Photo by James BunoanIn the middle of a high-profile Republican-inspired debate about California's sour business environment, Southern California Edison, a Republican-controlled company with lucrative electric monopoly rights granted by the state of California, is gouging small companies.
Take Phil Delgado's PlateCorp., a 19-year-old Orange-based business that makes decorative metal furnishings for cars, trucks and motorcycles. Delgado says he bounced a check for his August utility bill—the first bill he'd missed in almost two decades. Nevertheless, retribution was swift and merciless: on Sept. 18, Edison shocked Delgado with a demand that he not only pay his monthly electric bill of about $15,000, but also give the utility a $31,565 deposit in order to keep power on.
"I feel like it's an extortion bill," said Delgado, who was recently forced to lay off 51 employees because of the skyrocketing electric costs as well as a doubling of his workman's-compensation insurance and a quadrupling of property insurance. "In 19 years, I've been late on just one monthly electric bill, and now they want me to give them a deposit that's more than my current monthly cash flow. I won't be able to stay in business. There just won't be enough profit to offset our costs."
Although he says Orange Mayor Mark Murphy has been helpful, Delgado is getting little sympathy from the utility, which makes billions of state-protected dollars each year for its private shareholders and which claims it has the authority under California Public Utility Commission (PUC) regulations to require deposits. According to Delgado, he paid Edison $14,000 for his current bill and that, after negotiation, utility officials softened their demands. They now say they'll discontinue power to his company if Delgado doesn't make at least a $10,000 down payment on the full deposit (Edison keeps the interest) or purchase an FDIC-insured line of credit in Edison's name by Oct. 3. "I don't know how we're going to do it," he said.
It's impossible to know how many California companies face the same situation; contacted by the Weekly, Edison officials angrily refused to say. The utility's letter to Delgado suggests the deposit demand is a routine matter in cases of late payment.
Shutting off power would not only kill Delgado's business and the remaining 67 jobs, but also threaten the local environment. Power fuels the company's pollution-control systems that prevent metal byproducts such as nickel, copper and chrome from entering the area's water supply. Says Delgado, "I've never had a pollution problem, but if they shut off the power, it's going to be a big, big, toxic problem."
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Edison may have a problem of its own. A review of PUC rules 6 and 7, which utility officials cite as their authority for the deposits, may not support their move against struggling businesses. The two rules specifically address credit questions only for new customers. Delgado's company has been an Edison customer for almost two decades.
The PUC is often accused of being little more than a pawn for the utility giants, and this case may reinforce that point. A PUC official repeatedly referred questions about Edison's authority to require deposits to Edison officials and the company's website. Asked about PUC rules 6 and 7, PUC spokeswoman Sheri Inouye said, "I really don't know. I think they [Edison] have authority to demand the deposit, but you should ask them."
Meanwhile, Delgado's company, which once operated round-the-clock, has cut back to one production shift from 7 a.m. to 6 p.m. He says some Edison officials have seemed sympathetic to his plight, but not all of them. "I had one tell me, 'We really don't care.'"
With friends in high places, Edison doesn't have to care. The prime movers behind—and beneficiaries of—the state's profoundly flawed deregulation legislation, Edison has managed the electric crisis better than anyone else in California. When the electric markets went south, Edison stood to lose billions. Instead, they nabbed a massive rate hikes and a multibillion-dollar government bailout courtesy of the PUC; maintained outrageous giveaways contained in the 1996 deregulation law (including a $30 billion ratepayer-funded subsidy to utility stockholders); blocked out-of-state competition; and managed a textbook PR coup by successfully blaming consumers, consumer-rights groups and environmentalists for the deregulation mess. Edison recently transferred $10 billion to its unregulated, private parent company, Edison International—which has profitable investments around the globe. Edison public-relations material prominently touts a "concern" for the "economic and social well-being of the communities we serve."