Background and Procedural History

By Resolution E-3337, dated October 6, 1993, the Commission authorized SCE's proposed ENVEST to demonstrate and evaluate the feasibility of a new approach to extend the benefits of energy efficiency to large, non-residential customers. The Commission authorized ratepayer funding of up to $23 million for ENVEST, while SCE was to commit $75 million in shareholder funds. SCE was allowed to earn up to its authorized rate of return on its shareholder investment. The program was open to new participants until December 31, 1995, when it closed, thereafter remaining open only to existing customers.

The Commission determined that a reasonableness review was needed to review SCE's use of ratepayer expenditures, and in Decision (D.) 97-08-057 directed SCE to file an application by July 1, 1998 seeking a finding of reasonableness. The Commission approved SCE's request for an extension of time until July 17, 1998 to file this application

On July 17, 1998, SCE filed Application (A.) 98-07-036 in compliance with D.97-08-057. However, SCE noted that only 21 of the 33 total ENVEST projects were completed at that time. ORA filed a protest to the application arguing that a partial reasonableness review of ENVEST would be inefficient, recommending that the Commission review all the projects and close the proceeding in one reasonableness review. SCE responded in support of ORA's protest, proposing that it notify ORA after the last remaining project is completed and within 90 days of that event, file an amended reasonableness report.

By D.98-10-047 dated October 22, 1998 in A.98-07-036, the Commission dismissed the application without prejudice and ordered SCE to file a new application with an updated reasonableness report within 90 days of the completion of the last ENVEST project.

In compliance with D.98-10-017, SCE filed this application on March 31, 1999, seeking a Commission finding that ratepayer funding for ENVEST was reasonable. A prehearing conference was held on June 15, 1999. On June 23, 1999, the Scoping Memo and Ruling of Assigned Commissioner was issued, which among other things set evidentiary hearing dates of September 20 through 24, 1999, as needed. Due to subsequent requests from ORA, the hearings were first rescheduled and then removed from the Commission calendar to allow time for ORA and SCE to discuss possible settlement of the issues.

The Joint Recommendation dated March 6, 2000 was filed jointly by ORA and SCE. At the evidentiary hearing, SCE presented Exhibit 1 entitled "Reasonableness Report and Final Portfolio Level Report on the ENVEST Pilot Program" dated March 31, 1999, along with associated workpapers of the same date in Exhibit 7 as its evidence of the reasonableness of ENVEST. ORA presented Exhibit 5 entitled "Report on Reasonableness of the ENVEST Program" dated September 1999. Witnesses from both ORA and SCE testified regarding the reasonableness of both ENVEST and of the Joint Recommendation.

The Joint Recommendation provides in substantial part, as follows:

· The ENVEST tariff will remain open to existing customers until the last ENVEST payment has been made, (estimated to be in 2010) then closed;

· SCE will not seek additional ratepayer funding for program administration costs of approximately $2.5 million in excess of the $8 million already funded by ratepayers;

· SCE will refund the $2 million of ratepayer-funded credit-loss reserve, plus interest as a credit to SCE's EDRA; and

· SCE will assume all future credit risks and risk of collections associated with ENVEST contracts and program.

The proceeding was submitted for decision on June 5, 2000.