11. Customer Service and Information

11.1. Account 908 - Program Management

For Program Management, SCE forecasts incremental test year expenses of $1,931,000. The request would fund five programs: the Government and Mid-size Business Services Program for $513,000, In Language Communications for $275,000, Customer Process Based Satisfaction Survey for $432,000, Billing and Payment for $275,000, and Internet Improvements for $400,000. SCE states the incremental increase in funding for these programs will result in improved customer service delivery, increased utility program customer participation, and avoided cost savings, such as for postage.

ORA opposes funding for the Government and Mid-size Business Services program for similar reasons to those provided for Residential Services and Outreach in Account 905. ORA also opposes Customer Process Based Satisfaction Survey and Internet Improvements for the same reasons provided for Account 905. Lastly, ORA opposes the Billing and Payment programs given the uncertainty of participation and postage savings.

For the same reasons as discussed in Account 905 we will adopt an increase of $200,000 for Internet Improvements and deny SCE's request for Customer Process Based Satisfaction Survey funding. As discussed below, we will include $257,000 for Government and Mid-size Business Services and exclude SCE's request for Billing and Payment Services. In total the test year increases amount to $732,000, as opposed to SCE's request of $1,931,000.

SCE requests $513,000 to develop an integrated company-wide approach to improve the delivery of basic customer care to government and mid-size business customers. SCE plans to conduct additional research on how each of these customer segments accesses information and performs business transactions, and then tailor processes for conducting business with them. SCE states that this will include determining if programs can be adjusted or redesigned to make it easier for mid-size and government customers to participate.

In general, the purpose of the program, which is to provide better basic service and to expand service to these customer segments, appears to be appropriate. However, this program to develop an integrated company-wide approach appears to be replacing what SCE has done in the past in this area. The amount of historic costs that would no longer be necessary should be reflected, but is unknown. We will approximate the effect by reducing SCE's requested increase by 50%, or $256,000.

SCE requests $311,000 to develop billing and payment options utilizing the internet and debit cards. The expense reflects program management, promotion and maintenance costs. SCE states that it expects to improve the level of service for customers who choose to do business with it using these methods and realize future postage savings in much the same manner as it has experienced with the elimination of paper bills for its On-Line Billing participants. SCE's rationale for providing the services is reasonable. Use of alternative methods for paying bills is increasing and customers' expectations in this area continue to evolve. However, the need for incremental funding is questionable. First of all, there is no development of the $311,000 expected cost in SCE's direct or rebuttal testimony. It is not clear how the cost was derived, or whether the associated reduced postage is somehow reflected to reduce the net cost. Also, given that the total recorded Program Management spending level in 2003 was $6,057,000, SCE may be able to support any net costs of this program from existing funding levels. For these reasons, for this rate case, we will not include incremental funding for billing and payment for this account.

For the test year, SCE requests $2,499,000 for Economic and Business Development (EB&D) activities. The forecast is based on the recorded 2003 amount of $3,107,000 less $600,000 due to a program change. According to SCE, its EB&D activities retain, expand, and attract industrial customer operations within and to SCE's service territory that would otherwise locate outside of California. The company claims this program is beneficial to all customers by maintaining and increasing electric revenues to cover fixed costs.

In Aglet's opinion ratepayer funding of improvements to California's business climate is unnecessary. Approval of E&BD activities would be contrary to the Commission's "cautious view" of load building and load retention programs. Aglet argues that SCE has not shown that electricity costs cause businesses to leave SCE's service territory, or that customers will benefit from E&BD activities. Aglet's primary recommendation is to disallow all ratepayer funding of all E&BD costs. Alternatively, if Aglets recommendation is not accepted, the Commission should defer ruling on SCE's funding request until it acts on EB&D policy issues that are submitted in A.04-04-008 and A.04-06-018 (the Economic Development Rate (EDR) proceeding). It is Aglet's position that if the Commission approves any rate recovery, it should require shareholders to pay 25%of E&BD costs.

Aglet states that the policy issues submitted in A.04-04-008 and A.04-06-018 overlap with issues in this GRC proceeding. Following is a partial list of issues in the EDR proceeding, taken from the common briefing outline:

Aglet argues that, if one substitutes "E&BD programs" for "EDRs," then all of the listed issues are germane to this general rate case and that there is an overlap of important policy and technical issues. Rather than waiting for a decision in the EDR proceeding, Aglet repeated most of the points presented in the EDR proceeding, in testimony in this GRC.

We will consider Aglet's recommendation in light of D.09-05-018, which was issued in the EDR proceeding (A.04-04-008/A.04-06-018) on September 8, 2005. In that decision,39 the Commission supports the continuation of EB&D activities with the following Findings of Fact:

1. The cost of electricity is one of the major contributors to the cost of doing business in California. By some estimates electric rates cause about one sixth of what some experts believe is the overall 30% cost premium for doing business in California.

2. The implementation of successful economic development projects would benefit ratepayers directly by increasing the revenues available to contribute to the utilities' fixed costs of doing business, thus lowering rates to other customers.

3. In addition to direct benefits to other ratepayers, economic attraction and retention activities also provide indirect benefits to ratepayers in the form of increased employment opportunities and improved overall local and economic vitality.

The decision concluded that rate reductions to attract or retain business are in accord with the legislative precept to "encourage economic development" (Pub. Util. Code § 740.4.), and approved modified requests for economic development rates for SCE and PG&E. The Alternate Proposed Decision that would have shareholders pay 25% of discounting costs was not adopted. Consistent with D.05-09-018, we will continue the EB&D program with full ratepayer funding. SCE's test year request of $2,499,000 is adopted.

SCE requests $1,817,000 for the test year to support the operation of its Energy Centers. The forecast is based on the recorded 2003 amount of $1,317,000 plus $500,000 for additional displays and training classes in 2006. SCE explains that the Energy Centers are part of the company's delivery of basic customer care. The electrical safety training classes, intended to prevent or minimize incidents involving the use of electrical equipment on a customer site, contribute to its obligation to provide safe service. The additional demand response seminars and exhibits will provide customers with information about available programs and will teach them how to evaluate their potential for demand response, what control strategies need to be put in place, and how to measure the effectiveness of their demand response plan. SCE states that without this program, it would be unable to provide important resources and services that its customers request, and may hinder its ability to support the Commission's public policy objectives for demand response.

Aglet is not convinced that the Energy Centers generate substantial benefits for SCE ratepayers, especially residential ratepayers. However, because the facilities already exist, Aglet does not oppose the current level of expenses. Aglet does oppose the additional $500,000 requested by SCE. Aglet argues that the proposed additional displays and classes are not essential customer services. Aglet states that SCE has not justified a 38% increase in expenses for programs that promise few benefits for ratepayers and substantial good will for SCE shareholders.

In general, the Energy Centers provides valuable services for the non-residential customers it serves. However, SCE's requested 38% increase, to address the increased needs for customer electrical training and demand response program exhibits and related seminars, is not supported by recent post-energy crisis recorded data that shows a reduction in expenses from $1,380,000 in 2002 to $1,317,000 in 2003. In its testimony or rebuttal, SCE does not claim that the services provided by the Energy Center in 2003 were in any way deficient nor do they provide evidence that supports a 38% growth in activity from 2003 to 2006. We will adopt Aglet's recommendation to exclude $500,000 in forecasted incremental expenses, which results in the adopted test year expense for energy centers of $1,317,000.

39 Aglet has a pending request for rehearing of this decision.

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