Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Revised Cal. PUC Sheet No E

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1 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Revised Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 1 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 1. Purpose The purpose of the Electric Distribution Revenue Adjustment Balancing Account (EDRABA) is to 1) set forth the methodology for determining the Authorized PBR Distribution Revenue Requirement pursuant to D ; 2) record EDRABA revenue and 3) record the authorized monthly PBR Revenue Requirement. The Commission has authorized a PBR Distribution Revenue Requirement until the implementation of SCE s 2003 GRC revenue requirement. 2. Definitions. a. PBR Distribution Revenue Requirement (PBRDRR): The Authorized Level of Distribution Revenue Requirement (PBRDRR) shall be the amount of PBR Distribution Revenue authorized by the Commission, to be recovered by SCE during the applicable calendar year, or part thereof. The PBRDRR for 2001, 2002, and 2003 are listed in Table A: Table A PBR Distribution Revenue Requirement (PBRDRR) ($000) Effective Date PBRDRR June 14, 2001 $ 2,054,930 January 1, 2002 $ 2,158,123 January 1, 2003 $ 2,194,967 August 1, 2003 $ 2,170,582 September 1, 2003 $ 2,194,618 (N) b. Base Year The Base Year for the PBRDRR (The year in which the annual PBRDRR amount is initially established) is The terms, Current year, Prior Year, Subject Year, Productivity Pledge, and Z-Factors, are as defined in Preliminary Statement BB, Section 3 (PBR Distribution Revenue Requirement Adjustment Factor). c. Revision Date The Revision Date shall be January 1 of the Subject Year. SCE shall file an Advice Letter on November 1 of each year commencing in 2002 for revisions to the PBRDRR, calculated in accordance with the provisions described herein. Advice 1740-E John R. Fielder Date Filed Sep 2, 2003 Decision Senior Vice President Effective Sep 1, H15

2 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Revised Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 1 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 1. Purpose The purpose of the Electric Distribution Revenue Adjustment Balancing Account (EDRABA) is to 1) set forth the methodology for determining the Authorized PBR Distribution Revenue Requirement pursuant to D ; 2) record EDRABA revenue and 3) record the authorized monthly PBR Revenue Requirement. The Commission has authorized a PBR Distribution Revenue Requirement until the implementation of SCE s 2003 GRC revenue requirement. 2. Definitions. a. PBR Distribution Revenue Requirement (PBRDRR): The Authorized Level of Distribution Revenue Requirement (PBRDRR) shall be the amount of PBR Distribution Revenue authorized by the Commission, to be recovered by SCE during the applicable calendar year, or part thereof. The PBRDRR for 2001, 2002, and 2003 are listed in Table A: b. Base Year Table A PBR Distribution Revenue Requirement (PBRDRR) ($000) Effective Date PBRDRR June 14, 2001 $ 2,054,930 January 1, 2002 $ 2,158,123 January 1, 2003 $ 2,194,967 The Base Year for the PBRDRR (The year in which the annual PBRDRR amount is initially established) is The terms, Current year, Prior Year, Subject Year, Productivity Pledge, and Z-Factors, are as defined in Preliminary Statement BB, Section 3 (PBR Distribution Revenue Requirement Adjustment Factor). c. Revision Date The Revision Date shall be January 1 of the Subject Year. SCE shall file an Advice Letter on November 1 of each year commencing in 2002 for revisions to the PBRDRR, calculated in accordance with the provisions described herein. (C) (C) 1H17

3 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Revised Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 1 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 1. Purpose The purpose of the Electric Distribution Revenue Adjustment Balancing Account (EDRABA) is to 1) set forth the methodology for determining the Authorized PBR Distribution Revenue Requirement pursuant to D ; 2) record EDRABA revenue and 3) record the authorized monthly PBR Revenue Requirement. The Commission has authorized a PBR Distribution Revenue Requirement until the implementation of SCE s 2003 GRC revenue requirement. 2. Definitions. a. PBR Distribution Revenue Requirement (PBRDRR): The Authorized Level of Distribution Revenue Requirement (PBRDRR) shall be the amount of PBR Distribution Revenue authorized by the Commission, to be recovered by SCE during the applicable calendar year, or part thereof. The PBRDRR for 2001, 2002, and 2003 are listed in Table A: Table A PBR Distribution Revenue Requirement (PBRDRR) ($000) Effective Date PBRDRR June 14, 2001 $ 2,054,930 January 1, 2002 $ 2,158,123 January 1, 2003 $ 2,194,967 August 1, 2003 $ 2,170,582 (N) b. Base Year The Base Year for the PBRDRR (The year in which the annual PBRDRR amount is initially established) is The terms, Current year, Prior Year, Subject Year, Productivity Pledge, and Z-Factors, are as defined in Preliminary Statement BB, Section 3 (PBR Distribution Revenue Requirement Adjustment Factor). c. Revision Date The Revision Date shall be January 1 of the Subject Year. SCE shall file an Advice Letter on November 1 of each year commencing in 2002 for revisions to the PBRDRR, calculated in accordance with the provisions described herein. Advice 1739-E John R. Fielder Date Filed Sep 2, 2003 Decision Senior Vice President Effective Aug 1, H9

4 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Revised Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 2 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 2. Definitions. d. PBR Distribution Revenue Requirement Adjustment Factor (PDRRAF) Escalation Factor The PDRRAF is the annual multiplier developed through the Update Rule to be applied to the PBRDRR and the Incremental Cost per Customer (ICC). The PDRRAF is developed in Preliminary Statement, Part BB. e. Escalation Rate The Escalation Rate is that rate which shall be used to account for input price inflation in the determination of the Escalation Factor for application in the PBR Distribution Revenue Requirement Indexing Formula (PDRRIF). Recorded Escalation Rates and Forecast Escalation Rates shall be as provided in Preliminary Statement BB. Section 3. f. Customer Growth Customer Growth for the Current year shall be calculated as the difference between the recorded number of ultimate consumers for the Current Year and the Prior Year as reported in the September release of the respective year s Summary of KWH Sales, Customers, and Meters of the SCE s monthly Financial & Operating Report. The Forecast Customer Growth for the Subject Year shall be the same as the Recorded Customer Growth for the Current Year. The Forecast and Recorded Customer Growth for each year are set forth in Table B below: Table B Customer Growth Year Forecast Recorded ,909 60, ,812 57, ,123 g. Incremental Cost per Customer (ICC) The Incremental Cost per Customer (ICC) for the PBR Distribution Revenue Requirement shall be the amount of increase to the PBRDRR associated with the addition of a new customer. The ICC for the subject Year shall be equal to the product of the current Year s ICC multiplied by the PDRRAF. The ICC for 2001 shall be $657 per customer pursuant to D H20

5 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Revised Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 3 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 2. Definitions. g. Incremental Cost per Customer (ICC) Table C Incremental Cost per Customer for PBR Revenue Requirement Year 2001 $ $ $669 h. Customer Growth Allowance (CGA) The Customer Growth Allowance (CGA) for PBR DRR is the annual change in the PBR DRR which reflects the increase or decrease in costs associated with providing distribution electric service to the incremental change in the SCE total number of ultimate consumers as reflected by Customer Growth. The Forecast CGA for the Subject Year shall be the product of the forecast Customer Growth for the Subject Year multiplied by the ICC for the Subject Year. The Recorded CGA for the Current Year shall be the product of the Recorded Customer Growth for the Current Year multiplied by the ICC for the Current Year. The Forecast and Recorded CGA are set forth in Table D below: Table D Customer Growth Allowance for PBR Distribution Revenue Requirement ($000) Year Forecast Recorded 2001 $40,017 $39, $40,683 $38, $38,234 $ i. Franchise Fees and Uncollectible Accounts: Franchise Fees and Uncollectible Accounts shall be the rate derived from the Utility s most recent General Rate Case proceeding. j. Monthly Distribution Percentages (MDPs): Monthly Distribution Percentages (MDPs) are the estimated monthly billed and unbilled distribution rate revenues, expressed as a percentage of annual distribution rate revenues. 3H20

6 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Revised Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 8 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 3. Determination of annual PBR Distribution Revenue Requirement: b STEP Base Revenue Requirement (Full Year) 2,082,930 STEP 2 Subtract Forecast 2001 Customer Growth Allowance (40,017) STEP 3 Add 2001 Recorded Customer Growth Allowance Incremental cost per customer 2001 $ 657 Recorded 2001 Number of Customers 60,812 Recorded Customer Growth Allowance (657 * 60,812) 39,953 Subtotal: 2001 Base Revenue Requirement adjusted for 2001 Recorded Customer Growth Allowance 2,082,866 STEP 4 Escalate Base Revenue Requirement by 2002 cpi-x amount equal to 1.76% Escalation Amount 36,658 Subtotal: 2002 Base Revenue Requirement Before 2002 Customer Growth Allowance 2,119,525 STEP 5 Add 2002 Forecast Customer Growth Allowance Forecast 2001 Number of Customers 60,812 Forecast Customer Growth Allowance (669 * 60,812) 40,683 Subtotal: 2002 Base Revenue Requirement Before Catalina Adjustment 2,160,208 STEP 6 Subtract 2002 generation-related Catalina Revenue Requirement included in 2002 URG Revenue Requirement pursuant to D (2,085) TOTAL: 2002 REVENUE REQUIREMENT 2,158,123 c STEP Base Revenue Requirement (Full Year) 2,158,123 STEP 2 Subtract Forecast 2002 Customer Growth Allowance (40,683) STEP 3 Add 2002 Recorded Customer Growth Allowance Recorded 2002 Number of Customers 57,123 Recorded Customer Growth Allowance (669 * 57,123) 38,215 Subtotal: 2002 Base Revenue Requirement adjusted for 2002 Recorded Customer Growth Allowance 2,155,655 STEP 4 Escalate Base Revenue Requirement by 2003 cpi-x amount equal to 0.05% Escalation Amount 1,078 Subtotal: 2003 Base Revenue Requirement Before 2003 Customer Growth Allowance 2,156,733 STEP 5 Add 2003 Forecast Customer Growth Allowance Forecast 2003 Number of Customers 57,123 Forecast Customer Growth Allowance (669 * 57,123) 38,234 TOTAL: 2003 REVENUE REQUIREMENT 2,194,967 (L) 8H18

7 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Revised Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 8 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 3. Determination of annual PBR Distribution Revenue Requirement: b STEP Base Revenue Requirement (Full Year) 2,082,930 STEP 2 Subtract Forecast 2001 Customer Growth Allowance (40,017) STEP 3 Add 2001 Recorded Customer Growth Allowance Incremental cost per customer 2001 $ 657 Recorded 2001 Number of Customers 60,812 Recorded Customer Growth Allowance (657 * 60,812) 39,953 Subtotal: 2001 Base Revenue Requirement adjusted for 2001 Recorded Customer Growth Allowance 2,082,866 STEP 4 Escalate Base Revenue Requirement by 2002 cpi-x amount equal to 1.76% Escalation Amount 36,658 Subtotal: 2002 Base Revenue Requirement Before 2002 Customer Growth Allowance 2,119,525 STEP 5 Add 2002 Forecast Customer Growth Allowance Forecast 2001 Number of Customers 60,812 Forecast Customer Growth Allowance (669 * 60,812) 40,683 Subtotal: 2002 Base Revenue Requirement Before Catalina Adjustment 2,160,208 STEP 6 Subtract 2002 generation-related Catalina Revenue Requirement included in 2002 URG Revenue Requirement pursuant to D (2,085) TOTAL: 2002 REVENUE REQUIREMENT 2,158,123 c (January 1, 2003 through July 31, 2003) STEP Base Revenue Requirement (Full Year) 2,158,123 STEP 2 Subtract Forecast 2002 Customer Growth Allowance (40,683) STEP 3 Add 2002 Recorded Customer Growth Allowance Recorded 2002 Number of Customers 57,123 Recorded Customer Growth Allowance (669 * 57,123) 38,215 Subtotal: 2002 Base Revenue Requirement adjusted for 2002 Recorded Customer Growth Allowance 2,155,655 STEP 4 Escalate Base Revenue Requirement by 2003 cpi-x amount equal to 0.05% Escalation Amount 1,078 Subtotal: 2003 Base Revenue Requirement Before 2003 Customer Growth Allowance 2,156,733 STEP 5 Add 2003 Forecast Customer Growth Allowance Forecast 2003 Number of Customers 57,123 Forecast Customer Growth Allowance (669 * 57,123) 38,234 TOTAL: 2003 REVENUE REQUIREMENT (01/01/03 07/31/03) 2,194, (August 1, 2003 through December 31, 2003) Remove 2003 EPTC Revenue Requirement (D ) (24,385) TOTAL: 2003 REVENUE REQUIREMENT (08/01/03 12/31/03) 2,170,582 (N) (N) (N) Advice 1739-E John R. Fielder Date Filed Sep 2, 2003 Decision Senior Vice President Effective Aug 1, H9

8 Southern California Edison Original Cal. PUC Sheet No E* Rosemead, California Cancelling Cal. PUC Sheet No. PRELIMINARY STATEMENT Sheet 9 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 4. Operation of the EDRABA Entries to the EDRABA shall be made on a monthly basis as follows: a. Debit entry equal to the monthly amount of the PBR Distribution Revenue Requirement calculated by multiplying the applicable MDP to the annual PBR Distribution Revenue Requirement (as determined in Section 3 above), less a provision for FF&U. b. Credit equal to the recorded EDRABA Revenue. Interest shall accrue monthly to the EDRABA by applying the Interest Rate to the average of the beginning and ending monthly EDRABA balances. 5. Distribution Rate Level Changes: SCE has proposed rate level change procedures in A , which is currently pending before the Commission. Upon final Commission decision in that proceeding, SCE will revise its tariffs to reflect those rate level change procedures approved by the Commission. 6. Review Procedures: SCE has proposed review procedures for this mechanism which are pending in A Upon final Commission decision in that proceeding, SCE will revise its tariffs to reflect the Commission-approved review procedures. SCE shall provide a monthly report showing the activity in the EDRABA to Energy Division within 30 days of the end of the each month. 9H24

9 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Original Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 10 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 7. Z-Factors. In order to receive the ratemaking treatment provided under Decision No for a Z-Factor, a Potential Z-Factor, must qualify as a Z-Factor under the nine criteria set forth in Decision No Table C lists the nine criteria under which a Potential Z-Factor will qualify as a Z-Factor: Table C Z-Factor Criteria 1. The event causing the cost must be exogenous to the Utility. 2. The event must occur after implementation of the PBR. 3. The Utility cannot control the costs. 4. The costs are not a normal part of doing business. 5. An event affects the Utility disproportionately. 6. The PBR Update Rule must not implicitly include the cost. 7. The cost must have a major impact on the Utility. 8. The cost impact must be measurable. 9. The Utility must incur the cost reasonably. a. Identification of Potential Z-Factors: A Potential Z-Factor may be identified by the Utility or the Office of Ratepayers Advocates (ORA). The Commission shall be notified of all Potential Z-Factors by a Letter of Notification in compliance with Decision No The Letter of Notification shall be sent to the Commission addressed to the Executive Director. For all Potential Z-Factors identified by the Utility, copies of the letter shall be sent to the Director of the Energy Division and the Director of the ORA. For all Potential Z-Factors identified by the ORA, copies of the Letter of Notification shall also be sent to the Senior Vice President of Regulatory Policy and Affairs and the Manager of the Revenue and Tariffs Division of the Utility. The Letter of Notification shall: (1) clearly identify the Potential Z-Factor, (2) include a detailed description of the event, (3) include a forecast of the annual financial impact of the Potential Z- Factor; and (4) show how the Potential Z-Factor meets the Z-Factor Criteria listed above in Table C. 10H21

10 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California Cancelling Original Cal. PUC Sheet No E PRELIMINARY STATEMENT Sheet 11 ELECTRIC DISTRIBUTION REVENUE ADJUSTMENT BALANCING ACCOUNT 7. Z-Factors. b. Application for Z-Factor Recovery: In order to receive recovery of a Z-Factor through PBR Distribution Revenue Requirement, the Utility shall include its request for recovery of the revenue requirement associated with the Potential Z-Factor in its annual March 31 filing as required under the Distribution PBR Mechanism. c. Z-Factor Threshold: The Utility will bear the risk of all potential Z-Factors which do not have a financial impact on the Utility of more than $10 million. The $10 million threshold amount is also applied as a deductible on a one-time basis to each Z-Factor authorized for recovery by the Commission. The deductible amount is only applied in the first year s ratemaking treatment for the Z-Factor. The $10 million deductible does not apply to the formation of new municipal utilities and for projects subject to Public Utilities Code Section 463 for which the Utility is seeking Z-Factor recovery. 8. The Utility shall also make an annual filing on March 31 for each year that the Distribution PBR Mechanism is in effect. The March 31 filing will include: a. The Utility s request, if any, for recognition of and recovery of Potential Z- Factors; and b. Details of the operation of the Utility s PBR Distribution Revenue Requirement Performance Mechanism as set forth in the Utility s Preliminary Statement, Part CC, PBR Distribution Performance Mechanism (PDPM). Other filings may be made as necessary to reflect changes in Excluded Items initially established in accordance with Commission Decision No Such filings will address any changes necessary to the PBRDRR to reflect the addition of or elimination of Excluded Items, and their effect on Distribution Revenue Requirement. 11H21