In fact, the company continues to cut costs to conserve cash in order to continue operating and serving its 4.3 million customers. While Commissioners acknowledged the need to restore the creditworthiness of the utilities, they effectively did nothing to address the lingering procurement undercollection. This issue remains to be resolved through ongoing negotiations with Governor Gray Davis and other policy makers. The revenues generated by the rate increase will be used to repay the state on a going- forward basis for the net short supply of power it purchases for SCE customers. The amount is substantial, because wholesale prices are up to 10 times higher than they were a year ago.
Commissioners plan to take up the matter in the near future.
SCE's position, however, is that the utility satisfied the statutory conditions to end the rate freeze last August. This is likely, especially since the current rate increase still does not provide full recovery of the actual cost of wholesale power, especially when you factor in number of exempted customers and those who do not exceed the baseline benchmarks. While there's enough blame to go around for what went wrong in the state's deregulation program, the fundamental reality is that customers must pay for the power they use. Prices are, in fact, artificially high, and we continue to seek regulatory and legal remedies to make them affordable and reasonable. Before wholesale prices soared, SCE's rates were competitive with municipal rates.