Mattson Agenda Dec. Opinion Granting Application of Poly-Tainer, Inc. Petitioning for Modification of Resolution E-3707 regarding Edison's Economic Development Rates

2. Background

Decision (D.) 96-08-025 authorized new pricing options for SCE, including EDR tariffs. These tariffs were offered to encourage certain businesses to locate, remain, or expand within SCE's service area. The goal was to increase the number of customers and load supporting SCE's distribution revenue requirement.

EDRs are provided through three SCE tariffs:

· Schedule AEDR (Attraction Economic Development Rate)

· Schedule REDR (Retention Economic Development Rate)

· Schedule EEDR (Expansion Economic Development Rate)

EDRs provide eligible customers the following discounts from charges under their OAT:

YEAR

DISCOUNT

1

25%

2

20%

3

15%

4

10%

5

5%

6

0%

7

0%

EDR customers are required to maintain a minimum level of load for seven years. The combined eligible load under Schedules AEDR, EEDR and REDR is limited to 100 MW for all participants.

The original EDRs were subject to a minimum charge provision based on the Power Exchange (PX) energy price. On July 3, 2000, SCE filed Advice Letter 1461-E. SCE requested authority to modify the EDR minimum charge provision, so that EDR customers would not be charged more than they would otherwise be assessed under their OAT. SCE made this filing when it discovered that the unforeseen combination of high PX energy prices, the minimum charge provision, and frozen retail rates could result in charges to EDR customers in excess of those under their OAT. According to SCE, this was inconsistent with the intent of EDRs, which were specifically designed to provide business customers a discount from charges under their OAT as an incentive to locate, remain or expand within SCE's service territory.

On December 7, 2000, the Commission modified the minimum charge provision. (Resolution E-3707.) As modified, minimum charges are computed using the lower of the short run avoided cost or the PX price. Further, EDR schedules were closed to new customers effective December 7, 2000, due to the energy crisis and the need to reduce, rather than retain or stimulate, new load. The Commission did not, however, limit the minimum charge to no more than charges under the OAT.

On August 1, 2001, applicant filed a petition for modification of Resolution E-3707. Applicant asks that EDR customers be permitted to opt-out of EDR tariffs without penalty back to December 7, 2000 (the date of Resolution E-3707), citing events that occurred after December 7, 2000 as justification. SCE filed a response in support. Responses and comments in support were also filed by, or received from, several EDR customers, including InterMetro Industries Corporation; Einstein/Noah Bagel Corp., Cardinal TG; Argon Industries; Paper Coating Company; Parter Medical Products, Inc.; Langer Juice Company, Inc.; Durabag Company, Inc.; Pacific Plastics, Inc.; U.S. Plastic Lumber LTD.; Del Mesa Farms; and Kallen Industries, Inc. (doing business as Wambold Furniture). No responses or comments in opposition were filed or received.