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Moreno Valley Seeks Reduction in Street Light Rates Charged by SCE

The City of Moreno Valley has submitted testimony on the rates Southern California Edison (SCE) charges to operate street lights as part of SCE's general rate case. The Coalition of Affordable Street Lights, a group spearheaded by Moreno Valley and which includes the cities of Torrance, Yorba Linda, Downey, Huntington Beach and Rancho Cucamonga, filed testimony on Monday, February 6, 2012 with the California Public Utility Commission's (CPUC). The CPUC oversees the general rate case proceedings.

Over the last five years, SCE has increased the rate it charges to operate street lights by 58%, causing Moreno Valley to draw upon its General Fund to keep the street lights operational. For fiscal year 2012/13 the general fund subsidy is projected at $ 1,100,000 and will continue to grow if utility costs are not contained. That's $1,100,000 that the City cannot use for other vital public services including, but not limited to, public safety, recreational programs for its senior citizens or youth, and roadway maintenance.

Up until fiscal year 2008/09, the street light program was 100% funded by a parcel charge that is assessed on property tax bills. Moreno Valley property owners have been balloted twice (once in 2009 and again in 2010) to increase parcel charges by approximately $15/year to cover the increases in utility costs. Both times property owners opposed the increase.

While conducting research for its testimony, the Coalition discovered what appears to be an overstatement of SCE's real cost to provide street light service. SCE's street light cost information is far from complete and in some cases shows significant errors, making it difficult to precisely estimate SCE's actual costs. However, initial projections based on the limited information provided by SCE show that current street light rates may in some cases be more than double what would be required to fully cover SCE's costs.

While attempting to understand why SCE's rates continue to increase, Moreno Valley learned from SCE that the calculation for street light rates provide hidden subsidies. In most cases, private developers install street light facilities and deed the facilities to SCE. The Coalition has discovered that even though cities may condition developers to install street lights and fund the full cost of the installation, SCE has been providing them with a discount on street light installation costs, unbeknownst to the developer. That discount is then being recovered through the rates charged to cities and ultimately to the property owners through SCE's rates for street lights.

In its testimony, the Coalition proposes that street light rates should be brought down to a reasonable level and should be set based on SCE's actual costs. SCE should be required to disclose the information needed to calculate cost-based street light rates, which includes eliminating any subsidy to private developers. Cities are also asking for regular reports from SCE providing an update on street light repairs so it can in turn provide timely information to its citizenry.

SCE will have the option to negotiate a settlement agreement with the Coalition over the next few months. If a settlement cannot be reached, the matter will be litigated before the CPUC.

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