3. Bill Limiter Background and D.02-04-060

Bill limiters for SCE interruptible program Schedules I-3 and I-5 were first adopted in SCE's 1992 general rate case (GRC) decision. (D.92-06-020, 44 CPUC2d 471, 528.) The purpose was to mitigate the impact of transferring Schedule I-3 and I-5 customers of record on December 31, 1992, to Schedule I-6 on January 1, 1993, given the lower level of interruptible credit in Schedule I-6. According to SCE, the bill limiter capped these customers' bills to a total of no more than 15% in 1993, and 30% in 1994, above what would have otherwise been their Schedule I-3 or 1-5 bills based on December 1992 rates.

Legislation adopted in 1993 prohibited reductions in interruptible credit levels during 1995 and 1996. (Pub. Util. Code § 743.1.) Legislation adopted in

1994 extended the prohibition through 1999. Legislation adopted in 1996 continued the prohibition through March 31, 2002.¹

The Commission decision in SCE's 1995 GRC reduced revenues from bill-limited eligible customers by about $25 million per year, and raised rates and revenues from all other large power customers (Schedules TOU-8 and I-6) by an equivalent amount, according to SCE. There are approximately 100 customers subject to the bill limiter, with combined load of about 200 megawatts. (D.02-04-060, mimeo., page 25.)

SCE says that the annual revenue deficiency created by the bill limiter in 2002 is about $54 million. The increased revenue deficiency results from surcharges adopted by the Commission in 2001, according to SCE. These surcharges were applied in response to the energy crisis, and total about $0.04 per kilowatt-hour (kWh). (See D.01-01-018, D.01-03-082 and D.01-05-064.) Of the $54 million annual deficiency, SCE states that $25 million is recovered through the existing revenue shift to other large customers, and $29 million is not recovered from any other customer class.

Under current ratemaking mechanisms, the additional $29 million annual revenue shortfall results in a lower "surplus" to be applied toward recovery of the balance in the Procurement Related Obligations Account (PROACT). (See Resolution E-3765.) The resulting effect is to extend the PROACT recovery period and "frozen" Settlement rates for all customer classes. (D.02-04-060, mimeo, page 26.)

In our Phase 2 order, we considered three options: (1) end the bill limiter without other adjustment, (2) continue the bill limiter without adjustment, or

1. (3) continue the bill limiter in part (for the portion of rates in effect before 2001). (D.02-04-060, mimeo., pages 29-30.) We decided to continue the bill limiter to the extent that it applies to the portion of rates in effect before 2001, but discontinue its application to the remainder of rates.