The California Public Utilities Commission directly addressed issues of affordability of energy rates while authorizing Southern California Edison (SCE) to increase electric rates for 2019 by $335 million or a 6.6% increase over 2018 and by $410 million for 2020 or a 7.5% increase over 2019. Much of the increases are due to past approval of significant capital investments requested by the utility. According to the commission, the magnitude and substance of SCE’s requests stimulated an unprecedented level of testimony and briefing regarding the obligations imposed by the “regulatory compact” and how those are expressed within California’s framework for “forecast-based cost-of-service utility regulation.” The overall thrust of the debate focused on the extent to which the commission should prioritize the affordability of SCE’s services as it weighs SCE’s requests for funds to maintain or enhance the safety and reliability of its service.
The commission emphasized that while it and all parties to the case agreed that a certain level of revenue requirement is necessary to support the fundamental
operation of any electric utility, the company’s request for what it described as “conventional programs to meet conventional needs” totaled approximately $2.7
billion, or 67.5%, of SCE’s 2018 request. While the commission conducted a detailed review of each of the programs presented by the company as necessary for providing reliable service going forward, it stated that it could not conclude that increases of this magnitude would be affordable for ratepayers. The commission stated that it applied the following standard of proof in reviewing the company’s rate application—“in every instance where SCE cannot establish by a preponderance of the evidence that a request is necessary to provide safe and reliable service, we deny their requests.”
The commission also pointed out that in the time since the utility filed its application, new statutes had been enacted, and it had initiated two rulemaking
proceedings related to affordability. In 2017, the state enacted a new law, which requires the commission to develop policies, rules, or regulations with a goal of the statewide level of gas and electric service disconnections for nonpayment by residential customers. As directed by the new statute (SB 598) the commission opened an investigation to identify and adopt near-term improvements to the current payment and disconnection regulations and practices and approved interim rules with immediate reforms to help reduce the statewide level of service disconnections for residential energy customers, and to improve the reconnection process following future disconnections. During that time the commission also opened a rulemaking directly focused on affordability, with the intent to develop a common understanding and tools to assess the impacts on affordability of individual proceedings and utility rate requests. Re Southern California Edison Co., A.16-09-001, Decision 19-05-020, May 16, 2019 (Cal.P.U.C.).