a month more on the average Coachella Valley electric bill.

Edison’s request amounts to a 7.2 percent increase in 2012, with increases of 1.3 percent and 4.35 percent the two following years, said Russ Worden, the utility’s director of rate cases.

A ratepayer advocacy group, however, calculates Edison’s requested increase at about 17.5 percent next year.

The Gas Co., a division of Sempra Energy that provides natural gas throughout the Coachella Valley, is seeking a $308 million, 7 percent increase in its rates next year.

The increase, if approved, would raise monthly bills by $3.35 for an average residential customer.

With the effects of the recession lingering in the valley, the utilities’ rate hike plans are weighing heavily on some customers.

“From a business point of view, I’m sick of it,” said Rick Seidner, owner of two restaurants in Palm Springs, Rick’s Restaurant and Rick’s Desert Grill.

“Here we are in a recession. Everybody’s lost business to the point where they are just trying to operate and get by. And now the utilities, like always, want to raise your prices,” he said.

Seidner said he spends a total of about $6,000 a month on electricity at his two restaurants during the summer. His gas bill runs about $1,300 a month.

The Public Utilities Commission’s Division of Ratepayer Advocates, an independent consumer division of the regulator, has slammed what it described as Edison’s “bloated cost estimates” and called for the commission to reduce the requested increase by 80 percent.

Valley residents can speak on Edison’s rate proposal at two hearings scheduled by the Public Utilities Commission for noon and 5 p.m. Thursday, June 23, at Palm Springs City Hall council chambers, 3200 E. Tahquitz Canyon Way.

The Gas Co.’s proposed increase is not up for discussion at these forums, and will likely be discussed publicly at forums later in the year.

Southern California Edison is one of the nation’s largest electric utilities, providing electricity to more than 14 million people in a 50,000-square-mile area of Central and Southern California, excluding Los Angeles and certain other cities.

It provides electricity to most of the Coachella Valley west of Washington Street.

The rate case is a projection Edison submits to the Public Utilities Commission every three years, projecting costs it expects to incur and requesting permission to set its rates accordingly.

Edison and ratepayer advocacy groups don’t even agree on the size of the utility’s request: Edison characterizes it as $1.4 billion over the next three years; the Division of Ratepayer Advocates puts it at $4.62 billion over currently authorized levels, saying the utility isn’t properly accounting for sales growth and revenue requirements for its deployment of smart meters.

Another consumer advocacy group, TURN, The Utility Reform Network, says the increase will be about $3.6 billion through 2014.

Rick Seidner is owner of Rick's Restaurant and Rick's Desert Grill, both in Palm Springs. He says he spends a total of about $6,000 a month on electricity at his two restaurants during the summer. / Michael Snyder the desert sun

By Edison’s count, it seeks approval for an $828 million revenue increase next year, up 7.2 percent. That will equal $3 to $9 more per month on the average Edison customer’s bill, though closer to the high number for the Coachella Valley because it uses more energy, Worden said.

“The money is to maintain our ability to continue to provide reliable service for our customers,” he said.

The Division of Ratepayer Advocates recommends a far lower increase for Edison next year of $92 million, said Clayton Tang, program and project manager for the division.

“We don’t think they have made their case in many areas,” he said. “We’re just forecasting lower levels of expenses.”

TURN also questioned Edison’s revenue increase request.

“They have asked for $1 billion on software spending over the next five years—it’s just a very high expense,” said TURN executive director Mark W. Toney.

“Over a half-billion dollars for additional administrative costs we think is really high. They’ve doubled their administrative costs over the past decade.”

Worden said the technology investment is required to ensure system integrity and prevent cyberattacks as Edison increasingly uses automated systems.

The administrative cost increases are caused by “an accounting artifact,” and do not indicate a big increase in the number of administrators behind desks, he said.

As the economy continues to languish, raising electricity rates affects renters, homeowners, small businesses, industries and agriculture, Toney said.

“(Edison) comes into these rate hearings, we believe, with an attitude of, ‘What is the most we can possibly get away with asking for?'” Toney said. “We wish they would say, ‘What’s the least we can ask for? We’re trying to act in the public interest.'”

Worden said Edison does work to minimize its rate hike requests, knowing they are “difficult for people.”

“We have to make these investments,” he said. “If we delay, if we procrastinate and do not do the work, the work is going to pile up, and ultimately the system is not going to be as reliable as it is today.”

Public comments from the June 23 hearing will be added to the information considered by the Public Utilities Commission, which is expected to make its decision on Edison’s rate hike request later this year.