2. Background

In Decision (D.) 02-10-062 and D.02-12-074, the Commission determined that certain procurement related operations should be reviewed annually in the Energy Resource Recovery Account (ERRA) proceeding. This review includes utility retained generation (URG) expenses, Southern California Edison's (SCE's) administration of existing qualifying facility (QF) contracts, bilateral contracts, inter-utility power contracts, renewable resource contracts, natural gas tolling agreements, and California Department of Water Resources contracts allocated to SCE's customers in D.02-09-053. In addition, the Commission requires SCE to demonstrate that its least-cost dispatch operations and related spot market transactions during the Record Period complied with Standard of Conduct No. 4 (SOC 4) in its Commission-approved procurement plan, as clarified in D.05-01-054. In this application, SCE has set forth its procurement related operations for the Record Period January 1, 2008 through December 31, 2008 (Record Period) for such review and demonstration.

Also, as required by D.02-10-062, SCE has set forth the entries recorded in the ERRA Balancing Account and other regulatory accounts for review. SCE requests that the Commission find its operations and entries related to these regulatory accounts to be appropriate, correctly stated, and in compliance with the relevant Commission decisions. SCE also seeks to recover the net under-collected balance of $35,386,000 recorded in four of these accounts.

On May 6, 2009, a protest to the application was filed by the Division of Ratepayer Advocates (DRA), the only other party to this proceeding. SCE filed a reply to the protest on May 18, 2009.

A prehearing conference was held on June 2, 2009. The assigned Commissioner's Ruling and Scoping Memo (Scoping Memo) was issued on June 24, 2009. DRA testimony was served on August 27, 2009. A second prehearing conference was held on October 1, 2009 to discuss and set a revised procedural schedule. SCE rebuttal testimony was served on October 8, 2009. Evidentiary hearing was held on October 29, 2009. Opening briefs were filed on December 3, 2009, and reply briefs were filed on December 22, 2009, at which time this matter was submitted for decision.

SCE, as the applicant, has the burden of affirmatively establishing the reasonableness of all aspects of its request and proving that it is entitled to the Commission actions and relief in rates that it is requesting. As with most utility related matters, the standard of proof that the applicant must meet is that of a preponderance of evidence. It is with these principles in mind that we review the various aspects of SCE's request.