COM/SK1/cvm* ALTERNATE DRAFT Agenda ID # 4235

Alternate to Agenda ID # 3929

Ratesetting

Item 28a

1/27/05

ALTERNATE OF COMMISSIONER KENNEDY (Mailed 1/13/2005)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison Company (U 338-E) For Approval of its 2004 Revenue Requirement and Related Estimates Under the Energy Resource Recovery Account (ERRA); And For a Commission Finding that its Procurement-Related and Other Operations were Reasonable for the Record Period September 1, 2001 Through June 30, 2003.

Application 03-10-022

(Filed October 3, 2003)

Daniel W. Douglass, by Gregory S.G. Klatt, Attorney at Law,

Alcantar & Kahl LLP, by Nora Sheriff, Attorney at Law,

and Robert B. Keeler, Attorney at Law, for

Southern California Edison Company, applicant.

William H. Booth, Attorney at Law, interested party.

Regina DeAngelis, for Office of Ratepayer Advocates, protestant.

OPINION RESOLVING THE REASONABLENESS PHASE OF

SOUTHERN CALIFORNIA EDISON COMPANY'S

ENERGY RESOURCE RECOVERY ACCOUNT APPLICATION

1. Summary 2 2

2. Procedural History 2 2

3. SCE's Showing 3 3

4. ORA Recommendations 3 3

5. Scope of Review for Least Cost Dispatch under SOC 4 4 4

5.1. Positions of the Parties 5 5

5.2. Discussion 7 7

6. Standard of Review for Least Cost Dispatch under SOC 4 10 10

6.1. Positions of the Parties 10 10

6.2. Discussion 13 13

7. Forum for Review of Spot Market Transactions 17 17

8. Other Least Cost Dispatch Issues 18 18

9. Contract Administration and Costs 21 21

10. Cogeneration QFs and Renewable Contract Administration and Costs 23 23

11. Master Data Request 24 24

12. Audit Issues 26 26

12.1. CDWR Settlement Payment Authorization 26 26

12.2. ISO Expense Adjustment 28 28

12.3. Refinancing Transaction Fees 28 28

12.4. Employee Related Costs 28 28

13. Uncontested Costs 30 30

13.1. Generation 30 30

13.2. Special Contracts 30 30

13.3. Cost of Collateral 30 30

13.4. ISO-Related Costs 31 31

13.5. Fuel Oil Inventory Carrying Costs 31 31

13.6. Electric Vehicle Costs 32 32

13.7. Discussion 32 32

14. Confidential Information 33 33

15. Comments on Proposed Decision 34 34

16. Comments on the Alternate Decision 35 35

17. Assignment of Proceeding 35 35

18. Findings of Fact 35 35

19. Conclusions of Law 38 38

20. ORDER 39 39

OPINION RESOLVING THE REASONABLENESS PHASE OF

SOUTHERN CALIFORNIA EDISON COMPANY'S

ENERGY RESOURCE RECOVERY ACCOUNT APPLICATION

1. Summary

This decision adopts a joint Southern California Edison Company (SCE) and Office of Ratepayer Advocates (ORA) recommendation to reduce the Energy Resource Recovery Account (ERRA) by a net amount of $3,574,000 to reconcile certain audit issues. In all other respects, the decision finds SCE's procurement related and other operations were reasonable for the record period September 1, 2001 through June 30, 2003.

The scope of least-cost dispatch review in the ERRA is defined to include SCE's decisions to dispatch the resources under its control in the daily, hourly and real-time markets. The standard of review for least-cost dispatch is compliance with Standard of Conduct #4 (SOC 4), which is an element of SCE's procurement plan.

SCE and ORA are ordered to develop and implement a master data request process to be used in future SCE ERRA filings.