Energy Crisis Fee Formula Retained

State regulators refused Thursday to modify an electricity-crisis bond repayment system, rejecting complaints that Southern California Edison customers are paying back $532 million more than they received, plus interest.

The decision, opposed by the utility and a consumer group, keeps in place the existing system for charging customers of Edison, PG&E; Corp’s Pacific Gas & Electric Co. and Sempra Energy’s San Diego Gas & Electric Co. to repay costs incurred when the state took over power-buying duties during California’s 2000-2001 energy crisis.

“I struggled a great deal with how to vote on this matter,” said Michael Peevey, president of the California Public Utilities Commission. “But the bottom line is that there is no methodology that results in perfect equity from all points of view.”

The PUC’s 3-2 vote means Edison customers will pay back to the state 44.4% of a 20-year, $11.6-billion bond taken out by the Department of Water Resources, even though the utility was responsible for just 37.8% of DWR’s costs. With interest, the extra costs to Edison customers total $1.2 billion.

Under the repayment formula, the customers of each utility are paying back the bond at a flat rate of a half-cent for each kilowatt-hour of energy they use, typically listed on electricity bills as a “bond charge.”

Peevey said it was fair to assess all customers the same fee because all ratepayers benefited equally when DWR’s intervention “saved the grid” by stabilizing the market and providing power to avoid blackouts.

Commissioner Loretta Lynch, who voted against the “cost shifting” in the existing system, had hoped to persuade colleagues to adopt a repayment formula based on how much it actually cost DWR to serve each utility’s customers.

“At its core, it is inequitable for us to require Edison customers to pay back money that they never received,” Lynch said.

Rosemead-based Edison, a subsidiary of Edison International, said the PUC’s vote Thursday “will force our customers to continue paying significantly more than their fair share of costs [DWR] incurred on their behalf during the energy crisis.”

The bond charges are a holdover from the energy crisis, when DWR began buying power on behalf of the state’s financially teetering utilities.

The final bill was $16.3 billion, and $8.2 billion was repaid by ratepayers through rate increases. DWR floated bonds to cover the remainder of the tab, and that is being repaid through the bond charge on utility customers’ bills.

Edison said the extra charge endorsed Thursday by the PUC amounted to about 50 cents a month for the average residential customer, and about $16 per month for a typical medium-sized business. The charge will be on bills for 19 more years.