Ralphs Defects From Edison, Signs With New Power Source

Southern California Edison lost another major account Thursday as New Energy Ventures of Los Angeles announced it signed the Ralphs Grocery Co., one of Edison’s 10 largest power customers, to a multiyear power deal starting Jan. 1.

Terms were not disclosed, although New Energy Ventures said the deal is worth “tens of millions of dollars” in power sales to some 340 Ralphs and Food 4 Less stores in Southern California over the life of the contract.

Once power deregulation comes to the state in January, customers of Edison, San Diego Gas & Electric Co. and Pacific Gas & Electric Co. will be free to buy electricity from whomever they want. The utilities, however, will continue to distribute electricity and service customers.

Power customers, once the exclusive domain of monopolistic utilities, are already signing deals. Earlier this week, the McDonald’s Corp. restaurant chain announced that its 800 California stores, about half of them in Southern California, would buy electricity from PG&E; Energy Services, a unit of PG&E; of San Francisco.

The deal was seen as a loss for Edison, which serves most of the region’s McDonald’s.

Earlier this month, space and defense electronics manufacturer TRW Inc. of Redondo Beach, also a major Edison customer, announced it will buy energy from a venture consisting of the California Manufacturers Assn. and Montana Power Trading & Marketing Co., a low-cost provider of mainly hydroelectric power.

Edison downplayed the Ralphs deal, saying its role in the deregulated power arena will be mainly as a power distributor. But its Edison Source unit, a power marketing firm, is competing in the California power market, trying to sign the same customers as New Energy Ventures, Enron and legions of other power peddlers.

Declining to disclose any specific deals made by Edison Source, an Edison spokesman said that “it’s misleading to portray the power market as a horse race.” Last week, the utility rolled out Earth Source, a menu of electricity options generated from nonrenewable sources such as wind, power and geothermal sources.

Edison and the other utilities will continue to collect about 75% of a typical utility bill for power distribution and service and to pay off obligations connected to money-losing nuclear plants and state-mandated clean energy projects.

So Edison notes that it is not losing Ralphs as a customer entirely, only the portion of the revenue from Ralphs’ monthly bill that pays for the electricity used.

New Energy Ventures was formed in 1995 by Michael Peevey, a former top executive at Edison. Other major Edison customers signed by NEV include the Robinsons-May department stores in Southern California and Tamco Steel of Rancho Cucamonga.

“We are on the threshold of this new era, and the bigger customers are one by one peeling off from the utilities,” Peevey said Thursday.