Depreciation

At the PHC, there was discussion regarding a workshop on depreciation. Consideration of such a workshop was conveyed in Decision 05-01-027 to the Commissioner and Administrative Law Judge (ALJ) assigned to SCE's 2006 GRC.¹ The goal of such workshop would be to set guidelines regarding the type and quality of data that SCE would need to provide with its depreciation showing.

SCE indicated that the depreciation issues are fairly narrow and can be further narrowed within the normal order of the GRC. ORA indicated that it is continuing its discovery with SCE on this subject and does not see the need for workshops. TURN, on the other hand, recommended that the possibility of a workshop be kept open, stating that it has not yet been able to determine the quality of the depreciation data in this GRC, but given the possibility that there may be issues similar to the last GRC, it makes sense to try to address those issues up front.

While there is merit in addressing potential depreciation issues up front, it does not appear to be practical at this point. It is too late to meet the original intent of the suggested workshop regarding the type and quality of data that SCE would need to provide with its depreciation showing. SCE's depreciation showing has already been served as part of its GRC testimony. We also note the ORA and SCE reluctance to having the workshops. Resolving data quality concerns at this point might not be possible in a workshop environment. Also, to prepare for and hold a workshop and then to allow parties sufficient time to incorporate the results in their analyses and recommendations would likely extend the procedural schedule. For these reasons, the depreciation workshop will not be held for this GRC. Also, at the PHC, there were no responses to the ALJ inquiry regarding other alternatives for narrowing depreciation issues. Depreciation will therefore be considered, as in the past, through the normal course of the GRC. To the extent that parties participating in depreciation matters can reach common ground and narrow the issues, as they relate to facts, judgment or policies, such cooperation is encouraged and should be a focus throughout the proceeding.

¹ SCE's test year 2003 GRC decision, D.04-07-022, had ordered that prior to the 2006 GRC a workshop be held and parties should work jointly toward developing a reliable, independent depreciation study. In a petition to modify that decision, the Office of Ratepayer Advocates (ORA) indicated that due to the strongly subjective nature of the depreciation-related analyses, it was critical that ORA maintain its independence and not accede to the analysis and conclusions of a third party consultant. In D.05-01-027, while the Commission granted ORA's petition and eliminated the joint study requirement, there was discussion regarding a The Utility Reform Network (TURN) suggestion for an ALJ sponsored workshop on depreciation. The Commission did not adopt the suggestion but indicated a workshop could be considered for the 2006 GRC.