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, 2009 through December 31, 2009 (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's ERRA expenses for the record period of January 1, 2009 to December 31, 2009 were $3.433 billion, while the ERRA revenues for the period were $3.875 billion. Together with the previous year's undercollection, interest and various adjustments for the record period, the ERRA ending balance as of December 31, 2009 has an over-collection of $45.861 million. SCE also seeks to recover the net under-collected balance of $29,947,000 recorded in four of these accounts.

On May 10, 2010, 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 20, 2010.

A prehearing conference was held on June 21, 2010. The assigned Commissioner's Ruling and Scoping Memo (Scoping Memo) was issued on July 13, 2010. DRA testimony was served on October 6, 2010. SCE rebuttal testimony was served on November 16, 2010. Evidentiary hearings were held on January 19 and February 19, 2011. Opening briefs were filed on March 29, 2011, and reply briefs were filed on April 15, 2011, 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.