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After Filing For Bankruptcy, A Power Company In Western Riverside County Is Closing Down

Western Community Energy is exiting the energy sector.

Western, a public agency responsible for providing power to 113,000 consumers in six western Riverside County cities, has begun the process of winding down operations and transferring customers back to Southern California Edison following its bankruptcy filing last month.

Western Community’s board of directors voted on June 9 to apply to the California Public Utilities Commission for “deregistration.” In an email, Terrie Prosper, who manages commission media relations, said Western, which covers Eastvale, Jurupa Valley, Norco, Wildomar, Perris, and Hemet, “is ceasing operations and will no longer serve consumers.”

Western “will continue to work with the legislature and member entities to obtain funding for Covid delinquencies and potential forgiveness for customers who have fallen behind due to Covid, as well as working with its creditors to settle its debts,” Western spokeswoman Elisa Laurel said in an email on Monday, June 14.

Western chose to deregister after talking with the commission and Edison, “since it became clear that WCE did not have sufficient financial means to continue to purchase power for its consumers moving into July,” according to a Western news statement.

“The decision of energy generators to terminate contracts to deliver electricity moving into the summer months had a significant impact on WCE,” according to the announcement. “Without this energy, WCE was compelled to buy energy at market prices, which change daily and are currently high due to expected demand as temperatures rise above 100 degrees in the coming weeks.”

According to the announcement, which was released on Friday, June 11, the deregistration procedure will take two weeks. Unless they opted out, ratepayers in Western’s six cities received their electricity automatically from Western.

In the release, Eastvale City Councilmember Todd Rigby, who chairs Western’s board, stated that deregistering “is the best approach that ensures minimal to no damage to WCE customers, which is the top goal of WCE and SCE.”

“We’re collaborating closely with SCE on a smooth and efficient transition, and both organizations are dedicated to ensuring that customers experience minimal inconveniences and no service interruptions.”

Edison spokeswoman Diane Castro said the utility is working with Western to “guarantee that any effects to customers throughout the transition are minimized” during a phone interview.

After a board decision on May 24, Western, which began in 2016 as an endeavor to harness cities’ bargaining power to acquire cheaper electricity for citizens, filed for Chapter 9 bankruptcy protection in federal court. Creditors owe the agency at least $27 million, including $12 million to Edison.

Officials blamed the failure on a perfect storm of events, ranging from the coronavirus pandemic, which led to a moratorium on power shutoffs for non-paying customers — delinquencies averaged 10 times industry standards in 2020, according to Western — to higher-than-expected power demand due to an August heat wave, and the inability to use pandemic relief funds to bail out the agency’s finances.

Western has emphasized that consumers will not experience any service interruptions. Last month, Laurel warned that the average Western ratepayer might experience a monthly bill rise of $5 to $10.

Laurel said Monday via email that those hikes were predicted after the bankruptcy filing and will no longer materialize.

According to Western, Edison has the right to recoup “re-entry” fees to cover administrative, energy, and other costs associated with bringing Western customers on board.

According to the announcement, if Western does not pay re-entry fees on time, Edison may seek reimbursement from customers. The charge levels are still being set.

According to Western’s news release, clients would return to “normal bundled rates” under Edison, which has historically processed the agency’s bills for power usage.

“The rates between Edison and Western are often only a few percentage points apart,” Laurel said. Customers’ overall electric bills should be similar to or possibly cheaper than what they paid (Western) if they return to (Edison).”

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