SUBJECT: Establishment of the Transportation Electrification Portfolio Balancing Account Pursuant to D

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1 STATE OF CALIFORNIA Edmund G. Brown Jr., Governor PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA February 26, 2018 Advice Letter 3734-E Russell G. Worden Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, CA SUBJECT: Establishment of the Transportation Electrification Portfolio Balancing Account Pursuant to D Dear Mr. Worden: Advice Letter 3734-E is effective as of February 25, Sincerely, Edward Randolph Director, Energy Division

2 Russell G. Worden Managing Director, State Regulatory Operations January 26, 2018 ADVICE 3734-E (U 338-E) PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION SUBJECT: Establishment of the Transportation Electrification Portfolio Balancing Account Pursuant to Decision In compliance with the California Public Utilities Commission s (Commission s or CPUC s) Decision (D.) , Southern California Edison Company (SCE) hereby submits for filing the following changes to its tariffs. The revised tariff sheets are listed on Attachment A and are attached hereto. PURPOSE Pursuant to Ordering Paragraph (OP) 23 of D , SCE submits this advice filing to establish Preliminary Statement Part NNN, the Transportation Electrification Portfolio Balancing Account (TEPBA), a one-way balancing account that will record the actual Operation and Maintenance (O&M) expense and capital-related revenue requirements associated with the approved Priority Review Projects (PRPs). SCE may only recover the revenue requirements associated with up to the capped 1 level of capital expenditures and O&M expenses in the TEPBA for each of the five approved projects. BACKGROUND In 2015, Senate Bill (SB) 350 was enacted into law (Statutes of 2015, Chapter 547). Among other things, SB 350 added new sections to the Public Utilities Code regarding Transportation Electrification (TE). In relevant part, Public Utilities Code Section (Pub. Util. Code ) (b) states: 1 To demonstrate that SCE spending on approved Priority Review Projects is below the caps presented in Table 1, SCE will deflate the actual nominal amounts spent in capital, labor and non-labor to 2016$, consistent with the approved funding in Table 1 of D , p. 86, using the escalation indexes adopted in the 2018 General Rate Case (GRC). P.O. Box Rush Street Rosemead, California (626) Fax (626)

3 ADVICE 3734-E (U 338-E) January 26, 2018 The commission, in consultation with the State Air Resources Board and the Energy Commission, shall direct electrical corporations to file applications for programs and investments to accelerate widespread transportation electrification to reduce dependence on petroleum, meet air quality standards, achieve the goals set forth in the Charge Ahead California Initiative, and reduce emissions of greenhouse gases to 40 percent below 1990 levels by 2030 and to 80 percent below 1990 levels by Programs proposed by electrical corporations shall seek to minimize overall costs and maximize overall benefits. The commission shall approve, or modify and approve, programs and investments in transportation electrification, including those that deploy charging infrastructure, via a reasonable cost recovery mechanism, if they are consistent with this section, do not unfairly compete with nonutility enterprises as required under Section 740.3, include performance accountability measures, and are in the interests of ratepayers as defined in Section As directed by Pub. Util. Code (b), on September 14, 2016, an Assigned Commissioner s Ruling (ACR) was issued in Rulemaking (R.) directing Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and SCE to file their first round of TE applications by January 20, The ACR also set forth guidance on what the TE applications should contain and the criteria the applications would have to meet. D confirmed and ratified the guidance in the ACR. The ACR requires that proposals for the PRPs must be less-controversial in nature, able to be implemented in approximately a 12 month timeframe, and limited to no more than $4 million in costs per project, with a total funding limit of $20 million for each utility. On January 20, 2017, SCE filed Application (A.) consistent with the ACR s requirements. In this application, SCE proposed six PRPs for a total of $ million. On January 11, 2018, the Commission issued D adopting five of SCE s six proposed projects. In this decision, the Commission approved SCE s Port of Long Beach projects as proposed and approved SCE s Residential Make-Ready Rebate, Urban DCFC Clusters, and Electric Transit Bus Make-Ready projects with modifications. The decision denied SCE s Electric Vehicle (EV) Rideshare Incentives project. D also authorizes the IOUs to coordinate spending up to $1.644 million (total for all IOUs) to conduct an RFP and hire a third-party evaluator to determine the success and scalability of each of the PRPs upon their completion. 2 2 Ordering Paragraph (OP) 37 of the Decision ordered the utilities to collectively fund a budget equal to four percent of their total approved PRP budgets from all ratepayers.

4 ADVICE 3734-E (U 338-E) January 26, 2018 Table 1 below provides a summary of each PRP s authorized funding level. SCE is also authorized to recover $617,800 for evaluation of the projects upon their completion. SCE may only recover the revenue requirements in the TEPBA associated with up to the total capped level of funding as shown in Table 1 for each of the individual PRPs and their evaluation. Pursuant to OP 1 of D , costs incurred for each PRP up to the authorized level will be considered per se reasonable subject only to the utility s prudent administration of the project. Table 1 SCE s Approved PRPs Funding Levels (2016$ millions, excludes overheads) Priority Review Project Total Residential Make-Ready Rebate Pilot Urban DCFC Clusters Pilot Electric Transit Bus Make-Ready Program Port of Long Beach Rubber Tire Gantry Crane Port of Long Beach Terminal Yard Tractor Projects Subtotal Evaluation Total PROPOSED TARIFF CHANGES As discussed above and in compliance with OP 23 of D , this advice filing establishes Preliminary Statement Part NNN, the TEPBA, to record the actual O&M and capital-related revenue requirements (i.e. depreciation, return on rate base, and applicable taxes) associated with each approved PRP and SCE s share of evaluation costs. Separate subaccounts are established in the one-way TEPBA to ensure that SCE will only recover the revenue requirements associated with up to the total capped level of capital and O&M expense authorized funding for each of the individual PRPs and SCE s share of evaluation costs. On an annual basis, SCE will transfer the balance in the TEPBA to the distribution subaccount of the Base Revenue Requirement Balancing Account (BRRBA), which will allow for true-up of forecast and actual PRPs revenue requirements. Commencing January 1, 2019, SCE will include a forecast PRPs revenue requirement for approval in an advice letter to be filed in November in each year, up until the time the PRP ongoing revenue requirement is included in a GRC. 3 The annual PRPs revenue requirement will 3 Since D was approved after SCE s January 1, 2018 rate change, the PRPs revenue requirement is not reflected in currently effective rate levels. SCE may opt to combine the PRP revenue requirement advice filing with the Charge Ready Program

5 ADVICE 3734-E (U 338-E) January 26, 2018 be included in SCE s year-end consolidated revenue requirement and rate change advice filing for rates effective on January 1 of each year. Costs incurred for each PRP up to the authorized level will be considered per se reasonable, subject only to the utility s prudent administration of the project. Costs recorded in the TEPBA will be reviewed in SCE s annual Energy Resource Recovery Account (ERRA) Review proceedings to ensure that entries are stated correctly and are consistent and compliant with Commission decision(s). This advice filing will not cause the withdrawal of service or conflict with any other schedule or rule. TIER DESIGNATION Pursuant to OP 31 of D this advice letter is submitted with a Tier 2 designation. EFFECTIVE DATE This advice filing will become effective on February 25, 2018, the 30th calendar day after the date filed. NOTICE Anyone wishing to protest this advice filing may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this advice filing. Protests should be submitted to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California EDTariffUnit@cpuc.ca.gov Copies should also be mailed to the attention of the Director, Energy Division, Room 4004 (same address above). In addition, protests and all other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of: advice letter filed in November of each year.

6 ADVICE 3734-E (U 338-E) January 26, 2018 Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California Telephone: (626) Facsimile: (626) AdviceTariffManager@sce.com Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California Facsimile: (415) Karyn.Gansecki@sce.com There are no restrictions on who may file a protest, but the protest shall set forth specifically the grounds upon which it is based and must be received by the deadline shown above. In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice filing to the interested parties shown on the attached GO 96-B and A et al. service lists. Address change requests to the GO 96-B service list should be directed by electronic mail to AdviceTariffManager@sce.com or at (626) For changes to all other service lists, please contact the Commission s Process Office at (415) or by electronic mail at Process_Office@cpuc.ca.gov. Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by filing and keeping the advice filing at SCE s corporate headquarters. To view other SCE advice letters filed with the Commission, log on to SCE s web site at For questions, please contact Matt Sheriff at (626) or by electronic mail at Matt.Sheriff@sce.com. Southern California Edison Company RGW:ms:cm Enclosures /s/ Russell G. Worden Russell G. Worden

7 CALIFORNIA PUBLIC UTILITIES COMMISSION ADVICE LETTER FILING SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/cpuc Utility No.: Southern California Edison Company (U 338-E) Utility type: Contact Person: Darrah Morgan ELC GAS Phone #: (626) PLC HEAT WATER Disposition Notice to: EXPLANATION OF UTILITY TYPE ELC = Electric GAS = Gas PLC = Pipeline HEAT = Heat WATER = Water (Date Filed/ Received Stamp by CPUC) Advice Letter (AL) #: 3734-E Tier Designation: 2 Subject of AL: Establishment of the Transportation Electrification Portfolio Balancing Account Pursuant to Decision Keywords (choose from CPUC listing): Compliance, Balancing Account AL filing type: Monthly Quarterly Annual One-Time Other If AL filed in compliance with a Commission order, indicate relevant Decision/Resolution #: Decision Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: Summarize differences between the AL and the prior withdrawn or rejected AL: Confidential treatment requested? Yes No If yes, specification of confidential information: Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/access to confidential information: Resolution Required? Yes No Requested effective date: 2/25/18 No. of tariff sheets: -6- Estimated system annual revenue effect: (%): Estimated system average rate effect (%): When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: Service affected and changes proposed 1 : See Attachment A Pending advice letters that revise the same tariff sheets: None 1 Discuss in AL if more space is needed.

8 Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this filing, unless otherwise authorized by the Commission, and shall be sent to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California Telephone: (626) Facsimile: (626) Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California Facsimile: (415)

9 Public Utilities Commission 3734-E Attachment A Cal. P.U.C. Sheet No. Original E Original E Original E Original E Title of Sheet Preliminary Statement Part NNN Preliminary Statement Part NNN Preliminary Statement Part NNN Preliminary Statement Part NNN Cancelling Cal. P.U.C. Sheet No. Revised E Table of Contents Revised E Revised E Table of Contents Revised E 1

10 Southern California Edison Original Cal. PUC Sheet No E Rosemead, California (U 338-E) Cancelling Cal. PUC Sheet No. PRELIMINARY STATEMENT Sheet 1 NNN. Transportation Electrification Portfolio Balancing Account (TEPBA) 1. Purpose The purpose of the one-way Transportation Electrification Portfolio Balancing Account (TEPBA) is to record the actual Operations and Maintenance (O&M) expenses and capital-related revenue requirements (i.e. depreciation, return on rate base, and applicable taxes) associated with the approved Transportation Electrification Priority Review Projects (PRPs). Separate subaccounts are established in the TEPBA to ensure that SCE will only recover the revenue requirements associated with up to the total capped level of authorized funding for each of the individual PRPs and SCE s share of evaluation costs. 2. Definitions a) The Authorized Funding Level Cap for each PRP and Evaluation pursuant to D is as follows: b) Interest Rate SCE s Approved PRPs Funding Levels (2016$ millions, excludes overheads and FF&U) Priority Review Project Total Residential Make-Ready Rebate Pilot Urban DCFC Clusters Pilot Electric Transit Bus Make-Ready Program Port of Long Beach Rubber Tire Gantry Crane Port of Long Beach Terminal Yard Tractor Projects Subtotal Evaluation Total The Interest Rate shall be one-twelfth of the Federal Reserve three-month Commercial Paper Rate Non-Financial, from Federal Reserve Statistical Release H.15 (expressed as an annual rate). If in any month a non-financial Rate is not published, SCE shall use the Federal Reserve three-month Commercial Paper Rate Financial. (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3734-E Caroline Choi Date Submitted Jan 26, 2018 Decision Vice Senior President Effective Feb 25, H15 Resolution

11 Southern California Edison Original Cal. PUC Sheet No E Rosemead, California (U 338-E) Cancelling Cal. PUC Sheet No. PRELIMINARY STATEMENT Sheet 2 NNN. Transportation Electrification Portfolio Balancing Account (TEPBA) 3. Operation of the TEPBA On a monthly basis, entries to each of TEPBA sub-accounts shall be determined as follows: a) Residential Make-Ready Rebate Pilot Sub-Account: (1) A debit entry equal to SCE s recorded O&M expenses associated with the Residential Make-Ready Rebate Pilot. O&M expenses may include rebates, enrollment, rebate processing, and education and outreach. b) Urban DCFC Clusters Pilot Sub-Account (1) A debit entry equal to SCE s recorded O&M expenses associated with the Urban DCFC Clusters Pilot. O&M expenses may include SCE labor, project ME&O, project reporting and rebates, among others. (2) A debit entry equal to SCE s recorded capital-related revenue requirement (including book depreciation, applicable taxes, and an authorized rate of return on recorded rate base) associated with the Urban DCFC Clusters Pilot. Capital-related expenses may include utility and customer-side installation costs, such as transformer upgrades, service drops, trenching and panel changes. c) Electric Transit Bus Made-Ready Program Sub-Account (1) A debit entry equal to SCE s recorded O&M expenses associated with the Electric Transit Bus Make-Ready Program. O&M expenses may include SCE labor, program ME&O, program reporting and rebates, among others. (2) A debit entry equal to SCE s recorded l capital-related revenue requirement (including book depreciation, applicable taxes, and an authorized rate of return on recorded rate base) associated with the Electric Transit Bus Make-Ready Program. Capital-related expenses may include utility and customer-side installation costs, such as transformer upgrades, service drops, trenching and panel changes. (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3734-E Caroline Choi Date Submitted Jan 26, 2018 Decision Vice Senior President Effective Feb 25, H16 Resolution

12 Southern California Edison Original Cal. PUC Sheet No E Rosemead, California (U 338-E) Cancelling Cal. PUC Sheet No. PRELIMINARY STATEMENT Sheet 3 NNN. Transportation Electrification Portfolio Balancing Account (TEPBA) Operation of the TEPBA a) Port of Long Beach Rubber Tire Gantry Crane Sub-Account (1) A debit entry equal to SCE s recorded O&M expenses associated with the Port of Long Beach Rubber Tire Gantry Crane Program. (2) A debit entry equal to SCE s recorded capital-related revenue requirement (including book depreciation, applicable taxes, and an authorized rate of return on recorded rate base) associated with the Port of Long Beach Rubber Tire Gantry Crane. Capital-related expenses may include utility and customer-side installation costs, such as transformer upgrades, service drops, trenching and panel changes. b) Port of Long Beach Terminal Yard Tractor Sub-Account (1) A debit entry equal to SCE s recorded O&M expenses associated with the Port of Long Beach Terminal Yard Tractor Program. (2) A debit entry equal to SCE s recorded capital-related revenue requirement (including book depreciation, applicable taxes, and an authorized rate of return on recorded rate base) associated with the Port of Long Beach Terminal Yard Tractor. Capital-related expenses may include utility and customer-side installation costs, such as transformer upgrades, service drops, trenching and panel changes. c) Evaluation Sub-Account (1) A debit entry equal to SCE s share of evaluation costs for evaluation of the PRPs upon their completion. When recording the costs in the TEPBA, SCE will include provisions for overhead loadings as applicable based on authorized GRC rates. However, Pensions, Post- Employment Benefits Other Than Pensions (PBOPs), and medical, dental and vision labor loadings will not be recorded in the TEPBA since these costs are recovered through other stand-alone balancing accounts. Interest shall accrue monthly to the TEPBA by applying the Interest Rate to the average of the beginning-of-month and end-of-month balance in the TEPBA. (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3734-E Caroline Choi Date Submitted Jan 26, 2018 Decision Vice Senior President Effective Feb 25, H11 Resolution

13 Southern California Edison Original Cal. PUC Sheet No E Rosemead, California (U 338-E) Cancelling Cal. PUC Sheet No. PRELIMINARY STATEMENT Sheet 4 NNN. Transportation Electrification Portfolio Balancing Account (TEPBA) Operation of the TEPBA 3. Disposition and Review Procedures The year-end TEPBA balance shall be transferred annually to the distribution subaccount of the BRRBA. SCE is authorized to fully recover in distribution rates the revenue requirements associated with the TE PRPs and their evaluation up to the authorized funding levels. Pursuant to OP 1 of D , costs incurred for each PRP up to the authorized level will be considered per se reasonable subject only to the utility s prudent administration of the project. The entries recorded in the TEPBA will be reviewed in SCE s annual ERRA Review proceeding to ensure the entries are properly recorded and consistent with Commission decisions. (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3734-E Caroline Choi Date Submitted Jan 26, 2018 Decision Vice Senior President Effective Feb 25, H11 Resolution

14 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California (U 338-E) Cancelling Revised Cal. PUC Sheet No E TABLE OF CONTENTS Sheet 1 Cal. P.U.C. Sheet No. TITLE PAGE E TABLE OF CONTENTS - RATE SCHEDULES E E TABLE OF CONTENTS - LIST OF CONTRACTS AND DEVIATIONS E TABLE OF CONTENTS - RULES E TABLE OF CONTENTS-INDEX OF COMMUNITIES, MAPS, BOUNDARY DESCRIPTIONS E TABLE OF CONTENTS - SAMPLE FORMS E E (T) PRELIMINARY STATEMENT: A. Territory Served E B. Description of Service E C. Procedure to Obtain Service E D. Establishment of Credit and Deposits E E. General E F. Symbols E G. Gross Revenue Sharing Mechanism E E H. Baseline Service E I. Charge Ready Program Balancing Account E J. Not In Use... -E K. Nuclear Decommissioning Adjustment Mechanism E L. Purchase Agreement Administrative Costs Balancing Account E M. Income Tax Component of Contributions E N. Memorandum Accounts E E E E E E E E O. California Alternate Rates for Energy (CARE) Adjustment Clause E E P. Optional Pricing Adjustment Clause (OPAC) E (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3734-E Caroline Choi Date Filed Jan 26, 2018 Decision Vice Senior President Effective Feb 25, H9 Resolution

15 Southern California Edison Revised Cal. PUC Sheet No E Rosemead, California (U 338-E) Cancelling Revised Cal. PUC Sheet No E TABLE OF CONTENTS Sheet 3 PRELIMINARY STATEMENT: Cal. P.U.C. Sheet No. RR. New System Generation Balancing Account E SS. Songs 2&3 Steam Generator Removal And Disposal Balancing Account E E TT. SONGS Cost of Financing Balancing Account E UU. Not In Use... -E VV. Medical Programs Balancing Account E WW. Not in Use... -E XX. Low Carbon Fuel Standard Revenue Balancing Account E YY. Base Revenue Requirement Balancing Account E E ZZ. Energy Resource Recovery Account E E AAA. Post Test Year Ratemaking Mechanism E BBB. Not In Use... -E CCC. Cost of Capital Mechanism E DDD On Bill Financing Balancing Account E EEE Not in Use... -E FFF Electric Program Investment Charge Balancing Account-California Energy Commission E GGG Electric Program Investment Charge Balancing Account-Southern California Edison E HHH Electric Program Investment Charge Balancing Account-California Public Utilities Commission E III New Solar Homes Partnership(NSHP) Program Balancing Account (NSHPPBA) E JJJ Aliso Canyon Demand Response Program Balancing Account (ACDRPBA) E E RRR Integrated Distributed Energy Resources Shareholder Incentive Award Balancing Account LLL (idersiaba) E Integrated Distributed Energy Resources Contract Costs Balancing Account (iderccba) e MMM Distributed Resources Plan Demonstration Balancing Account (DRPDBA) E NNN Transportation Electrification Portfolio Balancing Account (TEPBA) E E (T) (N) (N) (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3734-E Caroline Choi Date Filed Jan 26, 2018 Decision Vice Senior President Effective Feb 25, H8 Resolution