Seal Beach residents, as well as the rest of Southern California Edison’s electricity customers, may be asked to share the cost of increased fresh water rates on Catalina Island with the people who live on the island. The final decision will be made by the California Public Utilities Commission in late 2013 or early 2014. Consumers will have until mid-November to tell the commission how they feel about the proposal.
A Southern California Edison spokesman said the state is expected to approve new Catalina drinking water rates in late 2013.
An attorney representing opponents of the water rate increase, officially known as “protestants” in the language of administrative law, said he expected the case to be settled in early 2014.
Edison customers have recently received official notice about the proposal along with their bills.
Attorney Norris Bishton, who represents Catalina water users, said Edison’s electricity customers—including both Islanders and mainland residents—would see their electric bills increase 9 cents a month for 12 months.
Bishton said Edison had 8 million customers.
The Edison website said the company serves “more than 14 million people” in 50,000 central, coastal and Southern California, communities, not including Los Angeles and a few other cities.
Robert Laffoon-Villegas, of Media Relations for Edison, said Edison would be allowed to recover 7.5 percent of the company’s capital improvement costs on Catalina.
Bishton said Edison originally asked for Islanders to pay 85 percent of their capital improvement costs.
Both men said the new rates are the result of a settlement agreement between the Island’s water ratepayers, Edison, the Division of Ratepayer Advocates (a California agency) and The Utility Reform Network, a non-profit consumer advocacy group.
Otherwise, roughly 4,000 Catalina Island residents will have to split the cost of $10.7 million in Edison capital improvements to the island’s fresh water system. Most Catalina residents live in the small incorporated city of Avalon, while others live at the private resort called Two Harbors.
Laffoon-Villegas said the agreement would have to be approved by the California Public Utilities Commission.
“SCE’s shareholders will incur a $2.5 million capital disallowance and a $205,000 disallowance for operations and maintenance,” Laffoon-Villegas said.
“SCE’s Catalina water rate of return will be lowered to 7.9 percent as compared to the current rate of return of 8.74 percent,” Laffoon-Villegas said.
He said that Edison, the protestants, DRA, and TURN filed a joint motion on Aug 16, 2013 asking the Public Utility Commission to approve an all-party settlement in the rate case proceeding.
Bishton said the commissioners had asked the parties to reach a settlement to avoid establishing a precedent.
“The proposed settlement transfers $8.796 million of Edison’s capital expenditures on the water system to its 8,000,000 electric ratepayers, costing them 9 cents a month for 12 months,” Bishton said.
But before the state can approve the settlement, electricity customers will be given a chance to comment on the proposal.
“Notice of the settlement is being sent to electric ratepayers with their bills. They will have until November 14 to comment on the proposed settlement,” Bishton said.
The attorney predicted that the administrative law judge overseeing the case recommend approval “because the settlement follows the outline of his proposed decision,” Bishton said.
“A decision by the CPUC is expected early next year,” Bishton said.
“DRA and TURN, representing the interests of electric ratepayers, insisted that Island water ratepayers pay more since the electric ratepayers were picking up the total cost of capital improvements,” Bishton said. “The proposed settlement does not increase Edison’s Rate Base (capital improvements) which Islanders would have to pay over time.”
Bishton also said that under a new design for water rate charges, all water customers would pay the same amount of money for a gallon of water, rather than different rates for residential and commercial users.
In April 2012, Administrative Law Judge Robert Barnett issued a proposed decision in the water rate case that supported the idea of having Edison electricity customers pay for the water system improvements.
In reaching his decision to pass $10,700,000 of Edison’s Rate Base to mainland electric ratepayers, Barnett said that the “water system primarily serves . . . visitors,” and that Catalina ratepayers, who currently are paying the highest rates in California, facing a doubling or more of their current bills, “would welcome the relief, as was made clear at the public hearing.”
In early 2011, Ben Harvey, who at the time was a spokesman for Edison, said that if the alternative plan was approved by the Utilities Commission, the rate increase would be a one-time only increase for a one-year period. Edison’s mainland electricity customers would share the $10.7 million bill for improvements to Catalina’s water system.
Harvey (who recently became city manager of the city of Avalon on Catalina) said Edison’s argument was that the cost of the water system improvements would be too much to be born only by Catalina residents.
