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California Utilities Want Customers to Pay for Rise in Wholesale Prices

Source: Knight Ridder/Tribune Business News Publication date: 2000-10-26

Oct. 26--California's two large electric utilities asked state regulators Wednesday for permission to bill customers $5.1 billion and raise rates another 10 percent. The $5.1 billion represents the cost for higher wholesale prices the utilities have paid this summer, but were unable to collect from customers because of a rate freeze.

Southern California Edison and Pacific Gas & Electric warned the California Public Utilities Commission that failure to recover the costs "will almost inevitably lead to serious statewide consequences."

In separate filings late Wednesday, both utilities told the commission that the current rate freeze, originally was slated to end in March 2002, should be lifted immediately because both companies have paid off their "stranded costs."

That is the investment in plants and equipment the utilities were allowed to recoup in the transition to a deregulated market. Meeting that regulatory milestone would lift the rate freeze and permit the utilities to pass on market-based prices to consumers.

Edison is advocating a plan of a near-term rate hike of up to 10 percent in January. It also wants the commission either to approve the sale of its remaining power plants or allow it to keep the plants with a "reasonable rate of return."

Edison, which wants to recover $2.4 billion, and PG&E, which wants $2.7 billion, said both utilities would be "financially weakened" and unable to serve customers if they do not collect the money.

The filings came in response to a request by administrative law judge Angela Minkin on Oct. 5 for financial information from the utilities. The commission will hold a pre-hearing conference Friday Gov. Gray Davis and the state Legislature are currently working on solutions to solve the issues.

-- Martin Thompson (, October 26, 2000

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