IV.  Discussion

At this time, we grant Edison's motion to the extent that it is limited to the issue of extending the PBR mechanism until Edison's next GRC. We do so because our pending decision in A.93-12-025 to defer Edison's GRC to test year 2003 necessitates the extension of PBR regulation. An extension of the PBR is also consistent with the Commission's priorities with respect to the upcoming GRCs and related proceedings for all energy utilities. The extension constitutes an appropriate response to the financial and operational uncertainties now effecting Edison.

We will not grant Edison's request to create a balancing account. We decline to do so because modification of the current PBR mechanism raises issues that warrant further consideration. Future decisions will consider Edison's proposal as well as those of other interested parties. While this matter remains pending, the Commission will require Edison to create a memorandum account that will track distribution system costs and revenues in separate sub-accounts starting from the date of this decision. The amounts recorded will be subject to adjustment as the Commission determines the exact mechanism that it will use in to implement Public Utilities Code Section 739.10.

Recovery of revenue shortfalls is not guaranteed, but rather is subject to a reasonableness review and the determination of the exact ratemaking mechanism for implementing Section 739.10. Creation of a memorandum account will ensure immediate compliance with Section 739.10 and the adopted implementation plan will determine the exact revenue shortfalls, if any.

We do not base our decision on Edison's MOU with the CDWR, nor do we take any position on the MOU in this decision. We will not modify the existing PBR now, but will address these issues by future rulings and Commission decisions.