The Breakdown | Explaining Southern California's economy
Business & Economy

Southern California Edison plans layoffs and outsourcing of some work

A Southern California Edison sign outside the San Onofre Nuclear Plant. The company is planning layoffs and outsourcing.
A Southern California Edison sign outside the San Onofre Nuclear Plant. The company is planning layoffs and outsourcing.
Grant Slater/KPCC

Southern California Edison plans to lay off workers and outsource certain functions as part  of "ongoing efforts to act as cost effectively and prudently as possible in operations for its customers,"  the utility company said Tuesday. 

In a statement, Southern California Edison said it hadn't finalized the number of employee cuts, but State Senator Alex Padilla told the Los Angeles Times that the number of workers affected by the cuts could be as high as 500 employees and the same number of contractors. Padilla chairs the Senate Energy, Utilities and Communications Committee and had been briefed about coming layoffs. 

Southern California Edison employs about 14,000 people. Travis Miller, director of Utilities Research at Morningstar says utility companies set their management and employee levels in line with growth in their customer bases and, in the case of SoCal Edison, demand for electricity. In the last few years, Miller says, between a rise in energy efficiency and a softening economy, that demand has fallen off or remained flat, but utilities are still adjusting. 

"As utilities go back to regulators and try to justify their costs, regulators are going to push back on behalf of ratepayers, and say 'we need you to become more efficient,'" Miller told KPCC, adding that the utilities will share the cost-savings that come from the cuts with customers.

Los Angeles-based management consultant David Kinney says when a company becomes top-heavy, and starts to streamline its workforce at the management level, it runs the risk of lower level employees feeling disconnected from the company's mission.  That, he says, could have an impact on customer service.

"While Southern California Edison may see the need to do this, I think that there's a potential for some pain for Southern California Edison customers," Kinney says. 

Edison said its efforts to outsource parts of its business include the Information Technology (IT) Department.  

"IT’s effort will enable an increase in quality, speed and capabilities while lowering costs," Edison's statement said. "By better leveraging the knowledge, skills and expertise of industry vendors, SCE will adopt a proven business strategy commonly and successfully used by other top U.S. companies."  

In the Fall of 2012, Edison cut 20 percent of the management staff in its IT department, in response to an audit that found that bloated management ranks in the department contributed to an unhealthy work environment. In December of 2011, Andre Turner, an employee in the IT department, went on a shooting rampage and killed two co-workers before killing himself.