SoCal says it will cut another 1,450 jobs
Cash-strapped Southern California Edison Co. (SCE) Friday said it will cut spending by an additional $365 million and eliminate another 1,450 jobs. The new cuts are on top of the company's Dec. 22 announcement it planned to eliminate 400 jobs and reduce spending by $100 million. SCE Chairman Stephen E. Frank said the company took action because it 'can no longer obtain financing through commercial markets to pay the extremely high cost of wholesale electric power for its customers.'
Cash-strapped Southern California Edison Co. (SCE) Friday said it will cut spending by an additional $365 million and eliminate another 1,450 jobs.
The new cuts are on top of the company's Dec. 22 announcement it planned to eliminate 400 jobs and reduce spending by $100 million and are further evidence of SCE's deteriorating circumstances.
SCE Chairman Stephen E. Frank said the company took action because it "can no longer obtain financing through commercial markets to pay the extremely high cost of wholesale electric power for its customers."
The California Public Utilities Commission Thursday approved a 90-day retail rate surcharge of 7-15%, far less than the utilities said they needed to cover their costs. Standard & Poor's, Moody's, and Fitch have downgraded the company's bond ratings, making it more difficult for SCE to obtain credit.
SCE, a unit of Edison International, said maintaining basic service levels and maintaining public and employee safety will be "extremely challenging" given the available resources. Friday the company warned virtually every operation will be affected, including spending for electric system operations, maintenance, and new investments.
Electric system components will be replaced only after they fail or are judged likely to fail soon, Frank said. Response time for power outages could be longer, depending on available staffing resources except in known life-threatening situations.
New service connections, which today have essentially no waiting period, the company said, will be performed during normal work hours only. It said residential and small business customer meters will be read bimonthly instead of monthly, though monthly billing will continue.
Bills will be estimated on alternating months. Online billing and other payment options will be reduced, though neighborhood payment outlets will continue to be available.
Costs outpace income
SCE and Pacific Gas and Electric Co. have warned for months their wholesale power expenditures are outpacing their ability to recoup them from retail customers under a rate freeze they originally supported as a condition of deregulation in California.
For the month of December, SCE said, all revenues to the company, including those from the company's remaining power generation units, fell short of the costs of the power supplied customers by $24 million a day, for a total of $750 million.
Earlier Friday, a federal appeals court denied SCE's request for an emergency order that would have required federal regulators to institute cost-based rates for wholesale electricity transactions in the state.
SCE said it was "extremely disappointed" the US Court of Appeals for the District of Columbia Circuit denied its petition for a writ of mandamus:
But SCE said, "It is important to note that the decision is not a ruling on the merits of our claim. The court has expressed the expectation that the Federal Energy Regulatory Commission (FERC) will rule on our rehearing petition in a timely manner."
SCE had urged FERC to adopt cost-based pricing rules, allowing each seller to bid into the market at its variable operating cost. But FERC said neither Southern California Edison Co. nor the PUC have acted to implement its November and December orders and recommendations that would shift Edison's heavy reliance on the spot market to a portfolio that combines forward and spot purchases as a means of managing risk.
FERC said it previously rejected cost-based rates to insure adequate supply for consumers at reasonable costs. Between 1996 and 1999, California's peak load grew by 5,500 Mw, while only about 700 Mw of capacity was added in the state.