I. Other Potential Issues

Parties' testimony should provide the Commission with a detailed understanding of how the utility spends its money.

· Sales Forecast - SCE's forecast of decreased sales for Test Year 2003 contributes substantially to its requested revenue requirement increase; this could be mitigated by a sales adjustment balancing account mechanism.

· Cost Escalation - SCE has assumed escalation rates in the range of 11 to 12 percent for base-to-test year cost escalation. It may be necessary to revise or update these assumptions.

· Customer Service and Information (CS&I) - SCE's estimates of CS&I expenses for 2003 increase significantly compared to expenses recorded in year 2000. The effects of SCE's proposal to capitalize software on CS&I expenses needs to be examined.

· Administrative and General Expenses - SCE's estimates of A&G expense forecasts for test year 2003 increase significantly over recorded year 2000 levels in every category.

· Depreciation - SCE has proposed to modify the method for calculating depreciation resulting in revenue requirement increase of about $77 million.

· Post Test Year Ratemaking - SCE's proposal for Years 2004 and 2005 has elements of both traditional attrition year ratemaking and performance-based ratemaking.

· Revenue Flows - Other operating revenues should include revenues from non-regulated activities, and address sharing of costs and benefits between ratepayers and shareholders.