7. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner and Robert Barnett is the assigned Administrative Law Judge in this proceeding.

1. SCE's PBR mechanism applied to the period from 1997 through 2003 with respect to three performance incentive mechanisms. The three performance incentive mechanisms were: (1) customer satisfaction, which measures customer satisfaction with transactions with SCE via a survey; (2) system reliability, measured as ACMI and frequency of interruptions (Frequency); and (3) employee health and safety, measured as the number of first aid incidents and OSHA-recordable lost time incidents per 200,000 employee hours worked.

2. On March 11, 2003, an SCE senior vice president received an anonymous letter alleging that planners were manipulating the customer satisfaction survey process by providing erroneous customer contact numbers to the survey company.

3. On November 4, 2003, the senior vice president received a second anonymous letter alleging manipulation of customer contact data provided to the survey company.

4. After conducting investigations, SCE provided its internal investigative reports to the Commission for customer satisfaction (dated June 24, 2004), employee health and safety (dated December 3, 2004), and system reliability (dated February 28, 2005) incentive mechanisms.

5. On June 15, 2006, the Commission issued Order Instituting Investigation 06-06-014 (PBR OII), ordering an inquiry into the three PBR metrics that were the subject of SCE's internal investigative reports.

6. The OII was divided into two phases. Phase 1 covered issues related to customer satisfaction, employee safety, and results sharing, and was the subject of hearings in November 2006. Phase 2 covered other issues.

7. Pending the outcome of Phase 1, a procedural schedule for Phase 2 was established. In accordance with that Phase 2 schedule, on September 21, 2007, SCE served its Phase 2 initial prepared testimony. That testimony consisted of the following:

· "Testimony on the PBR Incentive Mechanisms for System Reliability and Customer Satisfaction (Call Centers, Field Delivery, and In-Person Services)"

· "Phase 2 Direct Testimony of Dr. Andrew Morrison"

· "Assessment of PBR Reliability Metrics and Related Systems and Processes"

8. On September 23, 2008, the Commission issued D.08-09-038 (Phase 1 Decision), which resolved all appeals and issues that were considered in Phase 1 of this proceeding. The Phase 1 Decision ordered SCE to:

9. Following the issuance of the Phase 1 decision, an ALJ Ruling listed the remaining issues for consideration in Phase 2 of the OII. The ruling listed four issues: (1) system reliability and customer satisfaction for call centers, field delivery other than meter reading, and in-person services, (2) whether the Commission should permit SCE to continue PBR and, if so, under what conditions and modifications, (3) investigate the total costs that CPSD and its legal representatives have incurred because of CPSD's investigation and discuss whether the costs are recoverable from SCE, and (4) whether the Commission can reward a whistleblower.

10. 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.

11. After discussions among SCE, CPSD, and DRA pertaining to the resolution of Phase 2 issues had occurred, on December 11, 2008, SCE provided notice to all parties of a settlement conference related to Phase 2 issues. A settlement conference was held on December 18, 2008.

12. The Settlement Agreement provides:

1. The Settlement Agreement is reasonable in light of the whole record, consistent with law, and in the public interest.

2. The Settlement Agreement is not precedential in any other proceeding before this Commission.

ORDER

IT IS ORDERED that:

1. The Settlement Agreement appended as Attachment A is approved

2. Within 30 days after the date of this decision, Southern California Edison Company shall credit $4.0 million to the distribution subaccount of Southern California Edison Company's existing Base Revenue Requirement Balancing Account. Ratepayers will receive the benefit of the Ratepayer Credit as a reduction to Southern California Edison Company's distribution rates when the Base Revenue Requirement Balancing Account is amortized in rates.

3. The Performance-Based Ratemaking system reliability rewards that Southern California Edison Company received for the period 1997 through 2000 shall not be affected by the Settlement Agreement. For the period 2001 through 2003, Southern California Edison Company 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 Average Customer Minutes of Interruption in 2003.

4. Pursuant to the Settlement Agreement, Southern California Edison Company shall not propose any Performance-Based Ratemaking customer satisfaction or employee safety shareholder incentive mechanism before the completion of its 2015 General Rate Case cycle. Therefore, the first time Southern California Edison Company can propose any such mechanism will be in its 2018 general rate case cycle.

5. Southern California Edison Company shall not be liable for any statutory penalties, Performance-Based Ratemaking penalties, or the Consumer Protection and Safety Division costs related to Phase 2 of this Order Instituting Investigation.

6. Investigation 06-06-014 is closed.

This order is effective today.

Dated May 21, 2009, at San Francisco, California.

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