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Group raises alarm over state energy policies

Little Hoover Commission: Demand for renewable sources could cause runaway rates

Posted: December 4, 2012 2:00 a.m.
Updated: December 4, 2012 2:00 a.m.
 

On the heels of a rate hike approval for Southern California Edison consumers, an independent state oversight agency on Monday expressed concerns about California’s overall energy policies and how they affect ratepayers.

In a 106-page report, the Little Hoover Commission said the demand for renewable energy sources and the state’s failure to explain how they would be integrated with existing sources could mean another energy spike like the one seen in 1998.

Meanwhile, the California Public Utilities Commission OK’d an Edison rate hike last month to cover operations, maintenance and capital expenses.

The approved increase was 5 percent; the utility company had requested a 16.6 percent rate hike.

Rate increases are expected to show up on customers’ bills next year, with the average increase expected to be about $7 per month, the utility company said.

The rate increase means a $374 million revenue increase for Edison over the current $5.3 billion budget for the first year of a three-year cycle, an additional $107 million for the second year and $356 million more for the third year.

The report, issued Monday by the oversight agency Little Hoover Commission and directed to Gov. Jerry Brown and the California Legislature, expresses concern about California’s ambitious energy policies overall and how they might affect ratepayers.

In 2011, Brown signed into law a requirement that 33 percent of all retail electricity sales must come from renewable power resources by 2020.

The oversight agency said Californians cannot afford another energy policy failure — citing the cost of the state’s deregulation of energy companies in 1998.

Deregulation had been enacted in the hope of increasing competition and reducing costs, supporters said at the time. But it hurt consumers and utility companies alike when prices spiked and existing utility companies sometimes had to purchase power at a loss to meet demand.

The oversight agency said it is concerned that rapidly integrating renewable energy resources could cause electricity rates to rise. The report also expressed concerns that the state has failed to develop a thorough, cohesive energy strategy with clear priorities and that it lacks clarity about the combined cost of implementing the states’ energy policies.

Among other concerns, the commission calls on the governor to direct the state’s energy organizations to assess the cumulative impact of major energy-related policies on electricity rates.

jadkins@signalscv.com

661-287-5599

 

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