COM/SK1/cvm Mailed 2/1/2005 Item 28a

Decision 05-01-054 January 27, 2005

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Southern California Edison Company (U 338-E) For Approval of its 2004 Revenue Requirement and Related Estimates Under the Energy Resource Recovery Account (ERRA); And For a Commission Finding that its Procurement-Related and Other Operations were Reasonable for the Record Period September 1, 2001 Through June 30, 2003.

Application 03-10-022

(Filed October 3, 2003)

Daniel W. Douglass, by Gregory S.G. Klatt, Attorney at Law,

Alcantar & Kahl LLP, by Nora Sheriff, Attorney at Law,

and Robert B. Keeler, Attorney at Law, for

Southern California Edison Company, applicant.

William H. Booth, Attorney at Law, interested party.

Regina DeAngelis, for Office of Ratepayer Advocates, protestant.

OPINION RESOLVING THE REASONABLENESS PHASE OF

SOUTHERN CALIFORNIA EDISON COMPANY'S

ENERGY RESOURCE RECOVERY ACCOUNT APPLICATION

1. Summary 2 2

2. Procedural History 2 2

3. SCE's Showing 3 3

4. ORA Recommendations 3 3

5. Scope of Review for Least Cost Dispatch under SOC 4 4 4

5.1. Positions of the Parties 5 5

5.2. Discussion 7 7

6. Standard of Review for Least Cost Dispatch under SOC 4 10 10

6.1. Positions of the Parties 10 10

6.2. Discussion 12 12

7. Forum for Review of Spot Market Transactions 16 16

8. Other Least Cost Dispatch Issues 17 17

9. Contract Administration and Costs 20 20

10. Cogeneration QFs and Renewable Contract Administration and Costs 22 22

11. Master Data Request 23 23

12. Audit Issues 25 25

12.1. CDWR Settlement Payment Authorization 25 25

12.2. ISO Expense Adjustment 26 26

12.3. Refinancing Transaction Fees 26 26

12.4. Employee Related Costs 26 26

13. Uncontested Costs 28 28

13.1. Generation 28 28

13.2. Special Contracts 28 28

13.3. Cost of Collateral 29 29

13.4. ISO-Related Costs 29 29

13.5. Fuel Oil Inventory Carrying Costs 29 29

13.6. Electric Vehicle Costs 30 30

13.7. Discussion 30 30

14. Confidential Information 31 31

15. Comments on Proposed Decision 32 32

16. Comments on the Alternate Decision 33 33

17. Assignment of Proceeding 33 33

18. Findings of Fact 33 33

19. Conclusions of Law 36 36

20. ORDER 37 37

OPINION RESOLVING THE REASONABLENESS PHASE OF

SOUTHERN CALIFORNIA EDISON COMPANY'S

ENERGY RESOURCE RECOVERY ACCOUNT APPLICATION

1. Summary

This decision adopts a joint Southern California Edison Company (SCE) and Office of Ratepayer Advocates (ORA) recommendation to reduce the Energy Resource Recovery Account (ERRA) by a net amount of $3,574,000 to reconcile certain audit issues. In all other respects, the decision finds SCE's procurement related and other operations were reasonable for the record period September 1, 2001 through June 30, 2003.

The scope of least-cost dispatch review in the ERRA is defined to include SCE's decisions to dispatch the resources under its control in the daily, hourly and real-time markets. The standard of review for least-cost dispatch is compliance with Standard of Conduct #4 (SOC 4), which is an element of SCE's procurement plan.

SCE and ORA are ordered to develop and implement a master data request process to be used in future SCE ERRA filings.