Corona Plans to Seize Edison's Power Lines

By Scott Gold

Oct. 31, 2002 12 AM PT

Times Staff Writer

Frustrated with the high rates being charged by Southern California Edison Co., the city of Corona is expected to announce plans today to take over the distribution of electricity within its boundaries by seizing control of power lines from the big utility, officials said.

Corona Assistant City Manager Beth Groves would confirm Wednesday only that the city would make an announcement regarding the city’s fledgling energy distribution system.

But people familiar with the proposal said top city officials huddled Wednesday to finalize plans for a utility takeover, in which the city would use its power of eminent domain to condemn at least a portion of Edison’s power lines and substations. If that works -- it probably would carry an enormous price tag -- Corona effectively would take control of power distribution within its city limits.

The move could mark the first large, full-fledged municipal utility created since Sacramento formed one in 1947, and the first of any size since 1983, when tiny Needles took similar steps, said Jerry Jordan, executive director of the Sacramento-based California Municipal Utilities Assn.

The main hitch in the plan: “The system is not for sale,” said Edison spokesman Charley Wilson.

That’s why Corona would be forced to use its power of eminent domain -- which probably would drive the case into the courts and ratchet up the cost. Another city investigating the possibility of taking over a power distribution operation recently discovered that the cost would approach $500 million, Wilson said.

“It does surprise me a little bit because of the extraordinary cost burden that it places city residents under if they choose to go that route,” Wilson said. “It is very complicated. It is very time consuming. And it is very expensive.”

Corona’s plan is the latest development in the tense fallout from the California electricity crisis of 2000 and 2001, when wholesale prices soared and rolling blackouts claimed everything from restaurant refrigerators to traffic lights.

Businesses in Corona, which is in western Riverside County, have been complaining about Edison’s rates and quality of service, according to a filing the city made last month with the Federal Energy Regulatory Commission. Some companies have threatened to move to cities that have their own utilities.

Corona has been involved in a bitter back-and-forth with Edison, a unit of Rosemead-based Edison International, since April 2001, when the city formed its own power utility and announced plans to construct a 65-megawatt plant, primarily to serve Golden Cheese Co. of California, a local maker of cheeses such as cheddar and Monterey jack.

Corona’s plans foundered, however, when another potential power customer, the California Department of Water Resources, declined to take part. The city did begin buying bulk power, similar to the steps taken by the City of Industry, and distributes electricity to about 50 business customers today, mostly large manufacturing operations, according to Corona’s Groves.

City officials say they still can’t distribute enough power to the cheese company because Edison has refused to build a connection between the company and the power grid.

Edison has alleged that the transaction would be illegal, and Corona recently filed a complaint over that issue with FERC.

About three-quarters of Californians pay their electric bills to massive, investor-owned utilities such as Edison and Pacific Gas & Electric Co. But about a quarter of state residents pay their bills to government agencies that run their own utilities, such as the Los Angeles Department of Water and Power.

The state constitution guarantees the right of municipalities to deliver power to their residents. That effectively gives Corona the legal right to use eminent domain to take over electrical distribution, experts said.

There are 30 municipal utilities in California, 12 of them in Southern California, Jordan said. Seven of the 30 are more than a century old, including a utility in Anaheim built in 1895, and all but five were built before 1950.

But the energy crisis has renewed interest among local government agencies in reclaiming their destiny from corporate giants, Jordan said.

During the power crisis, for example, the City of Industry crafted a deal with Edison to tap into the power grid and supply power to a new 400-acre industrial park.

Through that pact, the City of Industry began buying bulk power on the open market last year, then transmitting it through Edison’s system for a fee. The power is supplied via cables owned by the City of Industry -- which charges 30% less than Edison does, Industry’s Public Works Director John Ballas said.

City of Industry officials say they made the city more competitive because of the potential savings to manufacturing operations there. “It’s not intended to be a profit center for the city,” Ballas said. “The main purpose is to pass along the savings to the customers.”

San Diego and Fresno counties and the cities of San Marcos and Cerritos, among others, are investigating whether it’s possible to strike out on their own, Jordan said.

“There is a huge amount of interest,” he said. “There is a lot of concern all over that they would like to have control of their electricity future and not be subject to the whims of the market. A lot of local elected officials and citizens looked at [the energy crisis] and said they’d be a lot better off if they made the decisions themselves.”

Dozens of cities are exploring whether they can take over any facets of electrical distribution, and officials are bracing for a wave of utility secession movements similar to Corona’s, said Tony Braun, a Sacramento attorney who represents the California Municipal Utilities Assn.

“They have the legal authority to do it,” Braun said. “It’s a question of economics. I imagine we’ll see this again in the future.”

Times staff writer Nancy Rivera Brooks contributed to this report.