Indeed, last month's heat wave could have one silver lining for Edison: power grid operators in other parts of the country are hungry for more power supplies, which could help Mission Energy recover from losses earlier this year.
Closer to home, though, the situation is more urgent.
In an earnings conference call with investors last week, Edison chairman and chief executive John Bryson said that during what he termed the recent "heat storm," customer power use peaked at 4 percent higher than 2005's record and 10 percent higher than 2004.
He said the heat wave was only one factor. Edison's fastest customer growth is occurring in inland regions that tend to have high power usage. What's more, residential customer usage has jumped thanks to all those power-hungry big-screen televisions and larger homes that take more energy to cool. (The standard measure of energy use had to be recalibrated: five years ago, one megawatt was enough to power 1,000 average-sized homes, but now it powers only about 650 homes.)
"In just two years, peak demand has grown by close to the total generating capacity of our largest generating station at the San Onofre nuclear plant. So for planning purposes, we're facing a challenging situation," Bryson said.
As a result, Edison intends to ramp up additional power generation capacity, including two natural gas-fueled plants in the Southern California area that add electricity to the grid during peak usage periods. And earlier this month, the California Public Utilities Commission approved Edison's request to buy up to 1,500 megawatts of additional power supplies over the next 10 years.
The heat wave also knocked out aging transformers, plunging thousands of Edison customers into darkness with no air conditioning. Of course, not only Edison transformers blew; virtually every electric utility in the state including the Los Angeles Department of Water & Power had transformer problems.
Bryson tried to put the problem in perspective, noting that only 0.2 percent of Southern California Edison's 700,000 transformers failed. He also noted that Edison is spending $2 billion per year to upgrade its power infrastructure, including scheduling the replacement of 12,000 transformers in 2006. Southern California Edison serves most of Los Angeles County outside of the city of L.A., in addition to surrounding areas.
Of course, all this additional maintenance, combined with higher natural gas prices, means Edison has sought more money from ratepayers to cover its costs. Late last year, Edison won PUC approval for a 15 percent rate hike, which took effect Jan. 1. This spring, Edison sought and won approval for another 2 percent rate hike to take effect on Aug. 1.
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