6. The Division of Ratepayer Advocates' Position

DRA made an extensive analysis of SCE's submission. Based on that analysis and discussion with SCE, DRA does not oppose SCE's 2011 ERRA forecast of $3.448 billion. DRA and SCE held a meet and confer subsequent to the service of SCE's rebuttal testimony and discussed SCE's forecast model, forecasting assumptions, and their impact on SCE's forecast and associated revenue requirement. SCE staff responded to DRA questions and addressed various issues about the forecast model and the resulting cost estimates. SCE also provided responses to data requests as a part of the meet and confer process. SCE has agreed with DRA's recommendation that SCE will exclude Mountainview incentive payments from its forecast 2011 ERRA revenue requirement, and instead record those payments after-the-fact and address them in the ERRA review application. As a result of this exchange of information, DRA recommends approval of SCE's 2011 ERRA forecast application.

DRA and SCE have agreed that future ERRA forecast applications will:

· Include a discussion of the internal forecast validation process in direct testimony; and

· SCE will conduct a sensitivity analysis on the forecast prior to filing the application and will include the results of that test in the workpapers that accompany the application and direct testimony.

As a result of that agreement, SCE and DRA propose that the following should be part of the final decision in this proceeding:

SCE will conduct a sensitivity analysis on the forecast prior to filing its next five (5) annual ERRA Forecast Applications and will include the results of that analysis in the workpapers that accompany those applications and direct testimony. Unless SCE and DRA later agree to a revised methodology, the sensitivity analysis shall be based on a gas price change equal to two (2) times the standard deviation of the projected 12-month gas price strip of the forecast year. The 12-month projected gas prices shall also be based on the most recent 20 days historical gas price data. Finally, SCE shall assume a proportional change in power prices to keep the Implied Market Heat Rate (IMHR) constant. SCE and DRA should meet after SCE files its August 2016 ERRA Forecast Application to discuss whether an upfront sensitivity analysis is warranted for future ERRA Forecast Applications.

We will adopt this proposal.