By Robert Mullin
Edison International is maneuvering to capitalize on California’s effort to meet its greenhouse gas emissions goals and encourage the use of distributed energy resources.
The 2018-2019 rate case for subsidiary Southern California Edison will include a capital spending request “designed to help California achieve its low-carbon policy objectives and to enable customer choice,” Edison CEO Ted Craver said during a call with investors last week.
Edison’s second-quarter profits fell 27% to $276 million, in part because year-ago earnings reflected a $100 million income tax benefit.
The second quarter of 2015 also included revenue SCE later refunded to ratepayers after a delayed ruling from state regulators on its 2015 rate case.
As a result, the company said, any comparison between the two quarters was “not meaningful.”
Craver said SCE’s rate base is projected to grow 7% over 2016-2017 based on capital spending approved by the California Public Utilities Commission and expected spending on FERC-jurisdictional transmission projects.
While the company expects “relatively little variance” in the timing of its spending on CPUC-jurisdictional projects, it could experience some “variability” in the timing for its FERC projects, which Craver attributed to delays in routing decisions and state and federal permitting approvals.
“A recent example was the $1.1 billion West of Devers project, which has been something of a moving target with CPUC staff — even with CAISO support — but appears ready for final CPUC approval with a supportive alternate proposed decision pending,” Craver said.
Project delays could defer some spending planned for 2017 to subsequent years, he said, but SCE does expect to complete major transmission projects linking the utility’s service territory with renewable generation located farther inland.
Edison anticipates a future shaped by 2015 legislation that seeks to use the grid to help meet the state’s carbon reductions goals, including reducing vehicle emissions through electrification of the fleet. One byproduct of that law is a current CPUC proceeding that seeks to direct utility investment to facilitate the wider adoption of DER.
In response, capital expenditures will be “lumped into two buckets” in the rate case SCE intends to file with the CPUC on Sept. 1.
The first bucket will consist of “traditional” investments, such as replacing aging infrastructure, adding new customer connections, upgrading information technology and maintaining SCE’s generators. The second will reflect investments in the modernization of the utility’s distribution system to facilitate the growth of DER.
Craver said the CPUC has “provided only some early direction on preferred technologies and required investments” for modernization.
Through its upcoming rate case, SCE will be the first utility “to provide specificity for how this technology evolution should unfold,” Craver said.
While Craver said he wouldn’t divulge details ahead of the filing, he noted that some of the utility’s modernization investments amounted to reinforcing the existing system, such as upgrading low-voltage circuits to accommodate increasing amounts of DER.
“But other parts really have no precedent, and therefore we do not know how to handicap how much of our request might finally be approved,” Craver said.
