6. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner and Hallie Yacknin is the assigned ALJ and presiding officer in this proceeding.

1. SCE's ownership of its interest in Four Corners is no longer necessary or useful in the performance of its duties to the public, under Pub. Util. Code § 851.

2. The divestiture of SCE's interest will not impair the reliability of the electric supply.

3. SCE's divestiture of its interest in Four Corners will resolve the tension between the EPS rules (prohibiting SCE from making certain life-extending expenditure for Four Corners) and SCE's potential contractual obligations under the Four Corners Project Operating Agreement (funding certain pro rata capital investments as a co-owner).

4. SCE's exit from coal-fired generation ownership in 2012 is consistent with the Commission's requirement that it do so by 2016.

5. Under a reasonable range of assumptions, the value of the Sale Agreement will hold SCE ratepayers economically indifferent to a sale before the expiration of the Operating Agreement.

6. SCE seeks authority to make capital expenditures on Four Corners in 2012 for 12 routine maintenance projects that do not increase the rated capacity of the power plant.

7. SCE does not seek cost recovery for these expenditures. Instead, upon the close of the transaction, APS will reimburse SCE for these expenditures (minus depreciation) through a corresponding increase to the sale price.

8. In light of SCE's sale of its interests in Four Corners, SCE's forecast 2012 capital expenditures do not represent a long-term financial commitment to the power plant nor do they expose California ratepayers to avoidable GHG compliance costs.

9. Recording the net after-tax gain on sale, grossed up to a revenue requirement level, as a credit to the generation sub-account of SCE's Base Revenue Requirement Balancing Account, will reasonably ensure that it accrues to ratepayers.

10. Preapproval of SCE's recovery of its share of liability for pension and OPEB costs under the Sale Agreement would provide no incentive to SCE to critically review and, if appropriate, challenge APS's forecast at the time of closing.

11. SCE's sale of its interest in Four Corners, ratemaking treatment with respect to the sale transaction and proceeds, and 2012 capital expenditures in the power plant will have no significant adverse environmental impacts.

12. The Commission has considered and reviewed the IS/ND.

13. The IS/ND reflects the Commission's independent judgment and analysis.

1. The value of the Sale Agreement is reasonable.

2. SCE's divestiture of its interests in Four Corners is consistent with the EPS and Commission decisions establishing and implementing the EPS for SCE.

3. SCE's divestiture of its interests in Four Corners pursuant to the Sale Agreement is reasonable and should be approved.

4. SCE should be authorized to make its forecast 2012 capital expenditures on Four Corners, and should be granted an exemption from the EPS rules adopted in D.07-01-039 and the restrictions of D.10-10-016, to the extent necessary to make these investments.

5. SCE should credit the entire after-tax, above-book value gain for Four Corners, grossed up to a revenue requirement, to SCE ratepayers through the Base Revenue Requirement Balancing Account.

6. Determining SCE's pension and OPEB liability based on a forecast of financial market performance at the time of closing is reasonable.

7. SCE should submit a Tier 3 advice letter for recovery of its pension and OPEB liabilities under the Sale Agreement based on its independent verification that the costs reflected in the closing statement are based on the same accounting principles, policies, and methodology as APS has historically used in connection with the calculation of the owners' pension and OPEB liabilities. The advice letter should be submitted within five days after its receipt of the final closing statement, and served on the official service list for this proceeding.

8. SCE's outside counsel costs are properly recovered through its GRC revenue requirement and should not be netted out from the calculation of the net proceeds of the sale.

9. The Commission has reviewed and considered the IS/ND.

10. The IS/ND was completed in compliance with CEQA.

11. Proceeding A.10-11-010 should be closed.

12. This order should be effective immediately.

ORDER

IT IS ORDERED that:

1. Southern California Edison Company's agreements to sell its interests in Four Corners Generation Station to Arizona Public Service are approved.

2. Southern California Edison Company is authorized to make its forecasted 2012 capital expenditures on Four Corners Generation Station, and is granted an exemption from the greenhouse gas emissions performance standards rules adopted in Decision 07-01-039 and the restrictions of Decision 10-10-016, to the extent necessary to make these investments.

3. Southern California Edison Company shall credit the entire after-tax, above-book value gain for Four Corners, grossed up to a revenue requirement, to its ratepayers through the Base Revenue Requirement Balancing Account.

4. Southern California Edison Company shall not net its outside counsel costs related to this sale from the calculation of the net proceeds of the sale.

5. Southern California Edison Company shall submit a Tier 3 advice letter for recovery of its pension and other post-employment benefits liabilities under the Sale Agreement based on its independent verification that the costs reflected in the closing statement are based on the same accounting principles, policies, and methodology as Arizona Power Service has historically used in connection with the calculation of the owners' pension and other post-employment benefits liabilities. Southern California Edison Company shall submit the advice letter within five days after receipt of the final closing statement, and serve it on the official service list for Application 10-11-010.

6. Application 10-11-010 is closed.

This order is effective today.

Dated March 22, 2012, at San Francisco, California.

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