Issues To Be Resolved

In D.01-06-038, the Commission elected to extend the PBR mechanism until superseded by Edison's next GRC. This interim decision established a memorandum account for booking contested revenues and costs attributable to electricity distribution, but did not determine whether and how to modify the existing PBR mechanism, whose elements were specified only through the year 2001.

In addition, on April 11, 2001, California enacted ABX1-29 (Stats. 2001, Ch. 8), which added § 739.10. ABX1-29 was effective as of April 12, 2001 (the date it was filed with the Secretary of State) because this legislation was enacted as an urgency statute. Section 739.10 states as follows:

The commission shall ensure that errors in estimates of demand elasticity or sales do not result in material over or under collection of the electrical corporations.

Under the current PBR, which uses a rate index, variations in sales translate directly into variations in revenues. Thus, it is unclear whether changes in sales will result in material under- or overcollections. At a minimum, §739.10 requires that we examine the PBR mechanism to ensure that it complies with this newly enacted statute.

On October 16, 2001, the active parties in this proceeding filed a case status statement. This statement reaffirmed that the issues identified in the August 30, 2001 Scoping Memo remain unresolved. Based on these documents and the course of the proceeding, the outstanding issues for resolution may be grouped as follows:

1. Should the Commission modify Edison's PBR to adopt a distribution revenue requirement and balancing account to comply with § 739.10 in 2001? In 2002?




2. If the Commission elects to set a revenue requirement for distribution, how should it set the 2001 value? The 2002 value?




3. Should the Commission modify the trigger mechanism?




4. Should the Commission modify any of the performance incentive programs?




5. Should the Commission enhance the revenue requirement to increase Edison's budget for electricity conservation?




6. How should the Commission implement adopted changes?

We address each issue in turn.