Residential Line and Service Extension Allowance Testimony. Application No.: Witnesses: C. Silsbee S. Reed J. Schichtl L. Vellanoweth (U 338-E)

Transcription

1 Application No.: Exhibit No.: Witnesses: SCE-1 C. Silsbee S. Reed J. Schichtl L. Vellanoweth (U -E) Residential Line and Service Extension Allowance Testimony Before the Public Utilities Commission of the State of California Rosemead, California LAW #1 October 1, 00

2 RESIDENTIAL LINE AND SERVICE EXTENSION ALLOWANCE TESTIMONY Table Of Contents Section Page Witness I. INTRODUCTION...1 C. Silsbee A. Summary Of Issues Raised By Resolution E B. Summary Of Recommendations...1 II. BACKGROUND...1 C. Silsbee A. History...1 III. SCE S RESPONSE TO THE ISSUES RAISED BY RESOLUTION E A. Methodology For Determining The Residential Line And Service Extension Allowance SCE s Current Methodology For Determining Line And Service Extension Allowances...1. Alternative Methods Of Calculating Net Revenue For The Residential Allowance...1. The Cost Of Service Factor Appropriately Adjusts Net Revenues To Calculate The Line And Service Extension Allowance...1 S. Reed/J. Schichtl J. Schichtl S. Reed. Criteria For Requiring A Revenue Impact Estimate...1 L. Vellanoweth. Service Territory Adjacent To Competing Municipal Utilities...1 B. Policy And Methodology For Determining Monthly Cost Of Ownership Charges For Unused Electric Line And Service Extension Capacity...1 C. Silsbee S. Reed 1. Cost Components To Be Recovered...1 Appendix A WITNESS QUALIFICATIONS -i-

3 I. INTRODUCTION A. Summary Of Issues Raised By Resolution E-1 On December 1, 00, Southern California Edison (SCE) filed Advice 1-E to revise SCE s tariff Rule 1 Distribution Line Extensions, Residential Allowances provision in accordance with Rule 1, Section I., Periodic Review, and Public Utilities Code Section (a). Protests were filed on January, 00, by the Office of Ratepayer Advocates (ORA) and on January, 00, by the Utility Reform Network (TURN). ORA submitted supplemental comments on February, 00. SCE provided comments on each of these submissions. On June 1, 00, the Commission issued Resolution E-1 which addressed a number of the issues raised in the protests and adopted SCE s changes to the residential distribution line and service extension allowance on an interim basis, as modified by the resolution. Resolution E-1 also addressed issues associated with San Diego Gas & Electric (SDG&E) Advice 1-E/1-G, filed on December 0, 00. The resolution directed SCE, Pacific Gas &Electric (PG&E), SDG&E and Southern California Gas (SoCalGas) to file applications that address possible changes in policy, and the methodology for determining both (a) allowances and (b) the monthly cost of ownership charges for unused electric and gas line and service extension capacity. 1 The purpose of this testimony is to address the following issues which were raised in Resolution E-1: 1. Possible changes in policy and the methodology for determining line extension allowances. a. The need for allowances to continue in areas of the Investor Owned Utilities (IOU s) service territory that are adjacent to competing municipal utilities, and the need in nonadjacent areas if different; b. Alternative methods of calculating the net revenue on which future residential line extension allowances are based, including: average residential distribution rate proxy, averaging the cumulative revenue from each residential schedule, and a marginal versus base cost approach; 1 Page 1, OP of E

4 c. Revenue sources to be used when calculating the residential allowance, including that from substations, primary circuits, and sub-transmission; d. Sources of data for calculating the residential allowance including the numbers of customers, distribution rates, average appliance usage, and revenue cycle service (RCS) credit and other credits; and e. Criteria for requiring a revenue impact estimate to be included in a residential allowance change advice letter filing.. Possible changes in policy and the methodology for determining the monthly cost of ownership charges for unused electric line and service extension capacity. a. The cost components to be recovered by the monthly cost of ownership charges; and b. The relationship of the monthly cost of ownership charges to: (1) monthly charges for operation and maintenance (O&M) of added (special) distribution facilities; and () the cost of service (COS) factor as used in Rule. B. Summary Of Recommendations SCE recommends, and requests that the Commission adopt, the following with respect to the issue of possible changes in policy and the methodology for determining line extension allowances: 1. At this time, SCE expresses no opinion as to whether allowances should vary based on the proximity of an applicant to the service area of a municipal utility adjacent to the utility granting the allowance.. SCE recommends that the Commission continue to rely on the existing net revenue calculation as presented herein, which includes all the distribution-related revenues which support the allowance, as the basis for line and service extension allowances.. For the sake of uniformity, SCE is willing to use the SDG&E approach of relying on information from the revenue allocation adopted in its most recent general rate case to calculate net revenues.. SCE believes the revenue sources and sources of data it currently uses when calculating the residential allowance are appropriate and should remain unchanged. We note that OP (d), page 1, of E-1 refers to CRS credit. SCE believes that this is a typographical error and that the Commission meant to refer to RCS credit. --

5 . SCE believes that a revenue impact estimate should not be included in a residential allowance change advice letter filing. SCE recommends, and requests that the Commission adopt, the following with respect to the issue of possible changes in policy and the methodology for determining the monthly cost of ownership charges for unused electric line and service extension capacity: 1. SCE believes that its current cost of ownership factor is the appropriate charge for unused capacity costs because it is derived from the added facility rate charge in which there is no capital recovery and which does not include components for ratebased costs (rate of return, income tax, carrying cost of capital, and depreciation). --

6 II. BACKGROUND As directed by Resolution E-1 and as detailed above, the purpose of this Application is to address possible changes in SCE s policy or methodology used to calculate residential line and service extension allowances and monthly cost of ownership charges for the unused portion of the line and service extension capacity. Upon review, SCE has concluded that its current policies and methodologies relating to residential line and service extension allowances and monthly cost of ownership charges, with the exception noted below, are appropriate and, as such, should be adopted by the Commission as presented herein. In addition, SCE believes that such policies and methodologies are fully supported by past Commission proceedings and legislation relating to line and service extension policies which favor the balancing of the cost of new line and service interconnections between existing customers and new applicants. A. History There is a lengthy history of Commission proceedings and legislation addressing the subject of line and service extension policies, in particular, residential extensions. In fact, it was only until the s that the Commission, after working closely with utilities and other interested parties, established the current balancing principle based on a net revenue methodology which balances the cost of new line and service interconnection between existing customers and new applicants. Initially, utilities were expected to invest in distribution line and service extension facilities as part of their obligation to provide service. Later, the Commission excused the utilities from this obligation by allowing utilities to provide free footage allowances in the form of a dollar credit towards the applicant s obligation (costs for installing the line extension), which allowances were not to exceed the total estimated installed costs of the extension. In the s, in response to increasing marginal costs and uncertainty over future gas and electric supply, the Commission sought to eliminate the free footage allowances out of concern that the allowances promoted increased energy growth. However, legislative intervention led the Commission to abandon the elimination of the free footage allowance and eventually, in the early s, the Commission moved to a net revenue methodology which balances the cost allocation --

7 between existing customers and new applicants. The net revenue methodology granted allowances, in the form of a dollar credit, towards the applicant s obligation (costs of the line extension), which allowances were not to exceed the total estimated installed costs of the extension. Said net revenues are to be economically justified based on the expected revenues provided by the new customer that support the distribution line and service extension. A brief review of some of the Commission proceedings in the s relating to line and service extension policies is presented below to help explain the development of the Commission s net revenue or balancing principle and SCE s current policies and methodologies. In its 1 Order Instituting Rulemaking on the Commission s Own Motion to Consider the Line Extension Rules of Electric and Gas Utilities (R or OIR), the Commission expressed its desire to consider the Line Extension Rules of the gas and electric utilities and revisions to such rules. On September 1, 1, following a series of workshops and negotiations, parties filed a Settlement Agreement which was approved in Decision (D) The Settlement Agreement allowed the following changes to the line extension rules: (1) allowances would be based on revenues produced by the customer (revenue based allowances), () a discount option was adopted which provided builders the opportunity to lower up-front costs, () the publishing of unit costs was allowed, () flat residential allowances which provided builders predictably were adopted, and () provisions which removed uncertainty as to when the utility would impose changes other than the filed unit cost for the line extension were adopted. In creating revenue based allowances, the Settlement Agreement stated,... California utilities have an obvious and important interest in creating a fair and efficient statewide line extension policy. From the utility standpoint, the rule must balance the interests of current and future customers, affected industries, and the utilities themselves in a manner that does not hamper utility efficiency. (Emphasis added.) On January 1, 1, the Joint Utilities submitted a joint status report regarding outstanding issues not addressed by the Settlement Agreement. D.-1-0 further modified the existing line and Parties to R include PG&E, SCE, SoCalGas, SDG&E (Joint Utilities) and others (Southwest Gas Corporation, Pacificorp, TURN/UCAN, Sierra Pacific Power Co, and Division of Ratepayer Advocates) --

8 service extension rules and practices for the electric utilities in order to reduce the amounts by which ratepayers already connected to the utility systems subsidize the costs caused by new ratepayers requiring new line and service extensions. These modifications resulted in more uniform and consistent practices among the utilities. The Commission concluded and adopted, in short, the following: (1) applicants should receive such free allowances only to the extent that the revenue expected to be received from the load to be served matches the utility s investment ( revenue justifying ), () the adoption of distribution basing allowances to reflect the unbundling of utility rates mandated by Assembly Bill (AB) and, () the adoption of a streamlining mechanism to keep the allowances current with changes adopted by the Commission in the new worlds of gas and electric regulation. On January 0, 1, the California Building Industry Association (CBIA) filed an application seeking rehearing of D.-1-0 and contended the Commission decision did not satisfy requirements of Section of the California Public Utilities Code. The Commission denied rehearing of D.-1-0 in D.-0-0 and reiterated that line extension charges should be premised on projections of distribution-related revenues only and that residential line and service extension allowance changes may be filed by advice letters when a Commission decision affects factors in the formula for its calculation. Later that year in D.-0-00, the Commission went further and removed revenue cycle service costs from line extension calculations, together with downstream costs such as meter reading and customer billing. In D.0-0-0, the final decision in R.-0-00, the Commission addressed additional changes to the line extension rules which included, among other things, allowing the cost of inspections to be absorbed by the line extension allowances, where available, and requiring the utility to book to ratebase the lower of the utility s bid amount or the applicant s costs, for applicant installed projects. On December 1, 00, SCE filed Advice 1-E requesting a change to the residential line extension allowance, in accordance with SCE s Rule 1, Section I, Periodic Review. TURN and ORA protested SCE s Advice 1-E alleging that SCE did not properly compute the net revenues used in the calculation of residential allowances, and that the current allowances include cost elements that do not support the cost of serving new customers. On June 1, 00, Resolution E-1 approved changes to --

9 the calculation of residential line extension allowances on an interim basis. SCE and SDG&E were ordered to clarify and coordinate language in Rules, 1, and 1. Resolution E-1 also ordered that SCE, SDG&E, PG&E, and SoCalGas file applications addressing changes in policy and the methodology for determining both allowances and the monthly cost of ownership charges for unused electric and gas line and service extension capacity. The historical perspective provided above evidences the importance of the Commission s desire to maintain a balance between the degree to which the cost of new line and service interconnections are borne directly by new individual applicants/customers or developers (which develop residential projects on behalf of applicants for new service interconnections) and by utilities, which would in turn recover such costs through utility rates charged to existing customers. The policy positions advanced by ORA and TURN in their respective protests of SCE s Advice 1-E would upset the current balance set forth in historical Commission decisions, resolutions, and proceedings, which were the culmination of years of work and effort by the Commission, the Joint Utilities, and outside interested parties. For the above stated reasons, SCE recommends that the Commission not make any changes to the existing residential line and service extension allowance calculation methodology used by SCE, with the following exception: SCE is willing to use the SDG&E approach to calculate Net Revenue, as more fully discussed below. --

10 III. SCE S RESPONSE TO THE ISSUES RAISED BY RESOLUTION E-1 A. Methodology For Determining The Residential Line And Service Extension Allowance 1. SCE s Current Methodology For Determining Line And Service Extension Allowances Extension of service to a new customer may involve a distribution line extension (Rule 1) and/or a service extension (Rule 1). Distribution extensions, as it relates to electric, are the overhead and underground electric lines typically installed along streets and roadways as well as other lands. They generally supply electric power to multiple customers in a given area. A service extension is the electric wiring that extends from the distribution facilities up to, and including, the electric meter. Service extensions typically provide electric power to one premise. As noted above, since the mid s, the utility s justifiable investment (allowance) for a line and service extension has been based on the portion of the extension costs that are supported by the loads served by the extension (revenue based) rather than on a free footage allowance based on end use appliances. For residential allowances, the Commission allows a flat revenue based allowance. The revenue based allowance approach allows allowances to be calculated in a manner that can easily accommodate changes in rates, cost allocation, and usage levels, and treats all applicants equally. The following formula illustrates the methodology currently used by SCE for calculating revenue based allowances: Allowance = Net Revenue (Supported Extension costs) Cost of Service Factor The numerator of this formula (Net Revenue) represents the proposed distribution revenues that will be produced by the applicant s loads, and which will be utilized to support a portion or all of the distribution extension costs. The denominator in the formula (Cost of Service Factor) is the ratio of revenue requirements to distribution capital investments, which is weighted by all added facility project jobs. --

11 For the purpose of establishing the standard allowance for residential line and service extensions, SCE calculates net revenues using the distribution component of the TOU-D-1 rate schedule, which reflects the averaged (summer/winter) residential distribution rate and excludes all non-distribution components after deducting the RCS cost. The baseline credit shown on schedule TOU-D-1, adjusted to reflect the ratio of average residential baseline allowance to total kwh consumption per customer, is also deducted from the residential distribution rate used in the calculation. Schedule TOU-D-1 clearly breaks out the distribution component of the rate from other parts of the rate which recovers both distribution related capital and O&M. To calculate the Cost of Service Factor, SCE uses the Company-Financed, With Replacement at Additional Cost rate from the Added Facilities Rates set forth in Rule, Section H (Rule ). For calculation purposes, costs are divided into two cost components: capital and O&M. The capital-related cost component is derived from the carrying charge rates associated with each Federal Energy Regulatory Commission (FERC) account. Calculation of the Cost of Service Factor is explained in more detail in Section III.B.1 below. SCE recommends that the Commission continue to rely on SCE s use of the existing net revenue calculation, which includes all the distribution-related revenues which support the allowance, as the basis for residential line and service extension allowances.. Alternative Methods Of Calculating Net Revenue For The Residential Allowance SCE is willing to use the SDG&E approach of relying on information from the revenue allocation adopted in its most recent general rate case to calculate net revenues. To apply SDG&E s methodology, SCE would take the residential distribution revenue requirement adopted in Phase of a General Rate Case (GRC), subtract out the last adopted Residential Revenue Cycle Service Credits, and divide by the current number of residential customers. In theory, this new method should generate the same net revenue as the method SCE currently employs. Currently, SCE uses the distribution rate component from Schedule TOU-D1 tariff, multiplied by recorded average sales less RCS credit, to generate total revenue. If the total sales and the total number of customers equal that which was used in the GRC, the net revenues resulting from SCE s current method and SDG&E s method should be the --

12 same. The advantage of moving to the SDG&E approach is simplification and uniformity between utilities.. The Cost Of Service Factor Appropriately Adjusts Net Revenues To Calculate The Line And Service Extension Allowance The single lifetime Cost of Service factor is appropriate to scale net revenues to a capital allowance because it is comparable to the numerator in that it includes O&M, and is designed to convert an annual revenue amount to a corresponding investment amount. The cost of service factor is derived from an added facility rate charge with no capital recovery: i.e., the Company-Financed, With Replacement at Additional Cost option under Rule. SCE may agree to install facilities under Rule, when a customer requests facilities with costs beyond standard service (where there is no immediate stream of revenue to support the special/added installed facilities). Line and/or service extensions can be similar to added facility installations, since in many cases SCE s costs for the facilities being installed may be beyond what the customer s load will generate in revenues or otherwise support the costs of the line and/or service extension. Thus, the cost of service factor used to convert capital investments for added facilities installation to monthly payments should be used in the denominator of the allowance calculation to convert an annual revenue amount into a corresponding investment amount. The Cost of Service Factor is composed of capital related cost components and operations and maintenance related cost components. The capital related cost components are derived from the carrying charge rates associated with each FERC account. The development of carrying charge rates is based on current assumptions of rate of return, depreciation, book lives, administrative and general expenses, ad valorem tax, insurance, Federal income tax, and State income tax. The operations and maintenance-related cost component is calculated as the ratio of the most recent ten-year average operations and maintenance expense and the most recent ten-year average plant in-service relevant to added facilities. SCE s added facilities rates under Rule include Company and Customer financed options. In addition, the following three replacement options are offered for each finance option: With Replacement at Additional Cost, With Limited Replacement, and With Perpetual Replacement. The most appropriate --

13 added facilities rate to be used in the allowance calculation is the With Replacement at Additional Cost option because it does not include an amount to cover future cost of replacement. If a customer chooses the rate With Replacement at Additional Cost option under Rule, the customer must pay for replacement facilities when they are needed and will continue to pay the monthly ownership charge for the added facilities. If a customer chooses the With Limited Replacement option under Rule, SCE provides replacement with no additional cost to the customer for a period up to 0 years. Finally, if a customer chooses the With Perpetual Replacement option under Rule, SCE provides replacement facilities at no additional cost to the customer as long as the customer continues to pay the monthly ownership charge for the added facilities. Because line extensions are evaluated over a single life, the replacement options, the With Limited Replacement option and the With Perpetual Replacement option, do not impact the allowance calculation.. Criteria For Requiring A Revenue Impact Estimate Resolution 1-E required utilities to address, in their respective applications, relevant issues related to the criteria for requiring a revenue impact estimate to be included in an allowance change advice letter filing. As ordered by General Order -A, Section III.C, utilities are required to provide an estimate of the annual revenue effect if a tariff schedule filed in an advice letter will result in an increase or decrease in revenues. The estimated annual revenue effect is to consider areas, schedules, and classes of customers where practicable. In all such relevant advice letters, SCE provides the annual revenue impact. SCE has historically filed changes to its residential line and service extension allowances by advice letter pursuant to Rule 1, Section I.. This tariff provision requires that SCE must periodically review the factors used for determining the residential allowance and modify that allowance if such review results in a greater than five percent change, SCE will submit a tariff revision proposal to the Commission for review and approval. This provision was ordered by the Commission in D.-1-0 Prior Advice Letters include Advice -E/E-A, Advice 0-E, Advice -E, and Advice -E. --

14 which adopted the Settlement Agreement proposed by parties to R When filing advice letters to request changes to its residential line extension allowance, SCE does not currently conduct an analysis of the annual revenue effect on customers. This is consistent with existing policy and was confirmed in a Commission decision, which states, when the Commission issues a decision that impacts factors in the formula for line and service extension allowances, SCE should recalculate the allowances in accordance with that decision without initiating or requesting a separate ratemaking or rulemaking proceeding. This finding confirms the Commission s view that recalculating the residential line extension allowance for purposes of incorporating updated factors from other Commission decisions does not constitute a rate change, which would otherwise require ratemaking protocols, and thus, does not result in revenue impacts to other ratepayers. The question of whether a change in the line and service extension allowance is a rate change was reviewed in R and finalized in Commission D In that decision, the Commission responded to R participants during its discussion of revenue justifying the line and service extension allowances and described its view of such allowances as follows: Allowances are payments from the utility to developers for the utility infrastructure. They are not rate schedules, contracts, or tariff options. Nor do they shift costs among customer class, rate schedules, or tariff options. Furthermore, in its discussion of the line extension allowance within the context of Assembly Bill, the Commission stated, On its face, the allowance for line and service extension costs does not appear to constitute a rate, fare, toll, rental or charge, since those terms connote payments to the utility, and allowances represent amounts that would not be paid by the applicant to the utility. The Commission affirms its view again in D.-1-0, Findings of Fact 1 when it stated, line or service extension allowances do not serve to collect the subject utility s revenue requirement, but rather Appendix B, STIPULATION AND SETTLEMENT AGREEMENT, Section III. Proposed Uniform Electric Extension Rules, Page. D.-0-0, Page. D.-1-0, page 1. Id, page. -1-

15 are set to determine an allocation of the line and service extension costs between the new customer and the existing body of ratepayers. For a residential line and service extension allowance change such as that which was filed in Advice 1-E and which was the conduit for this Application, SCE does not include an estimated annual revenue effect because such change would have no impact on revenues. The allowance is designed as an upfront advance in the form of dollars, as stated earlier, and is applied towards the estimated costs of the line and/or service extension. In other words, the advance is applied to the cost of the project and may reduce the payment required from the applicant prior to the start of construction. The allowance is based on revenues that will be realized over a given time, as stated in Rule 1, from that line and/or service extension. Theoretically, the allowance is a one-for-one offset based on the immediate load/revenues from the individual customer utilizing the line and/or service extension and does not impact other ratepayers. Thus, SCE is prudent in its practice of not performing a revenue impact study when filing an advice letter to modify the residential line and service extension allowance as described in this section. SCE believes that the existing procedures, which were extensively reviewed and approved in R.-0-00, are reasonable. SCE sees little benefit in conducting revenue impact analyses for such allowance changes and does not believe that such analyses should be included as a criterion to be included in an advice letter when SCE requests an allowance change pursuant to Rule 1, Section I.. SCE does not view the changes as discussed above, where the factors are updated due to other Commission decisions, to be rate changes and, therefore, following existing procedures is sufficient and achieves the tariff s objectives. However, in stating the above, SCE does recognize that eventually a change in the allowance may affect utility rates, since a change in the amount of utility investment will eventually affect rate base. The actual revenue impact, which could eventually affect a change in the allowance, will depend on the ratemaking practices adopted and announced by the utility in its General Rate Case. SCE believes that forecasting the eventual revenue impact of a change in the allowance would require SCE to forecast the Commission s response to some future rate change request. Therefore, it is sufficient for the -1-

16 Commission to address distribution line and service extension allowances on a policy basis, and rate change requests in utility General Rate Case proceedings.. Service Territory Adjacent To Competing Municipal Utilities At this time, SCE expresses no opinion as to whether allowances should vary based on the proximity of an applicant to the service area of a municipal utility adjacent to the utility granting the allowance. As a general practice, SCE believes that similar customers should be treated similarly as to rates and terms of service. However, the Commission has allowed deviation from this general practice where good cause can be shown. For example, the Commission has allowed SCE to offer economic development and business retension rates, where such rates would benefit overall ratepayers by spreading utility fixed costs over a broader volume of customers and load. B. Policy And Methodology For Determining Monthly Cost Of Ownership Charges For Unused Electric Line And Service Extension Capacity 1. Cost Components To Be Recovered SCE is responsible for operating, maintaining, and if necessary, repairing or replacing an extension, anytime after it is placed into service. When the extension, or part of the extension, begins to serve load, the share of the costs applicable to the load being served is added to ratebase and, thus, is recovered by rates. The unused portion of the extension is not added to ratebase and, thus, the costs are not recovered by rates. The monthly ownership charge recovers the costs associated with Customer- Financed facilities that are not fully utilized (i.e. property tax, operations and maintenance, administration and generation, franchise fees and uncollectibles, and possible facility replacement). SCE believes that the current method of calculating the cost of ownership factor is appropriate for unused capacity costs because it is derived from the added facility rate charge for which there is no capital recovery, the Customer-Financed With Perpetual Replacement rate. This rate does not include components for ratebased costs (rate of return, income tax, carrying cost of capital, and depreciation). Ownership charges begin to accrue after 1 months and are calculated based on the refundable balance which has not qualified for a refund. The accrued ownership charge is subtracted from any -1-

17 future refunds due to the customer commencing on the Ready-to-Serve date and continuing through the ten-year life of the contract. -1-

18 Appendix A WITNESS QUALIFICATIONS

19 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF CARL H. SILSBEE Q. Please state your name and business address for the record. A. My name is Carl H. Silsbee, and my business address is Walnut Grove Avenue, Rosemead, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. I am Manager of Regulatory Economics in the Regulatory Policy and Affairs Department. In this position, I am responsible for marginal cost studies and related studies to support rate design, performance based ratemaking, and a variety of special projects. I have held the position since November 1. Q. Briefly describe your educational and professional background. A. I received a Bachelor's degree in Engineering from Harvey Mudd College in 1 and a Master's degree in Engineering-Economic Systems from Stanford University in 1. I joined Southern California Edison in. Prior to my present position, my responsibilities have included coordinating and preparing operating and maintenance expense forecasts for general rate cases, preparing revenue requirement analyses in support of Certificate of Public Convenience and Necessity (CPCN) applications, and filing, avoided cost pricing for qualifying facilities and supporting wholesale rate case applications before the Federal Energy Regulatory Commission. I have previously testified before this Commission. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor the portions of Exhibit SCE-1, entitled Residential Line and Service Extension Allowance Testimony, as identified in the Table of Contents thereto. Q. Was this material prepared by you or under your supervision? A-1

20 A. Yes. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-

21 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF SUSAN C. REED Q. Please state your name and business address for the record. A. My name is Susan C. Reed, and my business address is Walnut Grove Avenue, Rosemead, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. I am a Financial Analyst for the Regulatory Economics group in the Regulatory Policy and Affairs Department. In this position I am responsible for providing economic analytical support for a variety of projects at Southern California Edison. Q. Briefly describe your educational and professional background. A. I received a Bachelor of Science degree in Economics and Finance from the University of Wyoming in 001 and a Masters of Science degree in Economics from the University of Wyoming in 00. I began working at Southern California Edison in January 00 and have held my current position since hired. I am responsible for calculating added facilities rates and real economic carrying charges, coordinating and preparing annual Safety and Reliability Performance Incentive Mechanism reports, developing cost-benefit analyses for distributed generation projects, evaluating street light marginal costs, and providing economic analytical support for various departments within Southern California Edison. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor the portions of Exhibit SCE-1, entitled Residential Line and Service Extension Allowance Testimony, as identified in the Table of Contents thereto. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. A-

22 Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-

23 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF JAMES SCHICHTL Q. Please state your name and business address for the record. A. My name is James Schichtl, and my business address is Walnut Grove Avenue, Rosemead, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company (SCE). A. I am Manager of the Rate Design Section in the Revenue and Tariffs Division of the Regulatory Policy and Affairs Department. Q. Briefly describe your educational and professional background. A. I received a Bachelor of Science Degree in Engineering in 1 and completed all required course work for a Master of Science Degree in Economics at the University of Texas, El Paso in 1. I began working as a Tariff Analyst for Southern California Edison in April of 1, responsible for pricing-related research and analysis. I became a Financial Analyst with SCE s Pricing Research group in 1 responsible for marginal cost of service studies, calculation of marginal cost revenue responsibility, evaluation of new pricing options and analytical support for various other departments within SCE. I attained my present position, responsible for developing retail pricing structures, in July of 1. I have previously testified before the California Public Utilities Commission. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor the portions of Exhibit SCE-1, entitled Residential Line and Service Extension Allowance Testimony, as identified in the Table of Contents thereto. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. A-

24 Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-

25 SOUTHERN CALIFORNIA EDISON COMPANY QUALIFICATIONS AND PREPARED TESTIMONY OF LISA VELLANOWETH Q. Please state your name and business address for the record. A. My name is Lisa Vellanoweth, and my business address is Walnut Grove Avenue, Rosemead, California. Q. Briefly describe your present responsibilities at the Southern California Edison Company. A. I am the Manager of Tariffs in the Regulatory Policy & Affairs Department. In this capacity, I oversee the development and management of SCE s California Public Utilities Commission (Commission) jurisdictional tariffs, and the management and resolution of customer Complaint Cases filed with the Commission. Q. Briefly describe your educational and professional background. A. I hold a Masters Degree in Business Administration from California State Polytechnic University, Pomona and a Bachelor of Science degree in Organizational Management from the University of La Verne. I began my career with SCE in 1 and have held various professional, supervisory, and management positions within the Customer Service and Regulatory Policy & Affairs Departments. I have been involved in developing and managing SCE s tariffs since 1. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to sponsor the portions of Exhibit SCE-1, entitled Residential Line and Service Extension Allowance Testimony, as identified in the Table of Contents thereto. Q. Was this material prepared by you or under your supervision? A. Yes, it was. Q. Insofar as this material is factual in nature, do you believe it to be correct? A. Yes, I do. A-

26 Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best judgment? A. Yes, it does. Q. Does this conclude your qualifications and prepared testimony? A. Yes, it does. A-