Utilities propose higher fees

Utilities propose higher fees

17 November 2009

published by www.glendalenewspress.com

USA– Faced with higher premiums and reduced coverage as a result of insurance claims for fires started by equipment failures, two utilities are awaiting a state decision on an application to potentially raise customer fees.

Under the proposal submitted in August by Southern California Edison and the Southern California Gas Co., customers from La Crescenta, La Cañada Flintridge and Glendale could face higher utility bills to help the companies cover the uninsured costs of wildfires — a move strongly opposed by Los Angeles County Supervisor Mike Antonovich.

In a letter sent to the California Public Utilities Commission, which will vote on the proposal, Antonovich criticized Southern California Edison for not adequately working with communities on new transmission projects and urged the commission to deny the application.

“It is unconscionable for Edison to place an additional burden on its customers . . . when the company refuses to reroute its own lines from high-fire areas,” Antonovich said.

He reiterated his opposition in a statement released Friday.

But a utility representative defended the application as reasonable given the risk of liability they’ve had to absorb during the recent fire seasons.

“It’s the normal cost of doing business,” said Steve Conroy, a spokesman for Southern California Edison. “There is nothing unusual in what we are asking for.”

The utilities joined with Pacific Gas and Electric C. and San Diego Gas & Electric Co. for the application.

If approved, the utilities would establish rate-payer-funded accounts to track and then recover the uninsured costs of wildfires through customer rates.

Utility officials said the cost recovery is necessary for the companies to remain financially viable in the face of increased liability.

The account would ensure the utilities are able to pay future claims that exceed insurance limits, said Denise King, a spokeswoman for Southern California Gas Co.

Citing a recent history of large claims filed against California utilities for wildfire damage, insurance companies have raised premiums, reduced or even eliminated coverage. Utility officials argued in their application that the diminished coverage leaves them exposed to wildfire claims previously covered by their insurance policies.

While details have not been worked out, in the case of cost recovery, the increased fees would likely be applied evenly to all Southern California Edison customers, Conroy said.

But the application has more than just Antonovich to deal with. The application has drawn opposition from consumer watchdog groups and from within state government itself.

In October, the California Consumer Protection and Safety Division filed a formal protest against the application.

“While insurance premiums may have increased, and while such premiums may cover less liability, granting the utilities their requested relief will result in a perverse incentive, where the utilities, if fully insured by ratepayers, would not need to keep their systems as safe and reliable as they do now,” Nicholas Sher, an attorney for the division, wrote in the filing.

Christopher Chow, public information officer for the Public Utilities Commission, said the case has been assigned to administrative law Judge Maribeth Bushey and Commissioner Timothy Alan Simon, who will outline the proposed decision before it goes to the full commission for a vote.

A time frame for the decision has not yet been outlined, he said.

“The assigned commissioner and [administrative law judge] plan to issue a scheduling ruling soon, and we’ll then have more details on the proceeding to report,” Chow said.

Crescenta Valley Town Council Vice President Frank Beyt criticized the utilities for not providing the public with more information on the proposal, which he said was similar to creating an “earthquake tax.”

“There is not enough information to base an accurate decision,” he said. “They’re going to have to do a lot more homework before they raise another rate on us.”

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