Edison seeks nearly $1 billion rate boost over three years.

Just months after rolling back electricity rate surcharges tied to the California energy crisis, Southern California Edison has asked for new rate increases that, combined with other proposals, could increase customers' bills by as much as 10 percent over the next 18 months.

The exact amount of the rate hikes depends on a series of state regulatory decisions in the coming weeks. Edison's requests, which total about $900 million over the next three years (raising rates 3 percent a year), could be further added to if a proposal by state Public Utilities Commission President Michael Peevey or a separate request by the state's Department of Water Resources are approved.

"The higher rates will start showing up on customers' bills sometime in the first quarter of next year," said Edison spokesman Gil Alexander.

Reasons for the requests vary. Edison is incurring higher infrastructure costs, Peevey wants the utilities to establish higher power-reserve margins, and the Department of Water Resources cites the impact of long-term energy contracts signed by Gov. Gray Davis during the height of the energy crisis.

Opponents of the rate hikes argue that SCE parent company Edison International recently reported healthy profits and has decided to reinstate dividend payments for the first time in nearly three years.

"We really need to scrutinize costs at all levels," said PUC Commissioner Loretta Lynch. "Small businesses, large businesses and even residents are all hanging on by their fingernails. And yet, here is Edison reporting profit increases and then coming back to us for a rate increase."

Edison reported third-quarter net income of $544 million, compared with $352 million for the like period a year ago. Revenue rose 3.4 percent, to $3.83 billion.

Edison officials said the rate increase proposal has nothing to do with current profits or dividends. Rather, they said, it's part of a triennial review of operating costs and power system maintenance that's required by state regulators. Several months ago, Edison rates fell by 13 percent after it eliminated a rate surcharge instituted to pay off debts accumulated during the power crisis.

Much of the utility's transmission grid was built out in the 1940s and 1950s and needs to be replaced within 10 years, Alexander said. There are added costs for disposing of old power poles. Part of the rate hike may be offset by lower costs at the San Onofre nuclear plant.

And like other employers, Southern California Edison is grappling with higher health care and benefit costs PUC rules allow Edison to recover those costs from ratepayers.

Peevey's proposal, which is pan of a separate regulatory proceeding, could drive Edison's rates up further. In pan, it would require Edison and the other two investor-owned utilities--PG&E Corp. unit Pacific Gas and Electric and Sempra Energy's San Diego Gas & Electric unit--to buy 17 percent more power than they need to avoid the possibility of future shortages.

But Lynch considers his plan an example of a PUC mentality to "buy every power source in sight ... There is this rush to judgment to make sure there is no repeat of the energy crisis, with no thought of how much this is going to cost ratepayers," she said.

SCE director of revenue and tariffs Akbar Jazayeri said Edison customers would not feel the impact of the Peevey proposal until 2005. He also noted that a competing proposal by PUC staff would spread out the costs of buying the extra power over a three-year period, resulting in a smaller rate increase in 2005.

Addressing the L.A. Area Chamber of Commerce and a power industry group last month. Peevey said his alternative would only have a slight impact on rates.

"It will be nothing like what consumers experienced in 2001 and considerably less than the decrease utility customers saw earlier this year," Peevey said.

The PUC is set to consider Edison's proposal on Dec. 18. Also scheduled at that meeting is a request from the Department of Water Resources, which stepped in to purchase power on behalf of the insolvent utilities during the power crisis three years ago for a rate increase from investor-owned utility ratepayers.

According to documents filed in September, the DWR wants to collect an additional $1.5 billion next year to cover the cost of the long-term power contracts that Davis signed at the height of the power crisis. If approved, it would add another 3 percent to Edison ratepayers' bills.

DWR spokesman Oscar Hidalgo said the higher costs result from provisions in the power contracts to purchase 15 percent more power in 2004 than in 2003.