Electricity Rate Reductions on the Horizon

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, May 16, 2003 Share this on FacebookTweet thisEmail this to a friend

The California Department of Water Resources (DWR) has lowered its revenue requirement by approximately $1 billion, paving the way for a modest electricity rate reduction later this year, possibly as soon as July 1.

California Public Utilities Commission (CPUC) President Michael R. Peevey has vowed to act quickly to implement the rate cut, and to "fairly distribute" the decrease among ratepayers. CMTA agrees that the rate should be fairly distributed among customers, and this means making sure that industrial customers, who bore the brunt of the 2001 rate increases, receive a rate reduction in proportion to the manner in which rates were increased in 2001.

DWR's revenue requirement was reduced because in January of this year, pursuant to ABX 1 (Keeley, Statutes of 2001), it transferred procurement responsibilities back to the state's three investor-owned utilities, thus reducing it's revenue needs.

Meanwhile, a more substantial rate reduction will occur this July for customers of Southern California Edison, pending approval by the CPUC. The Post-PROACT (utility undercollection account) reduction will provide relief to Edison's industrial customers roughly in proportion to the disproportionate rate increases imposed on industrial customers in 2001. Rates will likely decrease by 26 percent for industrial customers in the Edison territory.
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