State regulators have cleared the way for Southern California Edison to raise electricity rates by 5 percent -- the utility had requested a 16.6 percent hike -- in order to cover the cost of providing "safe and reliable" electricity and integrating renewable energy sources.
Average residential customers should expect their bills to climb about $7 per month beginning in January, Edison said in a statement.
SCE officials described the California Public Utilities Commission approval of the scaled-back rate increase as "constructive." The increase is expected to generate close to nearly $840 million over three years, which SCE said would help the utility make infrastructure improvements that will keep residential rates "at about the national average."
The CPUC ordered Edison to try harder to cut costs, and the commission disallowed some of what it called "non-essential" projects. The ruling will force the utility to cut operations and maintenance expenses by about $258 million and spending on capital projects by $756 million.
CPUC Commissioner Timothy Alan Simon, who led the review, said the decision strikes a balance between the goals of the utility and protecting ratepayers.
"This decision ensures that SCE is able to invest in smart energy systems, renewables and safety and reliability while its ratepayers are protected under the CPUC's prudent review," Simon said.
The decision authorizes Edison to beef up equipment inspections and to use new technology to better track the condition and service record of the utility's assets. Regulators also ordered an independent review of SCE's system utility poles to determine whether current loads meet legal standards and an independent audit of SCE's spending on infrastructure repair and replacement.
The report by the CPUC addressed widespread criticism over SCE's response to a destructive 2011 windstorm. The commission required SCE to the commission with a progress report next year on the utility's stated commitments to improve communications with customers during emergencies.
"While today's decision results in a rate increase for SCE's ratepayers, this is a necessary investment in our future. We need to do a more thorough job in monitoring, maintaining, and replacing our aging electricity infrastructure. We also need to modernize and enhance our electricity system to better achieve the state's environmental policy goals," Commissioner Mike Florio said. "We will be vigilant to ensure that SCE will spend every penny wisely."