Feburary 28, 2006 PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION

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2 Akbar Jazayeri Director of Revenue and Tariffs Feburary 28, 2006 ADVICE 1972-E PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION SUBJECT: Employee Safety and Distribution Reliability Performance Incentive Mechanism Report for 2005 Southern California Edison Company (SCE) hereby submits for filing its 2005 Employee Safety and Distribution Reliability Performance Incentive Mechanism Report (Report). PURPOSE: In compliance with Decision (D.) , SCE submits its Report for 2005 as required in Preliminary Statement, Part BBB, Employee Safety and Distribution Reliability Performance Incentive Mechanism (SRPIM). This Report includes details on 2005 rewards earned and/or penalties assessed that are to be recorded in the Safety and Reliability Incentive Mechanism Account (SRIMA). BACKGROUND: Pursuant to D , Ordering Paragraph 14, Resolution E-3895, and SCE s Preliminary Statement Part BBB, SCE submits an annual filing for each year that the SRPIM is in effect. This is SCE s second and final filing pursuant to the mechanism adopted in D It includes any rewards earned or penalties assessed resulting from application of the separate performance mechanisms for Employee Safety, System Average Interruption Duration Index (SAIDI), System Average Interruption Frequency Index (SAIFI), and Momentary Average Interruption Frequency Index (MAIFI). P.O. Box Walnut Grove Ave. Rosemead, California (626) Fax (626)

3 ADVICE 1972-E Feburary 28, SRPIM OVERVIEW (A) SRPIM Performance Rewards or penalties for employee safety are determined based on SCE s performance related to the frequency of all OSHA recordable industrial injuries and illnesses. Based on the recorded data for 2005, SCE fell below the established Employee Safety standard yielding a penalty of $5 million. Rewards or penalties for system reliability are determined based on SCE s performance under three service quality standards: System Average Interruption Duration Index (SAIDI), System Average Interruption Frequency Index (SAIFI), and Momentary Average Interruption Frequency Index (MAIFI). SAIDI measures the average number of minutes of sustained interruption experienced by a customer in a given year. SAIFI measures the average number of sustained power interruptions for each customer during a year. MAIFI measures the average number of momentary power interruptions for each customer during a year. SCE s SAIDI index was above the deadband of its mechanism yielding a penalty of $18 million. SCE s SAIFI index was also above the deadband of its mechanism yielding a penalty of $4 million. SCE s MAIFI Index was within the deadband of its mechanism and thus no award was earned or penalty was assessed. In accordance with SCE s Preliminary Statement, Part BBB, Section 5, Reliability Performance Indicators, in calculating SAIDI, SAIFI, and MAIFI, SCE adjusted the results for four events as follows: (1) SCE excluded interruptions that occurred during a series of severe winter storms in January and February 2005; (2) SCE excluded a California Independent System Operator-directed curtailment that occurred on August 25, 2005; (3) SCE excluded interruptions which occurred on September 20, 2005 during a period when SCE experienced a major event (more than 10% of SCE s customers affected) as a result of severe thunderstorms in the eastern portion of SCE s service area; and (4) SCE excluded interruptions from two circuits located in bark beetle infested areas and substituted a 10-year historical average of reliability for these circuits. These adjustments are discussed in more detail in SCE s Report. Table 1 summarizes the reliability results. The results are discussed below and in the attached Report. For more detailed information on the Reliability Measures, refer to Sections II.D & II.E of the Report.

4 ADVICE 1972-E Feburary 28, 2006 Table Net Revenue Sharing and Rewards/(Penalties) (Millions of dollars) (A) Employee Safety $(5) (B) Reliability Measure, SAIDI $(18) (C) Reliability Measure, SAIFI $(4) (D) Reliability Measure, MAIFI $0 Total $(27) SAFETY AND RELIABILITY INCENTIVE MECHANISM ACCOUNT In accordance with D , SCE established SRIMA to record SRPIM revenue sharing resulting from rewards earned and penalties assessed for the application of the service quality performance mechanisms. Thus, for an effective date of January 1, 2006, a debit in the amount of $27 million would be recorded to the SRIMA reflecting SCE s service quality performance penalties for Upon Commission approval of this advice letter, SCE will transfer the Commission-approved balance in the SRIMA to the distribution Sub-account of the Base Revenue Requirement Balancing Account (BRRBA). Consistent with SCE s Preliminary Statement, Part YY, BRRBA, amounts recorded in the BRRBA will be consolidated into rate levels upon Commission approval. No cost information is required for this advice filing. This advice filing will not increase any rate or charge, cause the withdrawal of service, or conflict with any other schedule or rule. EFFECTIVE DATE This advice letter will become effective upon Energy Division approval. NOTICE Anyone wishing to protest this advice filing may do so by letter via U.S. Mail, facsimile, or electronically. Normally, protests must be received by the Energy Division and SCE no later than 20 days after the date of this advice filing. However, due to an ongoing investigation related to SCE s performance based ratemaking (PBR) mechanism by the Commission s Consumer Protection and Safety Division (CPSD), SCE would not oppose deferring the submission of protests no later than 20 days after the CPSD has completed its investigation.

5 ADVICE 1972-E Feburary 28, 2006 The Energy Division has already suspended Advice Letter 1822-E regarding SCE s 2004 SRPIM Report, with protests due no later than 20 days after CPSD had completed its investigation. Protests should be mailed to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California jjr@cpuc.ca.gov and jnj@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: Akbar Jazayeri Director of Revenue and Tariffs Southern California Edison Company 2244 Walnut Grove Avenue Rosemead, California Facsimile: (626) AdviceTariffManager@sce.com Bruce Foster Vice President of Regulatory Operations c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2040 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 shall be submitted expeditiously. In accordance with Section III, Paragraph G, of General Order No. 96-A, SCE is serving copies of this advice filing to the interested parties shown on the attached GO 96-A service list and A Address change requests to the GO 96-A 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.

6 ADVICE 1972-E Feburary 28, 2006 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 Carl Silsbee at (626) or by electronic mail at Carl.Silsbee@sce.com. Southern California Edison Company AJ:cs:sq Enclosures Akbar Jazayeri

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 Utility type: Contact Person: James Yee! ELC " GAS Phone #: (626) " PLC " HEAT " WATER EXPLANATION OF UTILITY TYPE ELC = Electric GAS = Gas PLC = Pipeline HEAT = Heat WATER = Water (Date Filed/ Received Stamp by CPUC) Advice Letter (AL) #: 1972-E Subject of AL: Employee Safety and Distribution Reliability Performance Incentive Mechanism (SRPIM) Report for 2005 Keywords (choose from CPUC listing): Compliance, Reliability AL filing type: " Monthly " Quarterly! Annual " One-Time " Other If AL filed in compliance with a Commission order, indicate relevant Decision/Resolution #: D 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 1 : Resolution Required? " Yes! No Requested effective date: Upon approval No. of tariff sheets: -0- 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: None Service affected and changes proposed 1 : Pending advice letters that revise the same tariff sheets: 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 Ave., San Francisco, CA and Akbar Jazayeri Director of Revenue and Tariffs Southern California Edison Company 2244 Walnut Grove Avenue Rosemead, California Facsimile: (626) Bruce Foster Vice President of Regulatory Operations c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2040 San Francisco, California Facsimile: (415)

9 SOUTHERN CALIFORNIA EDISON COMPANY SCE S EMPLOYEE SAFETY AND DISTRIBUTION RELIABILITY PERFORMANCE INCENTIVE MECHANISM (SRPIM) 2005 PERFORMANCE REPORT Before The Public Utilities Commission of the State of California

10 SCE S Employee Safety and Distribution Reliability Performance Incentive Mechanism (SRPIM) 2005 PERFORMANCE REPORT (January 1, 2005 through December 31, 2005) Table of Contents Table of Contents...1 I. Introduction...2 Table I II. SRPIM Employee Safety and Reliability Rewards and/or Penalties...3 A. Description...3 B. Employee Safety Results...3 C. Employee Health and Safety Results...4 Table II.C Table II.C D. Reliability Measures...6 Reliability Performance Indicators... 6 System Average Interruption Duration Index (SAIDI)... 8 System Average Interruption Frequency Index (SAIFI)... 8 Momentary Average Interruption Frequency Index (MAIFI)... 8 E. Reliability Results...9 Table II.E Table II.E Table II.E Table II.E Table II.E Table II.E F. Summary of Service Quality Performance Results...15 Table II.F ADVICE 1972-E - 1 -

11 I. Introduction This report is filed pursuant to California Public Utilities Commission (Commission) Decision No. D , Ordering Paragraph 14 and SCE s Preliminary Statement, Part BBB. This filing includes details of the rewards and/or penalties to be recorded in the Safety and Reliability Incentive Mechanism Account (SRIMA). The year 2005 was the second and final year of operation for Southern California Edison s (SCE or Company) Employee Safety and Distribution Reliability Performance Incentive Mechanism (SRPIM). The purpose of this report is to summarize SCE s 2005 employee safety and distribution performance reliability. The purpose of the SRIMA is to record rewards and penalties based on SCE s recorded performance measured against established criteria in the following four categories: (1) Employee Safety, (2) System Average Interruption Duration Index (SAIDI), (3) System Average Interruption Frequency Index (SAIFI), and (4) Momentary Average Interruption Frequency Index (MAIFI). On December 3, 2004, SCE submitted to the General Counsel of the Commission and relevant staff a Performance-Based Ratemaking Illness and Injury Recordkeeping Investigation Report which identified various issues related to SCE s recording of injuries and illnesses and identified instances of underreporting during the period used to establish the baseline for the SRPIM mechanism. 1 Based on recorded data for 2005, SCE experienced more safety related incidents than the established Employee Safety baseline yielding a penalty of $5 million. SCE s result for SAIDI was above the deadband range of the mechanism, yielding a penalty of $18 million for SCE s SAIFI performance was also above the deadband of the mechanism, yielding a penalty of $4 million. SCE s MAIFI performance was within the deadband of the mechanism, yielding no reward or penalty. Table I.1 itemizes $27 million in service quality penalties we have calculated for These amounts will be credited to ratepayers through the SRIMA of SCE s Preliminary Statement, Part BBB, in accordance with D SCE introduced newly designed employee safety incentive programs and goals in 2005 to address the need for accurate and timely reporting of injuries and illnesses. ADVICE 1972-E - 2 -

12 Table I.1 Summary of SCE s Service Quality Rewards/(Penalties) (Millions of dollars) Employee Safety Reliability Measure, SAIDI Reliability Measure, SAIFI Reliability Measure, MAIFI $ (5) $(18) $(4) $ 0 Total $(27) II. SRPIM Employee Safety and Reliability Rewards and/or Penalties A. Description The SRPIM Mechanism consists of incentives for employee safety and service reliability. The determination of SCE s 2005 rewards and penalties for these measures are presented in the following sections. B. Employee Safety Results Rewards or penalties for employee safety are determined based on SCE s OSHA-Recordable work injury rate, calculated by dividing the total count of OSHA-Recordable work-injuries (which includes both lost time and non-lost time work-related injuries and illnesses) by the total number of SCE employee working hours. The Employee Safety Rating is shown in terms of the number of injuries and illnesses per 200,000 hours worked. This frequency rate, or index number, is normalized by using a factor of 200,000, which represents the average number of hours worked by 100 full-time workers in one year (40 hours per week multiplied by 50 weeks per year). This formula is expressed as follows: Frequency Rate ( Index) = Number of incidents 200, 000( normalizing factor) Actual workhours ADVICE 1972-E - 3 -

13 Using a normalizing index allows consistent comparisons of the injury and illness statistic, from year to year, against the mechanism standard described in the next section. SCE does not earn an employee safety reward in a year with a fatality resulting in an adjudicated or uncontested OSHA citation. C. Employee Health and Safety Results SCE s Employee Health and Safety Rating is 5.79 for 2005, as shown in Table II.C.1: Table II.C Employee Safety Index Number of OSHA recordable injuries and illnesses: X 100 employees at 2,000 hours/year: = injuries and illnesses, statistic X employee-hours/year per 100 employees: Total utility employee-hours per year: , ,600,000 26,337,246 = Index: 5.79 per 200,000 hours worked No reward is earned or penalty is assessed if the Employee Safety Rating results in an index within the deadband of 3.4 to 4.0. A reward is earned (or a penalty is assessed) annually for an Employee Safety Rating that results in an index below 3.4 (above 4.0), as shown in Table IV.G.2, below. Since the Employee Health Index was 5.79, which is above the deadband, SCE is assessed a penalty of $5 million for 2005, as shown in Table II.C.2. SCE did not have any employee fatalities during ADVICE 1972-E - 4 -

14 Table II.C.2 Employee Safety Reward ($ millions) Index < 2.4, Reward = $5.0 Index Reward Index Reward Index Reward Index Reward Index Reward 2.40 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $0.05 Index , Reward = $0.0 ADVICE 1972-E - 5 -

15 Index , Penalty = $0.00 Employee Safety Penalty ($ millions) Index Penalty Index Penalty Index Penalty Index Penalty Index Penalty 4.01 ($0.05) 4.21 ($1.05) 4.41 ($2.05) 4.61 ($3.05) 4.81 ($4.05) 4.02 ($0.10) 4.22 ($1.10) 4.42 ($2.10) 4.62 ($3.10) 4.82 ($4.10) 4.03 ($0.15) 4.23 ($1.15) 4.43 ($2.15) 4.63 ($3.15) 4.83 ($4.15) 4.04 ($0.20) 4.24 ($1.20) 4.44 ($2.20) 4.64 ($3.20) 4.84 ($4.20) 4.05 ($0.25) 4.25 ($1.25) 4.45 ($2.25) 4.65 ($3.25) 4.85 ($4.25) 4.06 ($0.30) 4.26 ($1.30) 4.46 ($2.30) 4.66 ($3.30) 4.86 ($4.30) 4.07 ($0.35) 4.27 ($1.35) 4.47 ($2.35) 4.67 ($3.35) 4.87 ($4.35) 4.08 ($0.40) 4.28 ($1.40) 4.48 ($2.40) 4.68 ($3.40) 4.88 ($4.40) 4.09 ($0.45) 4.29 ($1.45) 4.49 ($2.45) 4.69 ($3.45) 4.89 ($4.45) 4.10 ($0.50) 4.30 ($1.50) 4.50 ($2.50) 4.70 ($3.50) 4.90 ($4.50) 4.11 ($0.55) 4.31 ($1.55) 4.51 ($2.55) 4.71 ($3.55) 4.91 ($4.55) 4.12 ($0.60) 4.32 ($1.60) 4.52 ($2.60) 4.72 ($3.60) 4.92 ($4.60) 4.13 ($0.65) 4.33 ($1.65) 4.53 ($2.65) 4.73 ($3.65) 4.93 ($4.65) 4.14 ($0.70) 4.34 ($1.70) 4.54 ($2.70) 4.74 ($3.70) 4.94 ($4.70) 4.15 ($0.75) 4.35 ($1.75) 4.55 ($2.75) 4.75 ($3.75) 4.95 ($4.75) 4.16 ($0.80) 4.36 ($1.80) 4.56 ($2.80) 4.76 ($3.80) 4.96 ($4.80) 4.17 ($0.85) 4.37 ($1.85) 4.57 ($2.85) 4.77 ($3.85) 4.97 ($4.85) 4.18 ($0.90) 4.38 ($1.90) 4.58 ($2.90) 4.78 ($3.90) 4.98 ($4.90) 4.19 ($0.95) 4.39 ($1.95) 4.59 ($2.95) 4.79 ($3.95) 4.99 ($4.95) 4.20 ($1.00) 4.40 ($2.00) 4.60 ($3.00) 4.80 ($4.00) 5.00 ($5.00) Index > 5.0, Penalty = ($5.00) D. Reliability Measures Reliability Performance Indicators The System Average Interruption Duration Index (SAIDI), System Average Interruption Frequency Index (SAIFI), and Momentary Average Interruption Frequency Index (MAIFI) benchmarks apply to SCE s facilities and exclude certain events as specified in SCE s Preliminary Statement, Part BBB. Weather conditions experienced during 2005 were more severe than any year since the season. 2 Despite excluding an unprecedented 19 days of interruptions from measured SAIDI, SAIFI and MAIFI performance, as described below, SCE s reliability fell below the established benchmarks under the SRPIM, resulting in a $22 million penalty. SCE made four adjustments to the recorded reliability performance data. First, SCE excluded interruptions that occurred during a series of severe winter storms in 2 Rainfall for the storm season totaled inches in downtown Los Angeles, the second highest level recorded. ADVICE 1972-E - 6 -

16 January and February During this period, the Federal Emergency Management Agency (FEMA) determined that the damage resulting from severe storms, flooding, debris flows, and mudslides in certain areas of the State of California over the period December 27, 2004 through January 11, 2005 was of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C (the Stafford Act). The affected areas served by SCE included: Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura Counties. FEMA similarly declared a major disaster from February 16, 2005 through February 23, 2005 as a result of severe storms, flooding, landslides, mud and debris flows for Kern, Los Angeles, Orange, Riverside, San Bernadino, San Diego, and Ventura counties. The SRPIM allows SCE to exclude major events from the SAIDI, SAIFI, and MAIFI measurements. 3 Therefore, SCE is excluding SAIDI, SAIFI, and MAIFI data for the periods January 1, 2005 through January 11, 2005 and February 16, 2005 through February 23, Second, interruptions that occurred on August 25, 2005, during a California Independent System Operator (CAISO)-directed curtailment, were also excluded. 5 On August 25, 2005, CAISO used both interruptible and manual load shedding to maintain reliability of the interconnected grid due to the combination of higher than expected loads in South of Path 26 (SP26) area and a Pacific DC Intertie (PDCI) outage. Third, SCE excluded interruptions that occurred on September 20, 2005, during a major event when more than 10% of SCE s customers were affected as a result of severe thunderstorms in the eastern portion of SCE s service area. These thunderstorms resulted in numerous lightning strikes to SCE s equipment, which alone caused 110 sustained and 337 momentary outages and affected approximately 507,000 SCE customers at various times during this day. Finally, SCE excluded interruptions from circuits located in bark beetle infested areas and substituted a 10-year historical average of reliability for these circuits. 6 In the 2003 GRC settlement regarding reliability incentives that was adopted in D , SCE agreed to implement a new outage data recording system that will allow direct calculation of reliability metrics instead of estimating them using the 92/8 method. SCE has implemented this new Outage Database and Reliability Metrics (ODRM) system and is in the process of finalizing 2005 reliability reporting. This new outage reporting system captures outage information in a fundamentally different manner than the existing legacy system, and will not produce results comparable to those shown in this Report. During the process of reviewing the ODRM reporting results, which is 3 Preliminary Statement, Section BBB, Part 5(a). A major event is defined as any event that affects 10% of SCE s customers, or events caused by earthquake, fire or storms of sufficient intensity to give rise to a state of emergency being declared by the government. 4 SCE's tariff provides guidance to establish the beginning or the end dates of some exclusions, i.e., the event starts at 12:00 a.m. on the day when more than one percent of SCE's customers simultaneously experience sustained interruptions. This threshold was not reached during these major events. However, here the start and end dates of the major events were clearly defined by the federal declared states of emergency in January and February 2005 and by the September 20, 2005 storm event itself. 5 Preliminary Statement, Section BBB, Part 5(c). 6 Preliminary Statement, Section BBB, Part 5(e). The number of circuits affected by the bark beetle infestation has declined considerably from 74 in 2004 to 2 in 2005 as a result of tree removal efforts and wetter weather. ADVICE 1972-E - 7 -

17 continuing, SCE has identified a number of errors or omissions in the legacy system data, which have been corrected. 7 System Average Interruption Duration Index (SAIDI) The SAIDI measures the average number of minutes of sustained interruption experienced by a customer in a given year. 8 SAIDI is calculated as the total minutes of sustained customer interruptions divided by the total number of customers, expressed in minutes per year. The SAIDI has a performance target of 56 minutes with a deadband of 6 minutes on both sides in which there is no reward or penalty. System Average Interruption Frequency Index (SAIFI) SAIFI measures the average number of sustained interruptions experienced by a customer in a given year. It is calculated as the total number of sustained customer interruptions divided by the total number of customers, expressed in interruptions per customer per year. SAIFI has a performance target of 1.07 interruptions with a deadband of 0.13 interruptions on both sides in which there is no reward or penalty. Momentary Average Interruption Frequency Index (MAIFI) MAIFI measures the average number of momentary customer interruptions in a given year. It is calculated as the total number of momentary customer interruptions divided by the total number of customers, expressed as momentary interruptions per customer per year. MAIFI has a performance target of 7 In addition, SCE has recently identified an issue with the manner in which operations personnel have reported certain interruptions. During the restoration of some circuit outages, instances occurred when operations personnel would close a circuit breaker or automatic recloser in an effort to restore power to a de-energized circuit only to have the breaker or recloser immediately trip open again. The customer experiences such situations as a single interruption. However, the contribution to SAIDI and SAIFI for this type of interruption can be calculated regarding the event as a one continuous interruption or two separate interruptions. While the SAIDI for this type of interruption is the same using either method, SAIFI calculated assuming two interruptions is twice that assuming only one interruption. SCE s current practice is to treat such events as a single outage. However, during a portion of the period on which the SAIFI performance standard was based ( ), and during a portion of 2005, SCE believes that some of its staff were reporting such situations as two separate interruptions. 8 For the purpose of SCE s reliability reporting under the Employee Safety and Reliability Performance Mechanism, sustained interruptions are those with duration greater than five minutes and momentary interruptions are those with duration less than or equal to five minutes. See SCE Preliminary Statements, Part BBB.5. ADVICE 1972-E - 8 -

18 1.26 interruptions per year with a deadband of 0.13 interruptions on both sides in which there is no reward or penalty. E. Reliability Results 1. SAIDI SCE s SAIDI reliability measure was minutes for This measure is to be used in determining whether SCE earns a reward or is assessed a penalty. SCE s SAIDI results are shown in Table II.E.1. Table II.E.1 SCE s System Average Interruption Duration Index SAIDI: Minutes A reward will be earned (or penalty assessed) annually for a SAIDI measurement that is outside of the deadband for the year, as shown in Table II.E.2. Because SCE s SAIDI of was above 71 minutes, a penalty of $18 million was assessed for SCE s recorded SAIDI was minutes in Of this, minutes were excluded due to severe weather in January and February of 2005 as discussed above. Of the remaining minutes SAIDI, 1.19 minutes attributable to the CAISO-directed outages on 8/25/05 were also subtracted. From the remaining minutes, 3.89 minutes due to the thunderstorms on 9/20/05 were subtracted. Finally, SCE subtracted 0.06 minutes that occurred on bark beetle circuits and substituted the 10-year average SAIDI of 0.03 minutes, for a net SAIDI of minutes. ADVICE 1972-E - 9 -

19 Table II.E SAIDI Reliability Reward (Penalty) (in millions) Minutes Reward/(Penalty) 41 or less $18 42 $16 43 $14 44 $12 45 $10 46 $8 47 $6 48 $4 49 $2 50 $0 56 $0 62 $0 63 ($2) 64 ($4) 65 ($6) 66 ($8) 67 ($10) 68 ($12) 69 ($14) 70 ($16) 71 or more ($18) 2. SAIFI SCE s SAIFI reliability measure was 1.24 for This is the measure to be used in determining whether SCE earns a reward or is assessed a penalty. SCE s SAIFI results are shown in Table II.E SCE s recorded SAIFI was 1.53 interruptions per customer in Of this, 0.20 interruptions were attributable to severe weather in January and February of 2005 and were subtracted from the total recorded SAIFI. Of the remaining 1.33 interruptions per customer for 2005, SCE subtracted 0.04 interruptions per customer for the CAISO-directed outages on 8/25/05 for a net SAIFI of From this 1.29 SAIFI, SCE subtracted 0.04 interruptions per customer for the thunderstorms on 9/20/05. Of the remaining 1.24 interruptions per customer, a contribution of interruptions occurred on bark beetle circuits. SCE accordingly substituted the 10-year average SAIFI contribution on bark beetle circuits, SAIFI, for the interruptions contribution recorded on bark beetle circuits. Total SAIFI for 2005 is thus 1.24 interruptions per customer. ADVICE 1972-E

20 Table II.E.3 SCE s System Average Interruption Frequency Index SAIFI: 1.24 A reward will be earned (or penalty assessed) annually for a SAIFI Performance Rating that is below 0.94 interruptions (or above 1.20 interruptions). Because SCE s SAIFI Index of 1.24 interruptions was above 1.20 interruptions, a penalty of $4 million was assessed for ADVICE 1972-E

21 Table II.E SAIFI Reliability Reward (Penalty) (in millions) Interruptions Reward/(Penalty) 0.76 or less $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ ($1) 1.22 ($2) 1.23 ($3) 1.24 ($4) 1.25 ($5) 1.26 ($6) 1.27 ($7) 1.28 ($8) 1.29 ($9) 1.30 ($10) 1.31 ($11) 1.32 ($12) 1.33 ($13) 1.34 ($14) 1.35 ($15) 1.36 ($16) 1.37 ($17) 1.38 or more ($18) ADVICE 1972-E

22 3. MAIFI SCE s MAIFI reliability measure was 1.24 for This measure is to be used in determining whether SCE earns a reward or is assessed a penalty in SCE s MAIFI results are shown in Table II.E.5. Table II.E.5 SCE s Momentary Average Interruption Frequency Index MAIFI: 1.24 A reward will be earned (or penalty assessed) annually for a MAIFI Performance Rating that is below 1.13 (or above 1.39). Because SCE s MAIFI Index of 1.24 interruptions was within the performance target deadband of , no reward was earned or penalty assessed for SCE s recorded MAIFI was 1.47 interruptions per customer in Of this, 0.14 interruptions were attributable to severe weather in January and February of Of the remaining 1.33 interruptions per customer, SCE subtracted 0.00 interruptions per customer for the CAISO-directed outages on 8/25/05. From this, SCE subtracted 0.09 interruptions per customer for the thunderstorms on 9/20/05. Of the remaining 1.24 interruptions per customer, a contribution of interruptions occurred on bark beetle circuits. SCE thus substituted the 10-year average MAIFI contribution on bark beetle circuits, MAIFI, for the interruptions contribution recorded on bark beetle circuits. Total MAIFI for 2005 is thus 1.24 interruptions per customer. ADVICE 1972-E

23 Table II.E MAIFI Reliability Reward (Penalty) Interruptions Reward/(Penalty) 0.76 or less $3,600, $3,400, $3,200, $3,000, $2,800, $2,600, $2,400, $2,200, $2,000, $1,800, $1,600, $1,400, $1,200, $1,000, $800, $600, $400, $200, $ $ $ ($200,000) 1.41 ($400,000) 1.42 ($600,000) 1.43 ($800,000) 1.44 ($1,000,000) 1.45 ($1,200,000) 1.46 ($1,400,000) 1.47 ($1,600,000) 1.48 ($1,800,000) 1.49 ($2,000,000) 1.50 ($2,200,000) 1.51 ($2,400,000) 1.52 ($2,600,000) 1.53 ($2,800,000) 1.54 ($3,000,000) 1.55 ($3,200,000) 1.56 ($3,400,000) 1.38 or more ($3,600,000) ADVICE 1972-E

24 F. Summary of Service Quality Performance Results Table II.F.1 summarizes SCE s SRPIM results for 2005: Table II.F.1 Summary of 2005 Service Quality Performance Results Employee Safety $(5) Reliability Measure, SAIDI $(18) Reliability Measure, SAIFI $(4) Reliability Measure, MAIFI $0 Total Net Penalty = $(27) million In accordance with D , SCE s net penalty will be recorded in the Safety and Reliability Inventive Mechanism Account. This memorandum account is described in Resolution E-3895 and SCE s Preliminary Statement, Part BBB. ADVICE 1972-E