FINDINGS
1. SCE filed AL 1373-E on March 31, 1999 and AL 1373-E-A on June 1, 1999, requesting approval of its 1998 PBR Performance Report. AL 1373-E-A replaced AL 1373-E in its entirety. SCE's PBR Performance Report summarizes its 1998 performance under the PBR mechanism and provides the rewards and penalty calculations for its performance in the areas of service reliability, customer satisfaction, and employee health and safety.
2. This resolution approves $13 million in rewards for SCE's PBR performance in the areas of employee safety, customer satisfaction, and system reliability relative to the benchmarks established by the Commission in Decision (D.) 96-09-092.
3. In accordance with D. 96-09-092 and D. 97-10-057, SCE's net reward should be recorded in the PBR Distribution Rate Performance Memorandum Account.
4. SCE reports total Distribution-Related Operating Revenue of $1,978,791,000 for 1998, which includes $105,625,000 for Other Operating Revenue. The Commission in D. 97-08-056 adopted an Unbundled Distribution Revenue Requirement of $1,667,677,000. SCE's 1998 Distribution-Related Operating Revenue, excluding Other Operating Revenues, is $205,489,000 over the adopted amount.
5. SCE's Distribution Operating Expenses increased by $28 million in 1998, excluding expenses for Internal Chargebacks and Catalina/EPTC.
6. SCE's Customer Accounts Expenses increased by $20 million in 1998, excluding Internal Chargebacks.
7. In 1998 SCE began recording certain A&G expenses, including Pension and Benefits expenses in the General Ledger Accounts 500-599 and 905-909 for SCE's internal management reporting.
8. SCE's "Internal Chargebacks" consists of Pension and Benefits expenses, Payroll Taxes, and Internal Market Mechanism (IMM) costs.
9. SCE included $53 million in its total A&G costs that were directly and indirectly assigned to distribution.
10. SCE reports an increase of $32 million in Customer Service and Information (C&I) costs for 1998.
11. SCE's Operating Expenses Report includes $76 million for Transmission Costs for certain 115kV and below transmission facilities that are not under the control of the ISO. For the purpose of this Advice Letter filing the inclusion of these costs is approved conditionally. SCE should demonstrate in its next General Rate Case (GRC) filing that these costs are distribution related and reasonable.
12. The Commission adopted a Cost of Capital trigger value of 7.5% as the benchmark for the AA Utility Bond Rate. SCE reports a AA Bond rate of 7.0 % for the 12-month period ending September 1998. The Cost of Capital Trigger Mechanism is not triggered since the reported AA Bond rate is less than 100 basis points from the 1998 adopted benchmark.
13. SCE reports a Customer Satisfaction Rating of 71% for 1998, which represents the average percent of customers that responded "completely satisfied" or "delighted" to SCE's customer satisfaction survey. Under the Customer Satisfaction Mechanism SCE would receive a reward of $8 million for this rating.
14. SCE made significant changes to the methodology used in administering and calculating its customer satisfaction performance rating from 1997 and more significantly from SCE's original 1992 survey program.
15. SCE's 1998 customer satisfaction survey results may no longer be comparable to the 1992 results that the Commission used in establishing the 64% customer satisfaction PBR baseline. The Commission also expressed this concern in its PBR mid-term review decision D.99-12-035.
16. SCE's total Customer Satisfaction Rating of 71% should be reduced by 1%, and its reward should be $6 million, rather than the requested $8 million. SCE included in its Authorized Payment Agencies (APAs) scores from two transactions that did not occur and that were accounted for in the Telephone Center Scores.
17. SCE achieved an Employee Health and Safety Index of 7.9 per 200,000 hours worked with a maximum reward of $5.0 million for 1998. Energy Division has reviewed this calculation and concurs with this reward.
18. SCE reports a two-year Average Customer Minutes of Interruption (ACMI) rolling average of 60 minutes for 1998. No reward or penalty is assessed for 1998 given that SCE's two-year ACMI falls within the deadband.
19. SCE reports a two-year outage frequency average of 9,450. Based on the Commission's adopted standard, SCE earns a reward of $2 million for 1998.
20. For 1998, SCE reported to the Commission's Utilities Safety Branch zero human fatalities for SCE employees and 12 human fatalities to non-SCE employees.
21. SCE's Health and Safety (H&S) PBR Mechanism does not take into account the severity of accidents. The H&S mechanism is based on total number of injuries and illnesses related to the workplace.
