3. Summary of the Settlement Agreement
The Settlement Agreement resolves all PBR OII Phase 2 issues. The primary provisions of the Settlement Agreement are summarized below.
3.1. Ratepayer Credit
Within 30 days after Commission approval of this Agreement, SCE shall credit $4.0 million to the distribution subaccount of SCE's existing BRRBA. Ratepayers will receive the credit as a reduction to SCE's distribution rates when the BRRBA is amortized in rates.
3.2. System Reliability
The status of PBR system reliability incentives based on SCE's requests is that SCE has recovered $8.0 million for the period 1997 through 2000 and has requested or calculated a net reward of $2.0 million for the period 2001 through 2003 as follows:
PBR System Reliability Results (Maximum incentive $18M/year for ACMI and Frequency) | |||||||
1997 |
1998 |
1999 |
2000 |
2001 |
2002 |
2003 | |
ACMI |
(3.0) | ||||||
Frequency |
2.0 |
2.0 |
4.0 |
5.0 |
|||
$8 million rewards |
Net $2 million reward | ||||||
The PBR system reliability rewards SCE received for the period 1997 through 2000 shall not be affected by the Settlement Agreement. For the period 2001 through 2003, SCE shall forgo its claim for a net reward of $2 million, which is comprised of a reward of $5 million for Frequency in 2001 and a penalty of $3 million for ACMI in 2003.7
3.3. Conditions on Future SCE PBR Mechanisms
SCE agrees that it will not propose any PBR customer satisfaction or employee safety shareholder incentive mechanism before the completion of its 2015 General Rate Case (GRC) cycle. This moratorium is limited to SCE proposals for a mechanism whereby ratepayers would be obligated to make payments to SCE if a specified performance metric was achieved or a mechanism whereby SCE would be obligated to make payments to ratepayers if a specified performance metric was not achieved.
3.4. Investigation Costs of CPSD
The OII raised the question of whether CPSD's investigation costs are recoverable from SCE. The Settlement Agreement does not address this question directly but, rather, subsumes it in Paragraph 5 which states:
5. Final Resolution of Phase 2 Issues
SCE's payment of the Ratepayer Credit resolves all outstanding monetary claims of or against SCE related in any way to the subject matter of the OII. It is the intent and agreement of the Settling Parties that the provisions of Paragraph 4 also resolve all issues raised in ALJ Barnett's October 8, 2008 ruling and that the OII be closed upon Commission approval of this Agreement.
Our review of the record shows that CPSD's involvement was extensive, exhaustive, and expensive. The record does not place a dollar figure on the cost of CPSD's participation, but there is no doubt of its magnitude. Nevertheless, we will not second guess CPSD's decision to forgo recovery of its costs. It is sufficient that the ratepayers benefit substantially from this Settlement.
3.5. Whistleblower Compensation
No whistleblower compensation shall be awarded in connection with this PBR OII. We may wish to consider the provision of whistleblower compensation as a condition of a future PBR authorization.
7 SCE had filed annual advice letters for PBR results for 2001 and 2002 in Advice Letters (AL) 1608-E-B and AL 1697-E-A. However, SCE had not filed an advice letter regarding PBR results for 2003 pending the outcome of this OII. As reported in AL 2276-E, D.08-09-038 required SCE to refund with interest all the incentive amounts SCE had collected for customer satisfaction and employee health and safety for the period 1997 through 2000. With respect to 2001 and 2002, D.08-09-038 ordered SCE to forgo all rewards, and therefore the amounts SCE had previously requested for customer satisfaction and employee health and safety rewards for 2001 and 2002 have been forgone. SCE has advised the Energy Division of these impacts on SCE's pending AL 1608-E-B and AL 1697-E-A. The PBR Phase 2 Settlement Agreement will also affect SCE's pending PBR system reliability results reported for 2001 and 2002, and the calculated result for 2003 as described in this paragraph. Upon Commission approval of this Settlement Agreement, SCE will advise the Energy Division that it should resolve all remaining requests in SCE's pending PBR advice letters unaffected by the PBR OII and SCE will file an advice letter for 2003.
