3. SCE's Updated Forecast
On November 10, 2010, SCE served its updated testimony to: (1) update SCE's 2011 sales and load forecast; (2) update SCE's 2011 ERRA proceeding revenue requirement; (3) provide an estimate of the 2011 Cost Responsibility Surcharge (CRS) components for Direct Access (DA), Departing Load (DL), and Community Choice Aggregation (CCA) customers; and (4) update SCE's estimated 2011 overall consolidated revenue requirement.
SCE's updated sales and load forecast for 2011 is shown in Table II-1 of Exhibit SCE-4. As shown in Table II-1, the retail sales forecast of 85,111 GWh less 10,787 GWh of DA sales yields a bundled service customer sales forecast of 74,324 GWh. This updated bundled service customer sales forecast is 87 GWh, or 0.1 percent, lower than SCE's bundled service customer sales forecast included in its original testimony. After multiplying this updated bundled service customer sales forecast by the average annual distribution loss factor per its forecast methodology, SCE produced an updated ISO level bundled service customer load forecast for 2011.
SCE's updated 2011 ERRA revenue requirement is $3.448 billion, which represents an increase of $277 million from the current ERRA revenue requirement and is $155 million less than the estimated 2011 ERRA revenue requirement set forth in SCE's August Application. As SCE explained in its updated testimony, the reduction in the estimated 2011 ERRA revenue requirement is primarily due to a reduction in the 2011 average gas price forecast and the rescheduling of a San Onofre Nuclear Generating Station (SONGS) Unit 2 refueling outage from 2011, as reported in SCE's initial testimony, to 2012. SCE's updated 2011 forecast assumes an average natural gas price of $4.18/MMBtu1 that is based on an October 18, 2010 New York Mercantile Exchange (NYMEX) gas price forward curve. This is a $1.05/MMBtu reduction in the gas price used to support SCE's August Application. SCE included all documents and updated tables supporting its updated 2011 ERRA proceeding revenue requirement in its presentation.
SCE stated that it was no longer requesting the Commission to include an estimated $0.870 million associated with availability incentive payments for the Mountainview Generating Station (Mountainview).2 SCE explained that, although it believes these estimated payments are properly included in its 2011 ERRA revenue requirement, it is voluntarily removing them pursuant to an agreement with DRA. Instead, SCE will record these incentive payments as they are earned in the ERRA balancing account and present these amounts for review in its annual April ERRA review proceeding.
SCE has also addressed DRA's concerns regarding the reasonableness of SCE's updated 2011 ERRA revenue requirement. DRA questioned the accuracy of SCE's electricity production cost model used to forecast the dispatch of its energy portfolio. DRA requested SCE to provide a showing that its forecast dispatch model had been verified and/or internally vetted prior to SCE's August Application being submitted to the Commission. To address DRA's concern, SCE submitted rebuttal testimony, explaining its forecast dispatch model in detail, and also explaining the formal validation process that it uses to ensure that its dispatch model produces accurate results. SCE provided further details regarding its forecast dispatch model and internal validation process during a meeting with DRA on November 19, 2010. During this meeting, the parties also discussed SCE's November forecast update and the results of a gas price sensitivity analysis that SCE agreed to perform for DRA in this proceeding. To assist DRA, SCE agreed to include a discussion of its internal forecast validation process in its direct testimony in support of next year's ERRA forecast application, and to conduct an upfront gas price sensitivity analysis that it will provide to DRA in its supporting workpapers.
SCE believes that it has fully cooperated with DRA in its review of SCE's August Application, and that the evidence it has provided in this proceeding supports a Commission finding that its 2011 ERRA revenue requirement is reasonable and should be adopted. DRA has informed SCE that it appreciates SCE's efforts to address its concerns in this proceeding, and is no longer opposing SCE's 2011 ERRA revenue requirement. SCE therefore requests the Commission to find that its updated 2011 ERRA revenue requirement is reasonable and should be adopted.
1 "MMBtu" stands for one million British thermal units.
2 In its August Application, SCE informed the Commission that it was including an estimated $0.870 million availability incentive associated with Mountainview. Although SCE intended to include these estimated incentive payments as part of its application, they were inadvertently omitted from its calculation of its initial 2011 ERRA revenue requirement. SCE discovered the miscalculation on November 17, 2010, after it filed its updated testimony in this proceeding. SCE informed the Division of Ratepayer Advocates (DRA) of the discovery later that day, and indicated that it would note the omission in its opening brief.
