PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
E-2
ENERGY DIVISION RESOLUTION E-3712
NOVEMBER 21, 2000
Resolution E-3712. Southern California Edison Company (SCE) requests approval of its 1998 Performance Based Ratemaking (PBR) Performance Report, which details the rewards and penalties and revenue sharing calculations for the subject year. Total rewards of $13 million are approved, $2 million less than SCE's request.
By Advice Letter 1373-E filed March 31, 1999, and Advice Letter 1373-E-A filed June 1, 1999.
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SUMMARY
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. As explained below, this amount is $2 million less than the SCE's request. This resolution finds SCE's PBR Performance Report (PBR Report), filed in Advice Letter (AL) 1373-E-A on June 1, 1999, in compliance with D. 96-09-092.
SCE's PBR Report summarizes its 1998 performance under the PBR mechanism, and provides the rewards and penalties calculations for its performance in the areas of service reliability, customer satisfaction, and employee health and safety.
SCE reports total Distribution-Related Operating Revenue of $1,978,791,000 for 1998, including $105,625,000 for Other Operating Revenue. In D. 97-08-056 the Commission adopted an unbundled distribution revenue requirement of $1,667,677,000 for 1998. SCE's 1998 distribution-related operating revenue, excluding other operating revenues, is $205,489,000 over the adopted amount.
SCE reports a recorded Rate of Return on Equity (ROE) of 11.16% for 1998, not triggering the revenue sharing mechanism, since the reported ROE is within 50 basis points of the dead-band of the mechanism. The authorized ROE benchmark for 1998 is 11.60%.
SCE's Distribution Operating Expenses increased by $28 million in 1998.
SCE's Customer Accounts Expenses increased by $20 million in 1998.
SCE's Customer Service and Information (C&I) costs increased by $32 million in 1998.
SCE's Operating Expenses Report includes $76 million for Transmission Costs for certain 115kV and below transmission facilities and related Operating and Maintenance expenses that are not part of the ISO Grid.
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 of 7.5%.
SCE reports a Customer Satisfaction Rating of 71% for 1998 and a reward of $8 million for this rating. Energy Division (ED) found that SCE's Customer Satisfaction Rating includes two transactions that did not occur as part of the Authorized Payment Agencies (APAs), artificially raising the final rating by 1% and the reward by $2 million. ED recommends disallowing the inclusion of these two transactions in the APAs score, and to reward SCE for its performance for those transactions that actually took place.
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.
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 (58 to 64 minutes).
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.
The following performance rewards are approved for each area described below:
Employee Safety $5,000,000
Customer Satisfaction $6,000,000
System Reliability, Frequency $2,000,000
Total Rewards $13,000,000
In accordance with D. 96-09-092 and D. 97-10-057, SCE's reward should be recorded in the PBR Distribution Rate Performance Memorandum Account.
