Southern California Edison’s
Economic Development Rate  

Background 

California Public Utility Code 740.4 allows for utilities to offer an Economic Development Rate (EDR), which is intended to provide rate discounts to large customers that have electric bills as a significant cost of their business.  The CPUC has a long-standing history of allowing a utility an EDR as long as the discount does not lead to a cross-subsidy from other customers.   

In March 2014, Edison filed an Application requesting CPUC approval to offer its non-residential customers an Economic Development Rate (EDR) for the period 2014-2018, with the stated purpose to strengthen California’s economy and promote employment opportunities. Edison’s proposed EDR would offer discounted rates to commercial and industrial customers with at least 200 kW of consumption in economically distressed counties and cities within the Edison service territory:

  • 12% standard discount for 5 years
  • 30% enhanced EDR discount for 5 years to customers located in counties and cities with unemployment rates that are 125% of the state average in the previous year

In October 2014, ORA and Edison filed a Proposed Settlement with the CPUC which would: 

  • Cap overall program participation at no more than 200 MW, regardless of the type of discount (Standard or Enhanced)
  • Cap Enhanced EDR participation at 40 MW
  • Cap the constrained area component of Enhanced EDR participation at no more than 10 MW (that is, areas where energy supplies are tighter, and therefore the system could benefit from reduced energy consumption)

On March 6, 2015, the CPUC issued its Proposed Decision which would approve the Settlement. Opening Comments by parties are due on March 26, 2015. Reply Comments are due April 1. The Commission may consider the Proposed Decision as early as its April 9, 2015 business meeting.

 

ORA’s Policy Position 

ORA supports the Proposed Settlement because it provides reasonable measures to promote business growth in California while setting customer protections that mitigate the risk that the EDR program will result in increased customer rates. The settlement includes three levels of “caps” to address ORA’s concerns that Edison’s proposed EDR could create a situation where the amounts paid by EDR customers would be less than the marginal costs for serving those EDR customers - that is, the additional cost of providing one more unit of electricity to a new customer. In particular, the 10MW limit on the EDR located in “constrained areas” should be a significant customer safeguard.

 

Proceeding Status

See the Proceeding docket.