A catastrophic crisis calls for radical solutions that are considered out of the box. This includes asking utility shareholders to share in the the same pain as their customers.
M.Cubed is testifying on Southern California Edison’s 2021 General Rate Case (GRC) on behalf of the Small Business Utility Advocates. Small businesses represent nearly half of California’s economy. A recent survey shows that more than 40% of such firms are closed or will close in the near future. While these businesses struggle, the utilities currently assured a steady income, and SCE is asking for a 20% revenue requirement increase on top already high rates.
In this context, SBUA filed M.Cubed’s testimony on May 5 recommending that the California Public Utilities Commission take the following actions in response to SCE’s application related to commercial customers:
- Order SCE to withdraw its present application and refile it with updated forecasts (that were filed last August) and assumptions that better fit the changed circumstances caused by the ongoing Covid-19 crisis.
- Request that California issue a Rate Revenue Reduction bond that can be used to reduce SCE’s rates by 10%. The state did this in 1996 in anticipation of restructuring, and again in 2001 after the energy crisis.
- Freeze all but essential utility investment. Much of SCE’s proposed increase is for “load growth” that has not materialized in the past, and even less likely now.
- Require shareholders, rather than ratepayers, to bear the risks of underutilized or cost-ineffective investments.
- Reduce Edison’s authorized rate-of-return by an amount proportionate to its lower sales until load levels and characteristics return to 2019 levels or demonstrably reach local demand levels at the circuit or substation that justify requested investment as “used and useful.”
- Enact Covid-19 Commercial Class Economic Develop (ED) and Supply Chain Repatriation rates. These rates should be at least partially funded in part by SCE shareholders.
- Order Edison to prioritize deployment of beneficial, flexible, distributed energy resources (DER) in-lieu of fixed distribution investments within its grid modernization program. SCE should not be throwing up barriers to this transformation.
- Order Edison to reconcile its load forecasts for its local “adjustments” with its overall system forecast to avoid systemic over-forecasting, which leads to investment in excess distribution capacity.
- Order SCE to revise and refile its distribution investment plan to align its load growth planning with the CPUC-adopted load forecasts for resource planning and to shift more funds to the grid modernization functions that focus on facilitating DER deployment specified in SCE’s application.
- Order an audit of SCE’s spending in other categories to determine if the activities are justified and appropriate cost controls are in place. A comparison of authorized and actual 2019 capital expenditures found divergences as large as 65% from forecasted spending. The pattern shows that SCE appears to just spend up to its total authorized amount and then justify its spending after the fact.
M.Cubed goes into greater depth on the rationale for each of these recommendations. The CPUC does not offer many forums for these types of proposals, so SBUA has taken the opportunity offered by SCE’s overall revenue requirement request to plunge in.
(image: Steve Cicala, U. of Chicago)