Comments on the Settlement Agreement

Pursuant to Rule 51.4, the Alliance for Retail Energy Markets (AReM) has filed what it calls a limited protest to the Settlement Agreement. The County of Los Angeles and the Energy Producers and Users Coalition (EPUC) filed comments supporting the Settlement Agreement.

AReM calls for the Commission to raise SCE's revenue requirement, and with it, SCE's post-PROACT rates. This would benefit AReM's members, Electric Service Providers - many of whom sell their generation at some percentage below SCE's rates. AReM focuses on a line item labeled "PROACT Overcollection" (Line 23) which shows a $107.9 million credit in the revenue requirement table provided in Attachment A to the Settlement Agreement. (Appendix A to this decision.) This line item, in AReM's opinion, is inconsistent with Section II.A.e of the Settlement Agreement and statements made by SCE during the settlement discussions and in the April 8, 2003 Prehearing Conference. AReM would modify the Settlement Agreement by eliminating the $107.9 million credit. SCE, on behalf of TURN, ORA, FEA, CLECA, CFBF, and AECA, opposes AReM's position.

AReM states that "following AReM's recommendation would not raise rates." This is not correct. Removing the PROACT overcollection from the revenue requirement, based upon which the rate levels and structures reflected in Attachment A of the Settlement Agreement were designed, would result in the need to increase those rates by $107.9 million. AReM's argument that the inclusion of the PROACT overcollection results in "anti-competitive generation rates" and its recommendation for treatment of that overcollection are unpersuasive. SCE cannot hold funds belonging to its ratepayers just to keep its generation rates high for Energy Service Providers to be able to compete with that generation rate. AReM's comments are rejected.