3. Legal and Policy Background of Issues Before Commission

Decision (D.) 02-10-062 established the ERRA balancing accounts for several energy utilities, including SCE, to track fuel and purchased power revenues against actual recorded costs. D.03-07-029 and D.04-01-048 made minor modifications to the ERRA process, D.03-07-029 permitting the transfer of certain revenue requirements into ERRA balancing accounts and D.04-01-048 setting the annual filing schedule. In addition, D.02-12-074 established power procurement plans and rules for booking costs into ERRA. As a result, the ERRA review contemplated in D.02-12-062 and D.02-12-074 includes utility retained generation (URG) expenses and contract administration costs of existing qualifying facility (QF) contracts, bilateral contracts, inter-utility power contracts, renewable resource contracts, and California Department of Water Resource (DWR) contracts allocated to SCE customers in D.02-09-053. Additionally, D.02-10-062 and D.02-12-074 require a compliance review of the utilities least-cost dispatch operations.

D.02-12-062 also requires SCE to set forth the entries recorded in the ERRA Balancing Account for review. In addition, this proceeding also examines entries recorded in the Base Revenue Requirement Balancing Account, the Nuclear Decommissioning Adjustment Mechanism, the Public Purpose Programs Adjustment Mechanism, and the CARE Balancing Account.

SCE also requests to eliminate the 2006 Residential Deferred Revenue Memorandum Account after its review in this proceeding. SCE also seeks review of the Advanced Metering Infrastructure Balancing Account, the NSGMA, the PDDMA, the Results Sharing Memorandum Account and the Mohave BA. As mentioned above, SCE seeks recovery of $13.947 million contained in the NSGMA and the PDDMA through a rate adjustment.

The application now before us covers the 2007 Record Period.