APPLICATION SEEKING MODIFICATION OF RESOLUTION E-3707

On August 1, 2001, Poly-Tainer, Inc. (applicant) filed a petition for modification of Resolution E-3707. Applicant requests that EDR customers be allowed to opt-out of EDR agreements effective December 7, 2000 (the date of Resolution E-3707), with all liquidated damages waived. SCE filed a response in support, and responses or comments in support were filed or received from several EDR customers. No responses or comments in opposition were filed or received.

Applicant is correct that dramatic events occurred after December 7, 2000 which require reconsideration of our treatment of EDR tariffs and agreements. For example, on January 17, 2001, Governor Gray Davis proclaimed a State of Emergency based on a dysfunctional electricity market. On January 26, 2001, the Commission issued an emergency order to address potential jeopardy to public health, safety and welfare that might be caused by our interruptible program. (D.01-01-056.) On April 3, 2001, we made important improvements to interruptible tariffs, and, among other things, permitted SCE interruptible rate customers to opt-out of those rate schedules back to November 1, 2000 without penalty. (D.01-04-006.)

These same dramatic events affected EDR customers. In fact, EDR customers with Schedule I-6 as their OAT were hit twice. First, they were subject to frequent interruptions and large penalties for failure to interrupt. Second, they were forced by Resolution E-3707 to continue to pay minimum charges. The minimum charges resulted in EDR customers paying rates greater than those under their OAT. As SCE reports, all EDR customers have at some time paid monthly bills exceeding what they would have paid under their OAT. This has occurred since the time that wholesale prices began to dramatically increase in Summer 2000, or on or after July 1 2000.

EDR customers were recruited or encouraged by the State of California to locate, continue or expand load within the state that might otherwise be located, moved or expanded outside the state. EDR customers acted upon a reasonable belief that EDRs would normally result in a discount from the OAT for the first five years. Minimum charge provisions were not reasonably expected to be used often, if at all, just as the number of calls to interrupt and penalty provisions were not reasonably expected to dominate the interruptible program. The profound dysfunction of electricity market in 2000 and 2001 produced different outcomes. These outcomes resulted in our taking extraordinary actions in D.01-01-056 and D.01-04-006 for interruptible programs, and require similar actions here.

As a result, we generally grant the application. We authorize EDR customers to opt-out of EDR agreements effective December 7, 2000, with liquidated damages waived. This relief is available to all EDR customers from July 1 2000 through the present, including any who might have terminated and paid, or incurred liability for, liquidated damages before being informed of our decision.

To implement this order, SCE should notify all EDR customers within 30 days of the date that revised tariffs become effective. EDR customers should have up to 30 days after the date of notification to make the election whether or not to opt-out effective December 7, 2000. The notification should clearly state the available relief, and that the option expires 30 days after the date of notification.

Applicant asserts that SCE's shareholders should not be penalized by being required to absorb the differences between billed amounts and amounts due if SCE adopts the option of capping EDR rates at OAT rates for services rendered before December 7, 2000, the date of Resolution E-3707. We decline to adopt applicant's recommendation to exclude that option. SCE did not exercise the option, but no showing is compelling that the option was not viable. No other specific recommendations are made for ratemaking treatment, and none are adopted.

Adopting no special or unique ratemaking treatment means we do not authorize recovery from ratepayers of any revenue adjustments, or lost revenues, that may result from this resolution. The rate freeze itself has this effect during the duration of the rate freeze.⁷ Moreover, just as we did in D.96-08-025, we exclude revenue shortfalls from costs to be subtracted or netted out before sharing. (67 CPUC2d 297, 324.) Revenue shortfalls here include any revenue adjustments, or lost revenues, resulting from this Resolution.

⁷ We note that recent settlement of litigation between SCE and the Commission results in frozen rates for up to several years beyond March 31, 2002, the date that might otherwise control pursuant to Pub. Util. Code § 368.