Edison customers to see drop in rates

The cost of flicking on the lights is about to get cheaper for customers of Southern California Edison.

Electricity rates will go down for Edison customers by about 1.5% this year as the utility returns about $430 million it over-collected from ratepayers in 2007. The give-back stems from an annual reconciliation of utility rate proceeds and costs and reflects lower-than-expected prices for natural gas and power purchases in 2007.

Under the rates approved Thursday by the California Public Utilities Commission, the average residential bill will be about $1 lower per month, beginning April 2 and continuing for the following 12 months, said Akbar Jazayeri, Edison’s vice president of regulatory operations.

The reductions on individual household bills will vary by region and usage.

The rate reprieve will be temporary, though. Jazayeri warned that the cost of electricity at the Rosemead-based utility could jump as much as 12% in 2009, reflecting higher natural gas prices, the elimination of this year’s temporary refund and a big rate hike that could kick in at the start of the year under a project-laden spending plan being reviewed by utility regulators.

The combination of those factors could add $9 a month to the average residential bill, Jazayeri said.

Hoping to spare its customers from what it called rate whiplash, Edison had proposed keeping 44% of the $430-million overpayment, and then giving it back to customers in 2009 to help offset the effects of the rate hike expected for that year.

The utilities commission rejected the proposal, arguing that customers and the economy would benefit from having the full refund now.

“Rate stabilization, by and large, is a very good thing, especially for residential and small commercial customers,” commission President Michael Peevey said. “Given current uncertainty and economic conditions, it is clear that the benefits of injecting up to $430 million into the Southern California economy today outweighs the potential benefits that rate stability may bring in future years.”

The new rate plan calls for Edison to reduce the average cost of power for residential, commercial and industrial customers to 13.7 cents a kilowatt-hour, down from the current average of 13.9 cents.

On Thursday, the commission also approved a set of joint recommendations from the PUC and the state Energy Commission on how best to reduce greenhouse gas emissions from the electricity and natural gas industries.

The suggestions, approved Wednesday by the energy commission, will be forwarded to the California Air Resources Board, the agency that’s required to lay out a plan for meeting the benchmarks in California’s greenhouse gas reduction law.

Among the recommendations: Extend energy efficiency and renewable energy mandates to publicly traded utilities, assign emissions compliance to the company that delivers the power, set a cap on emissions, award credits for early reductions and allow credits to be auctioned.

Critics of the joint report, including many state legislators, flooded the energy commission and the PUC with concerns. Some worried that the system proffered by the two agencies would put a disproportionate cost burden on the Los Angeles Department of Water and Power. Others said a carbon tax or similar effort would work better than a cap-and-trade system.

PUC Commissioner John Bohn acknowledged the conflicts Thursday.

“The economic implications of the [credit] allocation process are critical. The balancing of interests is critical,” he said. “This is one of the thorniest kinds of issues that I have come across.”

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elizabeth.douglass@latimes.com