2015 General Rate Case

Transcription

1 Application No.: Exhibit No.: Witnesses: A SCE-73 T. Cameron R. Fisher G. Henry C. Hu M. Marelli D. Snow P. Wong (U 338-E) 2015 General Rate Case PUBLIC VERSION Update Testimony Before the Public Utilities Commission of the State of California Rosemead, California December 17, 2014

2 SCE-73: Update Testimony Table Of Contents Section Page Witness I. INTRODUCTION...1 M. Marelli II. RESULTS OF OPERATION...3 D. Snow III. ESCALATION RATE CHANGES...6 T. Cameron A. B. C. Escalation Rates Based On The Global Insight Power Planner Projection...6 Palo Verde Non-labor Escalation...9 Updating Of Escalation Rates For SCE s Post-Test Year Ratemaking Mechanism...10 IV. RECOVERY OF THE RESIDENTIAL SERVICE DISCONNECTION (RSD) OIR RECORDED COSTS THROUGH DECEMBER 31, D. Snow A. B. C. D. Summary...11 Background...11 Operation of the RSDMA From Inception Through December Reasonableness of RSDMA Recorded O&M and Uncollectible Amounts...14 V. POSTAGE EXPENSE FERC US POSTAL RATE INCREASE...17 C. Hu VI. MARINE MITIGATION...20 R. Fisher VII. PENSION...21 G. Henry VIII. INCOME TAX EXPENSES...23 P. Wong Appendix A... Appendix B... Appendix C... Appendix D... -i-

3 SCE-73: Update Testimony Table Of Contents (Continued) Section Page Witness Appendix E... -ii-

4 SCE-73: Update Testimony List Of Tables Table Page Table I-1 Southern California Edison Company Change In GRC Revenue Requirement (Thousands of Dollars)...2 Table II-2 Revised Results of Operations At Proposed Rates Commission Jurisdictional (Thousands of Dollars)...4 Table II , 2016 and 2017 Revenue Changes Resulting From the 2015 Test Year and 2016 and 2017 PTYR GRC Request Commission Jurisdictional (Thousands of Dollars)...5 Table III-4 O&M Labor Price Indexes And Escalation Rates (Based On Global Insight Power Planner 2014 Third Quarter Projection; 2012=1.0)...7 Table III-5 O&M Non-labor Price Indexes And Escalation Rates (Based Upon Global Insight Power Planner 2014 Third Quarter Projection; 2012=1.0)...8 Table III-6 Capital Price Indexes And Escalation Rates (Based Upon Global Insight Power Planner 2014 Third Quarter Projection; 2012=1.0)...9 Table III-7 Palo Verde Escalation...10 Table IV-8 Operations of the RSDMA August 2010 December 2014 (Nominal $000)...13 Table IV-9 OIR Impact on Uncollectible Expense in 2010 December 2014 Nominal ($000)...16 Table V-10 Postal Rates and Total Expense by Type of Mailing ($000 s) iii-

5 I. INTRODUCTION Southern California Edison Company ( SCE ) respectfully presents in this exhibit its testimony for the update phase of our Test Year 2015 General Rate Case. The Commission Rate Case Plan 1 sets forth update criteria as follows: A. Known changes in cost of labor based on contract negotiations completed since the tender of the NOI or known changes that result from updated data using the same indexes used in the original presentation during the hearing. B. Changes in non-labor escalation factors based on the same indexes the party used in its original presentation during hearings. C. Known changes due to governmental action such as changes in tax rates, postage rates, or assessed valuation. The Scoping Memo for this proceeding indicated that update testimony should be served on December 17, This exhibit updates our request in various areas, including: (1) capital escalation rates and O&M labor and non-labor escalation rates; (2) recovery of the residential disconnect OIR costs through 2014; (3) increase in postal rates; (4) removal of 2013 and 2014 marine mitigation capital expenditure costs, as a result of the approval of the SONGS settlement as per D ; and (5) update to SCE s pension forecast due to the passage of the Federal Highway and Transportation Funding Act. These updates are used to produce SCE s revised 2015 Test Year GRC Results of Operations (RO), also contained herein. Table I-1 below presents a summary of the revenue requirement impact of the updates identified in this testimony. 1 See, e.g., D

6 Table I-1 Southern California Edison Company Change In GRC Revenue Requirement (Thousands of Dollars) Description CPUC Rebuttal Revenue Requirement 5,774,730 6,075,697 6,390,350 2 Update for Joint Comparison (4,780) (3,991) (4,449) 3 Joint Comparison Revenue Requirement 5,769,949 6,071,706 6,385,901 4 Update Changes 5 Pension Forecast (43,472) (46,422) (49,971) 6 Marine Mitigation Capital Expenditures Removal (1,483) (1,308) (1,166) 7 O&M and Capital Escalation Rates (11,340) (15,545) (13,324) 8 Postage Rates 1,196 1,223 1,248 9 Total Revenue Requirement Changes (55,100) (62,053) (63,213) 10 Update Revenue Requirement 5,714,850 6,009,653 6,322, This exhibit is organized as follows: Chapter II sets forth SCE s requested 2015 GRC revenue requirement as well as the Post-Test year revenue requirements for 2016 and Chapter III provides SCE s update testimony regarding the calculation of escalation rates used to project O&M and capital expenses for the years 2013 through Chapter IV provides testimony concerning recovery of residential services disconnect OIR costs through Chapter V describes the changes resulting from an increase in postal rates. Chapter VI addresses removal of 2013 and 2014 marine mitigation costs consistent with the SONGS settlement adopted by the Commission. Chapter VII describes updates to the pension forecast based on the passage of the Federal Highway and Transportation Funding Act. Chapter VIII addresses income tax expenses. This exhibit also includes appendices supporting the prepared testimony. 2

7 II. RESULTS OF OPERATION This chapter presents our revised 2015 Test Year Results of Operations (RO) based on the updated information presented in Chapters III through VII. We respectfully request that the Commission adopt a 2015 revenue requirement of $5.715 billion. Table II-2 presents our revised Results of Operations for Test Year 2015 and Post-Test Years 2016 and

8 Table II-2 Revised Results of Operations At Proposed Rates Commission Jurisdictional (Thousands of Dollars) Line GRC-CPUC No. Item TOTAL OPERATING REVENUES 5,714,850 6,009,653 6,322, OPERATING EXPENSES: 3. Production 4. Steam 7,342 7,342 7, Nuclear 73,818 73,818 73, Hydro 53,142 53,142 53, Other 120, , , Subtotal Production 255, , , Transmission 93,402 93,402 93, Distribution 545, , , Customer Accounts 176, , , Uncollectibles 13,579 14,280 15, Customer Service & Information 39,020 39,020 39, Administrative & General 819, , , Franchise Requirements 51,974 54,656 57, Revenue Credits (155,333) (157,156) (156,874) 17. Subtotal 1,840,125 1,845,413 1,854, Escalation 109, , , Depreciation 1,677,274 1,729,451 1,787, Taxes Other Than On Income - Property 186, , , Taxes Other Than On Income - Payroll 66,271 68,595 71, Taxes Based On Income 400, , , Total Taxes 652, , , TOTAL OPERATING EXPENSES 4,279,645 4,429,126 4,612, NET OPERATING REVENUE 1,435,205 1,580,527 1,710, RATE BASE 18,195,705 20,033,516 21,675, RATE OF RETURN 7.89% 7.89% 7.89% 1 2 The revenue change attributable to this proceeding is $37 million as identified in Table II-3. This revenue change takes into account an Authorized Base Revenue Requirement (ABRR) increase 4

9 of $82 million, offset by forecast CPUC-jurisdiction base-related revenue growth of $64 million and a Residential Service Disconnection Memorandum account (RSDMA) increase of $18 million. Table II-3 also identifies the requested ABRR and CPUC-jurisdictional base-related revenue changes estimated for Post-Test Years 2015 and Table II , 2016 and 2017 Revenue Changes Resulting From the 2015 Test Year and 2016 and 2017 PTYR GRC Request Commission Jurisdictional (Thousands of Dollars) Cumulative SCE-10 Vol. 1 Reference 1. Proposed GRC Base Revenue Requirement 5,714,850 6,009,653 6,322,688 Table II-4 2. Estimated Present Revenue Requirement 5,632,680 5,714,850 6,009,653 For 2015, Table II-2 3. Subtotal Estimated Present Revenue Requirement 5,632,680 5,714,850 6,009, GRC ABRR Change 82, , , Less: GRC Revenue Growth GWhs GRC PRR 84,698 5,779,540 Table VI GRC PRR 85,630 5,843,137 Table VI GRC PRR 85,630 5,843,137 Table VI GRC PRR 86,298 5,888,719 Table VI GRC PRR 86,298 5,888,719 Table VI GRC PRR 86,712 5,916,969 Table VI GRC Revenue Growth 63,597 45,582 28, Residential Service Disconnection MA 17, ,975 Update Testimony Chapter IV 14. GRC Revenue Change 36, , , Percent Revenue Change 0.65% 4.36% 4.74% 9.75% 16. Total System PRR 12,237,509 12,357,104 12,426,532 Table VI Percent Revenue Change 0.30% 2.02% 2.29% 4.61% 5

10 III. ESCALATION RATE CHANGES This chapter provides SCE s update testimony regarding the calculation of escalation rates used to project capital and O&M expenses (including Palo Verde) for the years 2013 through The escalation rates shown for 2016 and 2017 are revised projections of the escalation rates that will be used in SCE s proposed Post-Test Year ratemaking mechanism for 2016 and 2017, assuming SCE s escalation rates are adopted by the Commission. All indexes are set a 2012 base year (2012 index = 1.0). A. Escalation Rates Based On The Global Insight Power Planner Projection The updated O&M labor, O&M non-labor and capital escalation rates presented below are based on the Global Insight Power Planner projection for the third quarter of The labor escalation rates incorporate wage increases determined for SCE s represented employees through 2015 and SCE s non-represented employees through 2013, as described in SCE s application. 6

11 Table III-4 O&M Labor Price Indexes And Escalation Rates (Based On Global Insight Power Planner 2014 Third Quarter Projection; 2012=1.0) Line No Year Steam Generation Nuclear Generation Hydro Generation Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change % % % % % % % % % % % % % % % Line No Year Other Generation Transmission Distribution Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change % % % % % % % % % % % % % % % Line No Year Customer Accounts CS&I Sales Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change % % % % % % % % % % % % % % % A&G Line No Year Inflation Index %_Change % % % % % 7

12 Table III-5 O&M Non-labor Price Indexes And Escalation Rates (Based Upon Global Insight Power Planner 2014 Third Quarter Projection; 2012=1.0) Line Year No Steam Generation Hydro Generation Other Generation Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change Line Year No Transmission Distribution Customer Accounts Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change Line No Year Inflation Index A&G@H CS&I Sales %_Change Inflation Index %_Change Inflation Index %_Change 8

13 Table III-6 Capital Price Indexes And Escalation Rates (Based Upon Global Insight Power Planner 2014 Third Quarter Projection; 2012=1.0) Line Year No Steam Generation Inflation Index %_Change Hydro Generation Inflation Index %_Change Other Generation Inflation Index %_Change Line Year No Transmission Distribution Meters Installed Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change Line No Year Nuclear Palo Verde Nuclear SONGS General Plant Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change B. Palo Verde Non-labor Escalation The following table present updated non-labor escalation rates for the Palo Verde nuclear generating station. As explained in SCE s direct testimony on escalation, these non-labor escalation rates are based on a weighted average of labor and non-labor escalation rates. (Exhibit SCE-10c, pp ). 9

14 Line No Table III-7 Palo Verde Escalation Year Inflation Index %_Change % % % % % C. Updating Of Escalation Rates For SCE s Post-Test Year Ratemaking Mechanism These labor and non-labor escalation rates will be updated in late 2015 and late 2016 to provide escalation factors for the 2016 and 2017 Post-Test Year advice letters as specified in SCE s Post- Test Year ratemaking mechanism. If the unions reach a collective bargaining agreement for the 2016 and 2017 periods, prior to the Phase 1 proposed decision being issued, the collective bargaining agreements will be incorporated into the labor escalation calculations for represented employees. The remaining portion of the capital, labor and non-labor escalation rates will be updated to reflect the latest available IHS Global Insight Power Planner projections available at the time of the updates. 10

15 IV. RECOVERY OF THE RESIDENTIAL SERVICE DISCONNECTION (RSD) OIR RECORDED COSTS THROUGH DECEMBER 31, 2014 A. Summary In addition to SCE s updated 2015 Test Year revenue requirement request, SCE also requests recovery of the amount recorded in the Residential Service Disconnection Memorandum Account (RSDMA) as of December 31, 2014 in this proceeding. SCE discusses this item in its opening testimony at Exhibit SCE-10, Volume 1, pages and rebuttal testimony at Exhibit SCE-26, Volume 1, pages In this update testimony, SCE provides and supports the year-end 2014 RSDMA balance for Commission review and approval. The Commission instructed in D and affirmed in D SCE to seek recovery of amounts recorded in the RSDMA in SCE s next GRC. SCE expects to record $ million in the RSDMA through December 31, SCE proposes to recover this amount in rates, effective upon a final decision in this GRC proceeding. D approves piloting new practices to further reduce residential disconnections through Accordingly, SCE also requests Commission approval in this Application to extend the RSDMA through 2017 to record and track all costs associated with the new practices resulting from R Commission review of expenses incurred after January 1, 2015 and recorded in the RSDMA should occur in SCE s 2018 GRC. B. Background On February 5, 2010, the Commission issued Order Instituting Rulemaking (Residential Disconnection OIR) on its motion to address the issue of residential customers electric and natural gas service disconnection. This rulemaking directed California investor-owned utilities (IOUs) to implement interim practices to help reduce residential service disconnections. The rulemaking also authorized the establishment of memorandum accounts to record significant costs associated with complying with the new practices. On February 11, 2010, SCE filed Advice Letter 2439-E to establish the RSDMA to record Operation & Maintenance (O&M) expenses associated with implementing the new practices and revenue shortfalls resulting from uncollectibles in excess of those authorized in SCE s last GRC. On July 30, 2010, the Commission issued D , which continued practices to decrease the number of disconnections and established a Residential Disconnection OIR Phase II to 11

16 address whether to extend any of the interim measures or take any additional steps to reduce the number of disconnections. D also stated that the Residential Disconnection OIR Phase II should address the categories and significant costs associated with complying with the practices established in the Residential Disconnection OIR. D also confirmed that memorandum account cost recovery will be determined in the next GRC. The Residential Disconnection Phase II Decision (D ) issued on March 22, 2012 addressed required disconnection practices to be observed until December 31, The Phase II Decision also reaffirmed the Commission s intent to review the reasonableness of the costs tracked in the memorandum accounts in SCE s next GRC. On June 26, 2014, the Commission issued D , Final Decision Approving Settlement Agreement on Credit, Collection and Disconnection Practices, which made certain practices permanent and authorized new pilot practices until December 31, As a result of D authorization of new practices through 2016, SCE respectfully requests Commission approval in this Application to extend the RSDMA through 2017 for recording and tracking all costs associated with the new practices resulting from R SCE s request for Commission review and approval of the RSDMA amounts recorded from inception through December 31, 2014 remains in this GRC. Commission review of expenses recorded in the RSDMA after January 1, 2015 (i.e., expenses associated with the new pilot programs resulting from the Settlement Agreement) will occur in SCE s 2018 GRC. 4 C. Operation of the RSDMA From Inception Through December 2014 From August 2010 through November 2014, SCE recorded $ million in the RSDMA. SCE estimates that $63,000 in O&M expenses for manual field visits will be recorded in December 2014 in the RSDMA. In the first quarter of 2015, SCE also expects to record an adjustment in the 2 The requirement that customers are offered enrollment in CARE rates by telephone and the requirement for a pre-disconnection site visit for vulnerable customers do not expire. 3 Although D extended the new practices until December 31, 2016, in 2017, SCE expects to record in the RSDMA any uncollectibles in excess of authorized for the year 2016 that are attributable to the Disconnect OIR in addition to continuing costs related to implementing the new practices in ORA agreed that, if the Commission extends the provisions of the Residential Disconnect Decision beyond the sunset date of December 31, 2013, then SCE s RSDMA should remain open to track any O&M charges and any uncollectible expenses that result from extending the Residential Disconnect Decision provisions (ORA-13, p. 50). 12

17 RSDMA to reflect the final recorded uncollectible expenses in excess of authorized for the year 2014 that are attributable to the Residential Disconnection OIR. The RSDMA expenses totaling $9.168 million, excluding interest, from inception through July 2013 were presented and discussed in Customer Service testimony at Exhibit SCE-04, Volume 2, pages Table IV-8 below summarizes the operation of the RSDMA from its inception through December 2014, including the forecast uncollectible expense in excess of authorized for 2014 that SCE will adjust to actual in the first quarter of Table IV-8 Operations of the RSDMA August 2010 December 2014 (Nominal $000) Recorded Forecast Line Description Aug July Aug No. Dec Nov Total 1 Beginning balance $ - $ 9,175 $ 13,856 2 Implementation of New Practices Expenses 3 Manual Field Visits IT System Changes Customer Contact Center Expense Subtotal $ 1,459 $ 35 $ 63 $ 1,558 7 Uncollectible Expense in Excess of Authorized 7,709 4,631 3,853 16,194 8 Expense Subtotal with Uncollectible $ 9,168 $ 4,667 $ 3,916 $ 17,752 9 Interest Ending Balance $ 9,175 $ 13,856 $ 17,775 $ 17,775 1 The 2014 Residential Disconnection OIR uncollectible expense will be recorded to the RSDMA in the 1st Quarter As shown in table above, SCE expects to record $ million in the RSDMA through December 31, Upon a final decision in this GRC, SCE proposes to recover the RSDMA balance in rates by transferring the RSDMA balance to the distribution sub-account of the Base Revenue Requirement Balancing Account (BRRBA) for rate recovery through distribution rates from all customers. In the advice filing implementing a GRC decision (expected no sooner than the first quarter of 2015), SCE will update the RSDMA balance for the actual uncollectible amount in excess of authorized for The recorded operation of the BRRBA, which will include the RSDMA transfer, will be reviewed by the Commission in SCE s annual April ERRA Review proceeding to ensure that the entries made in the BRRBA are stated correctly and are consistent with Commission decisions. 13

18 D. Reasonableness of RSDMA Recorded O&M and Uncollectible Amounts The operating costs associated with the Residential Disconnection OIR expenses include manual field visits, IT system modifications, Customer Contact Center training and training-related activities, and increased uncollectible expenses resulting from the more lenient disconnection practices. Residential Disconnection OIR expenses of $9.168 million incurred from inception through July 2013 were discussed in Exhibit SCE-04, Volume 2, pages Residential Disconnection OIR expenses of $8.599 million incurred during August 2013 through December 2014 are discussed below. For Residential Disconnection OIR manual field visits, SCE incurred a total of $868,000 in O&M expenses in the RSDMA from January through November As described in direct testimony, 5 these expenses resulted from the Residential Disconnection OIR interim practices and mandated delays to Remote Service Switch implementation resulting in increased expenses for manual disconnections. From January 2013 through November 2014, SCE incurred an additional $63,000 for manual disconnection of Medical Baseline and Critical Care customers as a result of the interim practices to provide an in-person field visit and field collection to any customers on the medical baseline rate or the life support program that will be recorded to the RSDMA in the month of December SCE anticipates it will not incur any additional manual disconnection O&M expenses in the RSDMA during December Residential Disconnection OIR IT system expenses totaling $591,000 were incurred from inception through July These IT system expenses are recorded in the RSDMA and discussed in direct testimony. 7 Additional Residential Disconnection OIR IT system expenses of $3,108 were incurred during August 2013 through the end of For Residential Disconnection OIR Settlement Agreement expenses through December 2014, $32,000 was incurred for Customer Contact Center training and training materials so that Customer Service Representatives would be able to respond to customer questions regarding the changes in disconnection practices. 8 SCE also initiated three Residential Disconnection OIR pilot programs for 5 Exhibit SCE-04, Volume 2, pp See Appendix for workpapers. 7 Exhibit SCE-04, Volume 2, pp See Appendix for workpapers. 14

19 which there are no incremental expenses through November 2014 and none expected for December In Pilot 1, 3,500 customers received a Payment Thank You Letter to affirmatively acknowledge/confirm receipt of the first payment of their payment arrangement. Approximately 1,000 of these letters included large font and the 800 numbers to the multicultural services. In Pilot 2,700 customers received a proactive, outbound live-agent call in an attempt to avoid disconnection by granting an extension/payment arrangement, taking a payment, or leaving a message to call SCE back. In Pilot 3, analysis of a subset of customers who successfully complete a payment arrangement will be performed to identify improvement opportunities. For uncollectible expenses, the Residential Disconnection OIR incremental uncollectible expense was calculated by determining the portion of SCE s total uncollectible expenses that were directly attributable to the more lenient credit practices instituted by the Residential Disconnect OIR (primarily extended payment arrangements and the elimination of reestablishment of credit deposits for CARE customers). 9 The RSDMA recorded uncollectible expenses in excess of authorized costs resulting from the Residential Disconnection OIR include $7.709 million from inception, August 2010 through 2012; 10 $4.631 million for 2013; and $3.853 million forecast for The calculation of these amounts is shown in Table IV-9 below. The difference between SCE s authorized uncollectible expense and the recorded uncollectible expense from inception, August 2010, forecast through December 2014 was $ million. Because the total impact of the Residential Disconnect OIR on uncollectible expense (Table IV-9, Line 6 11 ) is less than the difference between SCE s authorized and recorded Uncollectible Expenses (Table IV-9, Line 5), the lower of the two amounts ($ million) will be recorded in the RSDMA. 9 SCE used the average three-month bill amount for each account for an estimate of what would have been incurred since the Residential Disconnect OIR mandates and included the difference between each account s average three-month bill and the amount actually written off for each account as being attributed to the provisions of the Residential Disconnection OIR. 10 Exh. SCE-04, Volume 2, pp See Appendix for workpapers. 15

20 Table IV-9 OIR Impact on Uncollectible Expense in 2010 December 2014 Nominal ($000) Line No. Description Recorded Total Estimates Total SCE Revenue 10,091,308 10,070,802 11,243,208 31,405,318 11,611,360 12,191,000 55,207,678 2 Uncollectible Recorded 24,791 25,139 29,939 79,869 30,447 28, ,316 3 GRC Authorized Uncollectible Factor 0.240% 0.240% 0.205% N/A 0.205% 0.205% N/A 4 GRC Authorized Uncollectible Expense 24,219 24,170 23,049 71,438 23,803 24, , Difference = Recorded vs. Authorized ,891 8,432 6,644 3,008 18,084 Incremental Write-off Due to OIR 418 2,305 4,986 7,709 4,631 3,853 16,194 OIR Impact as a % of Recorded Uncollectible Expense 1.68% 9.17% 16.66% 9.65% 15.21% 13.76% 11.71% In the first quarter of 2015, SCE will calculate the final recorded 2014 uncollectible expense based on the uncollectibles in excess of authorized for the year 2014 that are attributable to the Residential Disconnection OIR and make the appropriate entry into the RSDMA. If the Commission finds any portion of the RSDMA recorded expense for 2010 through 2012 not to be reasonably caused by the Residential Disconnection OIR, then that same portion must be included as part of the business-as-usual uncollectible expense (i.e., not associated with the Disconnection OIR), and it should be added to the five-year average used in calculating SCE s forecast for the 2015 Test Year Uncollectible Factor As discussed in Exhibit SCE-04, Volume 2, p. 134, to avoid double-counting, the Disconnect OIR impacts were removed from derivation of SCE s proposed Uncollectible Factor (derived based on a fiveyear average) on the assumption that the Commission will authorize the recovery of the amounts recorded in the RSDMA. If the Commission were to deny RSDMA recovery (or portions thereof), then adjustments for the disallowed portion of the impact should be added to the five-year average used to forecast SCE s 2015 Test Year Uncollectible Factor. 16

21 V. POSTAGE EXPENSE FERC US POSTAL RATE INCREASE On September 24, 2013, the Governors of the United States Postal Service voted to seek a price increase above the typical annual increase associated with changes in the Consumer Price Index (CPI) to be effective January 26, On December 24, 2013, the Postal Review Commission approved the postage rate increase in Order No in Docket R The postage rate increase results in a revised 2015 Test Year forecast of $ million, an increase of $1.100 million above the $ million included in SCE s original November 2013 testimony and revised in SCE s September 2014 Errata. 15 SCE s postage expense, which records to FERC Subaccount , is described in Exhibit SCE-04, Volume 2, on pages As shown in the table below, the 2013 postage expense forecast remains unchanged. The updated 2014 and 2015 postage expense forecast shows the impact of the new postage rates. The updated 2014 postage expense forecast of $ million increased by a net $1.164 million and is comprised of additional postage expense of $1.276 million offset by the incremental postage savings of $111,000 in increased postage savings from the avoided cost of postage at the higher rates for customers expected to migrate to online billing options. The updated 2015 postage expense forecast of $ million increased by a net $1.100 million and is comprised of additional postage expense of $1.287 million offset by $186,000 in increased postage savings from the avoided cost of postage at the higher rates for customers expected to migrate to online billing options. 17 The postage rate increase by type of mailing and the increase in savings attributed to online billing are the only updated components of the postage expense Test Year forecast. No other component of the postage 13 United States Postal Service News Release, Sept. 25, 2013, "U.S. Postal Service Announces New Prices for 2014 ; see also Appendix for Workpapers: USPS Notice of Market-Dominant Price Adjustment (to be effective January 26, 2014), filed on September 26, 2013, in Docket No. R before the Postal Regulatory Commission, available at [as of September 12, 2014]. 14 Postal Regulatory Commission Press Release, Dec.24, 2013, "PRC Approves Postal Service request for Exigent Rate Increase; Rejects Permanent Price Increases. 15 Due to the removal of the Prepayment Program from the GRC, SCE s original postage expense forecast of $ million was revised upward by $84,000 - See Exhibit SCE-04 Errata, Table IV-50 on p Also see SCE-04, Vol 2, A (Errata) pp Exhibit SCE-04, Volume 2, p. 124, lines 5-10 and p. 125, lines

22 1 2 expense forecast has been modified, i.e., number of customers and number of mailings per customer remain the same. 18

23 Table V-10 Postal Rates and Total Expense by Type of Mailing ($000 s) Original Forecast Updated Forecast Difference Type of Mailing Postal Rate Category 5 Digit Digit AADC (Automated Area Distribution Center) Mixed AADC (Automated Area Distribution Center) Misc 1st Class Misc 1st Class Overweights Full 1st Class Overweights Full 1st Class Overweights (Over 2oz) Non-Manifest 1st Class Non-Manifest 1st Class Overweights Summary 1st Class2 N/A N/A N/A N/A N/A N/A N/A N/A N/A Summary 1st Class Overweights Late Notices Misc Pieces Weighted Average Postal Expense (Nominal $000) 5 Digit $13,000 $13,087 $13,201 $13,000 $14,516 $14,643 $ $1,429 $1,441 3 Digit $4,093 $4,120 $4,156 $4,093 $4,501 $4,541 $ $381 $385 AADC (Automated Area Distribution Center) $80 $80 $81 $80 $87 $88 $ $7 $7 Mixed AADC (Automated Area Distribution Center) $219 $221 $223 $219 $246 $248 $ $26 $26 Misc 1st Class $.2 $.2 $.2 $.2 $.1 $.1 $.0 -$.2 -$.2 Misc 1st Class Overweights $109 $109 $110 $109 $ $ $.0 -$109 -$110 Full 1st Class Overweights $80 $80 $81 $80 $93 $94 $ $13 $13 Full 1st Class Overweights (Over 2oz) $.3 $.3 $.3 $.3 $.3 $.3 $.0 $.0 $.0 Non-Manifest 1st Class 1 $264 $266 $268 $264 $265 $267 $ -$1 -$1 Non-Manifest 1st Class Overweights $414 $417 $421 $414 $ $ $ -$417 -$421 Summary 1st Class 2 N/A N/A N/A N/A N/A N/A N/A N/A N/A Summary 1st Class Overweights2 $389 $391 $395 $389 $274 $276 $ -$118 -$119 Late Notices $413 $416 $419 $413 $418 $422 $ $2 $2 Misc Pieces $408 $411 $414 $408 $473 $477 $ $62 $63 Prepaid Meter Postage 3 $4 $4 $4 $4 $4 $4 $ $ $ Other Mailings 4 $245 $245 $245 $245 $245 $245 $ $ $ Other Postage related activities5 $521 $521 $521 $521 $521 $521 $ $ $ Postage Expense Sub-total $20,239 $20,368 $20,540 $20,239 $21,644 $21,827 $ $1,276 $1,287 Productivity and Op Ex Savings Online Billing Productivity Adjustment (Organic) -$429 -$992 -$1,599 -$429 -$1,070 -$1, $78 -$126 Operational Excellence Productivity Adjustment -$242 -$423 -$761 -$242 -$456 -$ $33 -$60 Total $19,568 $18,954 $18,180 $19,568 $20,117 $19,280 $ $1,164 $1,100 1 Included all Non-Manifest, Late notices & Miscellaneous pieces 2 These pieces did not include late notices or Miscellaneous pieces 3 Adjusted amount in Pitney Bowes meters and bank account less roll over from previous year 4 Customer correspondence generated by Revenue Services and Customer Contact Center 5 Postage costs associated with Intelligent Mail Barcode, Address Cleansing, EDI Charges, Timing of Bank Reconciliation, and USPS postage fee corrections/charges 19

24 VI. MARINE MITIGATION SCE has removed all 2013 and 2014 incremental marine mitigation capital from the 2015 GRC forecast. The decision approving SONGS OII settlement agreement includes a provision for the amortization of SCE s SONGS related marine mitigation investments. 18 The marine mitigation capital expenditures of $3.2 million and $3.8 million in 2013 and 2014, respectively, were removed from the 2015 GRC. 19 SCE s marine mitigation project is required by the California Coastal Commission (CCC) and removing 2013 and 2014 capital costs from the GRC ensures there is no double recovery of marine mitigation capital D SCE accepted the 2013 recorded marine mitigation expenditures as its 2013 forecast in rebuttal testimony. 20 SCE, Vyas, Tr. 16/

25 VII. PENSION This chapter provides SCE s update testimony regarding the impact of a change in pension funding law on SCE s pension forecast. SCE is revising its forecast amount to $ million, from $ million. SCE s forecast of pension expense was based upon the law in effect at the time. In August 2014, after SCE s testimony had been filed, the Federal Highway and Transportation Funding Act ( HATFA ) became law. Under federal law, employers are required to make specified minimum contributions to pension plans. HATFA caused a change in the required minimum contributions. HATFA included provisions that temporarily increase pension plan funding interest rates and thus lower pension liabilities and legally required minimum employer contributions. HATFA extends the interest rate floor that was introduced in the so-called MAP-21 legislation of SCE s long-standing funding policy seeks to provide systematic long term funding and rate recovery, calculated to remain level as a percentage of payroll over the life of the plan. SCE contributes the greater of the amount calculated under that funding policy or the legally required minimum contribution. 21 SCE is continuing to propose that such greater of methodology be followed by the Commission. In SCE s testimony as filed, under that methodology the amount calculated under the funding policy was less than the legally required minimum, which was $217 million. 22 However, instead of requesting that projected $217 million, SCE requested a lower amount ($ million), which was the amount that had been authorized in the 2012 GRC. An April, 2014 pension cost projection prepared by SCE s actuaries at ORA s request (to reflect a December, 31, 2013 plan asset valuation), calculated a reduced projected funding amount for 2015, of slightly over $167.4 million. As a result of HATFA, the amount calculated under the funding policy now exceeds the legally required minimum. The applicable minimum legal funding requirements have been amended by the Pension Protection Act (PPA) of 2006, and further modified by MAP-21, and now by HATFA. These ever- 21 Exhibit SCE-06, Vol. 02, Pt. 1, pp Exhibit SCE-06, Vol. 02, Pt. 1, Exhibit B. 21

26 changing funding rules, combined with the 2008 stock market decline and subsequent market recovery, have dramatically increased year-to-year pension cost volatility. The Commission has mitigated this volatility with two way balancing account treatment, and by continuing SCE s historical pension funding policy, which helps to smooth costs by maintaining ongoing funding, even in years when little or no contributions would be legally required. The Aon Hewitt December 2, 2014 report is appended hereto. It shows that although the HATFA funding relief has reduced the three-year average Test Year 2015 amount to only $ million, much higher costs are now expected in the subsequent rate cycle, as the HATFA short-term funding relief gradually expires. The revised forecast also uses revised mortality assumptions consistent with a recently released Society of Actuaries study. This pension cost reduction, from almost $220 million to now less than $90 million, occurred less than one year after SCE filed its forecast, and legislative changes such as this are entirely beyond SCE s control. This pension cost volatility shows just how critical two-way balancing account treatment is to the ongoing financial viability of the SCE Retirement Plan, which is an element of overall compensation. Although SCE is updating its forecast amount, SCE is not modifying the portion of its earlier testimony which called for two-way balancing account treatment, and that aspect has already been fully briefed by SCE and the parties. 22

27 VIII. INCOME TAX EXPENSES On the night before the filing of this update, the United States Senate (2 nd session of the 113 th Congress) passed House Report 5771 (HR 5771) entitled Tax Increase Prevention Act of HR 5771 retroactively extends numerous expired tax provisions for one year beginning 2014, including the 50% tax bonus depreciation provision. At this time, the President has not signed this legislation. As such, this update does not include the impact of any of the tax extensions. SCE currently estimates a reduction in revenue requirement estimated to be $18 million in the Test Year if this change becomes law. 23

28 Appendix A

29 ATTACHMENT A To Chapter II

30 APPENDIX RESULTS OF OPERATION

31 AUTHORIZED BASE REVENUE REQUIREMENT (ABRR) AND REVENUE CHANGES

32 Table III-5, SCE-10, Volume , 2016, and 2017 Revenue Changes Resulting From The 2015 Test Year and 2016 & 2017 PTYR GRC Request (thousands of dollars) ABRR and Revenue Change Including the Impact of Previously Approved and Forecasted ABRR Changes: Cumulative SCE-10 Vol. 1 Reference 1. Proposed GRC Base Revenue Requirement 5,714,850 6,009,653 6,322,688 Table II-4 2. Estimated Present Revenue Requirement 5,632,680 5,714,850 6,009,653 For 2015, Table II-2 3. Subtotal Estimated Present Revenue Requirement 5,632,680 5,714,850 6,009, GRC ABRR Change 82, , , Less: GRC Revenue Growth GWhs GRC PRR 84,698 5,779,540 Table VI GRC PRR 85,630 5,843,137 Table VI GRC PRR 85,630 5,843,137 Table VI GRC PRR 86,298 5,888,719 Table VI GRC PRR 86,298 5,888,719 Table VI GRC PRR 86,712 5,916,969 Table VI GRC Revenue Growth 63,597 45,582 28, Residential Service Disconnection MA 17, ,975 Chapter IV 14. GRC Revenue Change 36, , , Percent Revenue Change 0.65% 4.36% 4.74% 9.75% 16. Total System PRR 12,237,509 12,357,104 12,426,532 Table VI Percent Revenue Change 0.30% 2.02% 2.29% 4.61%

33 TOTAL COMPANY SUMMARY OF EARNINGS AT PROPOSED RATES 2012 THROUGH 2017

34 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE SUMMARY OF EARNINGS ESTIMATED REVENUE REQUIREMENTS (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Operating Revenues 2. Electric Revenues 5,924,916 5,704,507 6,102,035 6,621,273 6,948,799 7,274, Operating Expenses 4. Escalation 0 39,000 73, , , , Generation - Steam 28,512 19,644 13,633 7,342 7,342 7, Generation - Nuclear 73,818 73,818 73,818 73,818 73,818 73, Generation - Hydro 49,204 53,306 53,225 53,142 53,142 53, Generation - Other 101, , , , , , Transmission 151, , , , , , Distribution 508, , , , , , Customer Accounts 167, , , , , , Customer Service and Information 38,590 38,710 38,772 39,020 39,020 39, Total O&M Expenses 1,118,652 1,241,545 1,268,312 1,316,498 1,376,589 1,433, Administrative and General 901, , , , , , Total A&G Expenses 901, , , , , , Revenue Credits 197, , , , , , Other Uncollectibles 14,505 11,694 12,509 15,759 16,538 17, Franchise Requirements 48,430 51,694 55,297 60,220 63,199 66, Subtotal 1,884,984 2,045,962 2,099,483 2,064,374 2,129,834 2,196,962

35 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE SUMMARY OF EARNINGS (Continued) ESTIMATED REVENUE REQUIREMENTS (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Depreciation - System 1,297,830 1,443,899 1,611,375 1,893,245 1,958,642 2,021, Taxes Other Than On Income - System 265, , , , , , Taxes Based On Income - System 640, , , , , , Total Taxes - System 906, , , , , , Total Operating Expenses - System 4,089,409 4,231,381 4,444,114 4,779,254 4,945,180 5,139, Net Operating Revenue - System 1,835,507 1,473,126 1,657,921 1,842,018 2,003,619 2,134, Rate Base - System (Average)-System 16,876,148 18,647,163 20,986,345 23,316,688 25,362,266 27,016, Rate of Return-System 10.88% 7.90% 7.90% 7.90% 7.90% 7.90%

36 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE TAXES - OTHER ESTIMATED REVENUE REQUIREMENTS (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Ad Valorem Taxes 2. Ad Valorem Taxes 193, , , , , , Total Ad Valorem Taxes 193, , , , , , Payroll Taxes 5. Federal Insurance Contribution Act (FICA) 70,393 64,864 64,920 63,722 65,942 68, Federal Unemployment Tax Act State Unemployment Tax Act 2,948 2,576 2,434 2,297 2,303 2, Total Payroll Taxes 73,773 67,818 67,711 66,356 68,583 71, Misc. Taxes 10. Federal - All Other (465) 4,628 4,787 4,920 5,066 5, Total Miscellaneous Taxes (465) 4,628 4,787 4,920 5,066 5, ITC Amortization on CTC Property (725) (725) (725) (692) (591) (590) 13. ARAM Expense on CTC Property Total Taxes Other Than Income 265, , , , , ,455

37 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE INCOME TAX ADJUSTMENTS ESTIMATED REVENUE REQUIREMENTS (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description California Income Tax Adjustments 2. Tax Depreciation 1,170,679 1,263,192 1,419,047 1,482,723 1,531,538 1,566, Interest On Long-Term Debt 452, , , , , , Interest On Accumulated Deferred ITC (3,924) (3,576) (3,530) (3,289) (3,042) (2,815) 5. Uniform Capitalization 155,705 82,945 95,490 90,109 94,249 89, Capitalized Software 32,328 26,497 29,366 30,174 34,690 29, Ad Valorem Lien Date Adjustment 3,806 13,305 1,154 14,693 15,682 12, Removal Costs 332, , , , , , Amortization of Land Rights 4,113 5,128 5,184 5,744 7,445 6, Salvage Warehouse Expense CIAC Revenues (229) 743 (6,931) (4,558) (3,629) (4,129) 12. Non Deductible Meals (3,099) (3,140) (3,188) (3,244) (3,307) (3,373) 13. Excess Compensation ESOP Dividends 20,191 22,915 20,483 18,309 16,365 14, Leased Vehicles (20) (20) (20) (20) (21) (21) 16. Repair Deduction 506, , , , , , Total CCFT Adjustments 2,671,335 2,459,146 2,923,554 3,115,030 3,268,178 3,352,421

38 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE INCOME TAX ADJUSTMENTS ESTIMATED REVENUE REQUIREMENTS (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Federal Income Tax Adjustments 2. Tax Depreciation 2,022,624 2,750,162 1,401,215 1,212,957 1,386,542 1,502, Interest On Long-Term Debt 452, , , , , , Uniform Capitalization 151,741 82,945 95,490 90,109 94,249 89, Capitalized Software 32,328 26,497 29,366 30,174 34,690 29, Ad Valorem Lien Date Adjustment 3,806 13,305 1,154 14,693 15,682 12, Repair Deduction 506, , , , , , Removal Costs 332, , , , , , Amortization of Land Rights 4,055 5,068 5,124 5,683 7,385 6, Salvage Warehouse Expense CIAC Revenues 41,720 33,466 (13,124) (9,951) (6,932) (5,810) 12. Non Deductible Meals (3,099) (3,140) (3,188) (3,244) (3,307) (3,373) 13. Leased Vehicles (20) (20) (20) (20) (21) (21) 14. ESOP Dividends 20,191 22,915 20,483 18,309 16,365 14, Preferred Dividend Deduction Section 199 Manufacturer's Deduction ,152 20,618 22,014 18, Medicare D 4, Total FIT Adjustments 3,569,593 3,982,354 2,925,960 2,864,525 3,145,683 3,309,780

39 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE ESTIMATED REVENUE REQUIREMENTS TAXES - INCOME ($000) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description California Corporation Franchise Tax 2. Operating Revenues 5,924,916 5,704,507 6,102,035 6,621,273 6,948,799 7,274, Operating Expenses 1,884,984 2,045,962 2,099,483 2,064,374 2,129,834 2,196, Taxes Other Than Income 265, , , , , , Subtotal Expenses 2,150,919 2,328,149 2,396,181 2,375,730 2,474,039 2,572, Income Tax Adjustments 2,671,335 2,459,146 2,923,554 3,115,030 3,268,178 3,352, California Taxable Income 1,102, , ,300 1,130,513 1,206,582 1,349, CCFT Tax Rate % % % % % % 9. CCFT 94,177 78,338 69,155 99, , , California Alternate Minimum Tax Arizona Income Tax Rate % % % % % % 12. New Mexico Income Tax Rate % % % % % % 13. Arizona Income Tax 1,920 1,597 1, New Mexico Income Tax Total Other State State Income Taxes 2,224 1,850 1, Total State Income Taxes 96,401 80,188 70, , , ,641

40 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE ESTIMATED REVENUE REQUIREMENTS TAXES - INCOME ($000) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Federal Income Tax 2. Operating Revenues 5,924,916 5,704,507 6,102,035 6,621,273 6,948,799 7,274, Operating Expenses 1,884,984 2,045,962 2,099,483 2,064,374 2,129,834 2,196, Taxes Other Than Income 265, , , , , , Total State Income Taxes 96,401 80,188 70, , , , Less: Current Year's CCFT 94,177 78,338 69,155 99, , , Plus: Prior Year's CCFT 91,760 94,177 78,338 69,155 99, , Subtotal - Expenses 2,244,903 2,424,176 2,475,692 2,445,190 2,574,301 2,679, Income Tax Adjustments (Sch M) 3,569,593 3,982,354 2,925,960 2,864,525 3,145,683 3,309, Federal Taxable Income 110,419 (702,023) 700,383 1,311,557 1,228,815 1,284, FIT Tax Rate 35% 35% 35% 35% 35% 35% 12. Federal Income Tax 38,647 (245,708) 245, , , , Federal Alternative Income Tax 16, Taxes Deferred-current (Plant) 417, ,354 98,331 (70,957) (49,237) (46,626) 15. Taxes Deferred-current (AFUDC Debt) 4,660 8,412 7,408 9,217 7,819 2, Taxes Deferred-current (Cap. Int.) 71,382 29,920 34,592 29,140 30,414 31, Contributions in Aid of Construction 4,720 16,213 (9,469) (6,632) (3,918) (1,421) 18. Investment Tax Credit Amortization (9,074) (9,349) (10,076) (10,095) (9,979) (9,838) 19. Accrued Vacation Total Federal Income Taxes 544, , , , , , Total Taxes-Income (State and Fed) 640, , , , , ,996

41 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE DEPRECIATION EXPENSE ESTIMATED REVENUE REQUIREMENTS (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Depreciation Expense 1,297,830 1,443,899 1,611,375 1,893,245 1,958,642 2,021,367

42 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE WEIGHTED AVERAGE RATE BASE ESTIMATED REVENUE REQUIREMENTS (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Fixed Capital 2. Plant in Service (Avg.) 29,349,427 32,401,486 35,701,688 38,634,600 41,502,908 44,052, Capitalized Software (Avg.) 1,431,694 1,560,583 1,644,304 1,664,347 1,473,884 1,250, Intangibles (Avg.) 145, , , , , , Property Held for Future Use (Avg.) Total Fixed Capital (Avg.) 30,926,991 34,114,054 37,509,494 40,477,919 43,164,207 45,498, Adjustments 8. Customer Advance for Construction (Avg.) (67,223) (57,359) (52,825) (54,676) (60,939) (67,721) 9. Total Adjustments (Avg.) (67,223) (57,359) (52,825) (54,676) (60,939) (67,721) 10. Working Capital 11. Materials and Supplies (Avg) 134, , , , , , Mountainview Emission Credits (Avg) 9,138 8,286 7,603 6,901 6,234 5, Working Cash (Avg.) 230, , , , , , Total Working Capital (Avg.) 374, , , , , , Total Before Deductions for Reserves (Avg) 31,233,952 34,399,730 37,808,436 40,801,330 43,518,064 45,862,881

43 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE WEIGHTED AVERAGE RATE BASE (Continued) ESTIMATED REVENUE REQUIREMENTS (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Deductions for Reserves 17. Depreciation Reserve (Avg) (10,265,650) (10,767,948) (11,180,977) (11,718,776) (12,492,923) (13,305,444) 18. Accum. Amort. - Capitalized Software (Avg.) (599,923) (765,904) (940,463) (978,698) (899,160) (783,157) 19. Accum. Taxes Def. - Plant ( Avg.) (3,644,752) (4,299,651) (4,729,153) (4,774,339) (4,710,420) (4,663,010) 20. Accum. Def. Taxes for Uniform Capitalization 53,749 (11,237) (50,524) (91,728) (129,783) (165,741) 21. Accum. Taxes Def. - CIAC (Avg.) 137, , , , , , Accrued Vacation (Avg) 27,072 26,773 26,466 26,152 25,828 25, Unfunded Pension Reserve (Avg.) (66,221) (69,020) (74,344) (79,396) (84,292) (88,690) 24. Total Deductions for Reserves ( Avg.) (14,357,804) (15,752,567) (16,822,091) (17,484,642) (18,155,798) (18,845,887) 25. Total Rate Base (Avg) 16,876,148 18,647,163 20,986,345 23,316,688 25,362,266 27,016,994

44 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE N-T-G MULTIPLIER ESTIMATED REVENUE REQUIREMENTS Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Revenues Uncollectibles Tax Rate Uncollectibles Amount Applied Subtotal Franchise Fees Tax Rate Franchise Fees Amount Applied Subtotal Arizona/New Mexico/D.C. Income Tax Rates Other State I.T. Amount Applied Subtotal S. I. T. Rate S. I. T. Amount Applied Subtotal Federal Income Tax Federal Income Tax Amount Applied Net Operating Revenues Uncollectible and Franchise Fees Factor N-T-G MULTIPLIER

45 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE RATE OF RETURN ESTIMATED REVENUE REQUIREMENTS Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Cost Factor 2. Long-Term Debt 6.22% 5.49% 5.49% 5.49% 5.49% 5.49% 3. Preferred Stock 6.01% 5.79% 5.79% 5.79% 5.79% 5.79% 4. Equity 11.50% 10.45% 10.45% 10.45% 10.45% 10.45% 5. Capitalization Ratios 6. Long-Term Debt 43.00% 43.00% 43.00% 43.00% 43.00% 43.00% 7. Preferred Stock 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 8. Equity 48.00% 48.00% 48.00% 48.00% 48.00% 48.00% 9. Weighted Cost 10. Long-Term Debt 2.68% 2.36% 2.36% 2.36% 2.36% 2.36% 11. Preferred Stock 0.54% 0.52% 0.52% 0.52% 0.52% 0.52% 12. Equity 5.52% 5.02% 5.02% 5.02% 5.02% 5.02% 13. Return on Rate Base 8.74% 7.90% 7.90% 7.90% 7.90% 7.90%

46 SUMMARY OF ELECTRIC RATE BASE

47 Southern California Edison Summary of Electric Rate Base - Total Company (nominal $000) SCE-10, Volume 2 Line Recorded Estimated No. Item FIXED CAPITAL 1 Plant in Service 29,349,427 32,401,486 35,701,688 38,634,600 41,502,908 44,052,546 2 Capitalized Software 1,431,694 1,560,583 1,644,304 1,664,347 1,473,884 1,250,979 3 Other Intangibles 145, , , , , ,780 4 Total Fixed Capital 30,926,991 34,114,054 37,509,494 40,477,919 43,164,207 45,498,305 ADJUSTMENTS 5 Customer Advances for Construction (67,223) (57,359) (52,825) (54,676) (60,939) (67,721) (67,223) (57,359) (52,825) (54,676) (60,939) (67,721) WORKING CAPITAL 6 Materials & Supplies 134, , , , , ,784 7 Mountainview Emission Credits 9,138 8,286 7,603 6,901 6,234 5,600 8 Working Cash 230, , , , , ,912 9 Total Working Capital 374, , , , , ,296 DEDUCTIONS FOR RESERVES 10 Accumulated Depreciation Reserve (10,265,650) (10,767,948) (11,180,977) (11,718,776) (12,492,923) (13,305,444) 11 Accumulated Amortization (599,923) (765,904) (940,463) (978,698) (899,160) (783,157) 12 Accum. Def. Taxes - Plant (3,644,752) (4,299,651) (4,729,153) (4,774,339) (4,710,420) (4,663,010) 13 Accum. Def. Taxes - Uniform Capitalization 53,749 (11,237) (50,524) (91,728) (129,783) (165,741) 14 Accum. Def. Taxes - CIAC 137, , , , , , Accum. Def. Taxes - Vacation Accrual 27,072 26,773 26,466 26,152 25,828 25, Unfunded Pension Reserve (66,221) (69,020) (74,344) (79,396) (84,292) (88,690) 17 Total Deductions for Reserves (14,357,804) (15,752,567) (16,822,091) (17,484,642) (18,155,798) (18,845,887) 18 RATE BASE 16,876,148 18,647,163 20,986,345 23,316,688 25,362,266 27,016, DEPR'N & AMORT EXPENSE 1,297,830 1,443,899 1,611,375 1,893,245 1,958,642 2,021,367 1/ Does not include Legacy meter rate base of $147 million

48 Southern California Edison Summary of Electric Rate Base - CPUC Basis (nominal $000) Line Recorded Estimated No. Item FIXED CAPITAL 1 Plant in Service 24,917,220 27,383,342 29,286,225 31,150,377 33,601,517 35,918,234 2 Capitalized Software 1,344,216 1,465,230 1,543,835 1,562,654 1,383,829 1,174,543 3 Other Intangibles 136, , , , , ,879 4 Total Fixed Capital 26,398,393 28,991,271 30,983,571 32,881,068 35,161,309 37,275,655 ADJUSTMENTS 5 Customer Advances for Construction (67,223) (57,359) (52,825) (54,676) (60,939) (67,721) (67,223) (57,359) (52,825) (54,676) (60,939) (67,721) WORKING CAPITAL 6 Materials & Supplies 126, , , , , ,732 7 Mountainview Emission Credits 9,138 8,286 7,603 6,901 6,234 5,600 8 Working Cash 216, , , , , ,893 9 Total Working Capital 351, , , , , ,224 DEDUCTIONS FOR RESERVES 10 Accumulated Depreciation Reserve (9,437,021) (9,886,287) (10,212,026) (10,614,060) (11,218,587) (11,853,623) 11 Accumulated Amortization (563,267) (719,107) (883,000) (918,899) (844,220) (735,305) 12 Accum. Def. Taxes - Plant (3,049,160) (3,448,410) (3,595,235) (3,552,699) (3,449,904) (3,367,040) 13 Accum. Def. Taxes - Capitalized Interest 39,238 (33,233) (83,776) (129,870) (171,315) (205,457) 14 Accum. Def. Taxes - CIAC 137, , , , , , Accum. Def. Taxes - Vacation Accrual 25,418 25,137 24,849 24,554 24,250 23, Unfunded Pension Reserve (62,175) (64,803) (69,802) (74,545) (79,142) (83,271) 17 Total Deductions for Reserves (12,909,046) (13,992,282) (14,692,086) (15,133,375) (15,603,966) (16,086,098) 18 RATE BASE 13,774,003 15,264,211 16,569,399 18,048,425 19,886,236 21,528, DEPR'N & AMORT EXPENSE 1,192,019 1,281,025 1,403,288 1,628,174 1,680,351 1,738,563 1/ Does not include Legacy meter rate base of $147 million

49 Southern California Edison Summary of Electric Rate Base - ISO (nominal $000) Line Recorded Estimated No. Item FIXED CAPITAL 1 Plant in Service 4,432,207 5,018,144 6,415,463 7,484,223 7,901,391 8,134,313 2 Capitalized Software 87,478 95, , ,693 90,056 76,436 3 Other Intangibles 8,913 9,286 9,990 10,935 11,451 11,901 4 Total Fixed Capital 4,528,598 5,122,783 6,525,922 7,596,851 8,002,898 8,222,650 ADJUSTMENTS 5 Customer Advances for Construction WORKING CAPITAL 6 Materials & Supplies 8,233 7,546 7,923 8,062 8,076 8,052 7 Mountainview Emission Credits Working Cash 14,072 12,907 13,106 14,618 16,887 18,019 9 Total Working Capital 22,305 20,453 21,029 22,680 24,964 26,072 DEDUCTIONS FOR RESERVES 10 Accumulated Depreciation Reserve (828,629) (881,661) (968,950) (1,104,716) (1,274,336) (1,451,821) 11 Accumulated Amortization (36,656) (46,797) (57,463) (59,799) (54,940) (47,852) 12 Accum. Def. Taxes - Plant (595,592) (851,241) (1,133,918) (1,221,641) (1,260,516) (1,295,971) 13 Accum. Def. Taxes - Capitalized Interest 14,511 21,996 33,252 38,142 41,532 39, Accum. Def. Taxes - CIAC Accum. Def. Taxes - Vacation Accrual 1,654 1,636 1,617 1,598 1,578 1, Unfunded Pension Reserve (4,046) (4,217) (4,543) (4,851) (5,150) (5,419) 17 Total Deductions for Reserves (1,448,758) (1,760,285) (2,130,005) (2,351,267) (2,551,832) (2,759,788) 18 RATE BASE 3,102,145 3,382,952 4,416,946 5,268,264 5,476,030 5,488, DEPR'N & AMORT EXPENSE 105, , , , , ,804

50 TOTAL COMPANY SUMMARY OF EARNINGS AT PRESENT RATES 2012 THROUGH 2017

51 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE SUMMARY OF EARNINGS ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Operating Revenues 2. Electric Revenues 5,924,916 6,091,902 6,417,575 6,426,212 6,432,402 6,436, Operating Expenses 4. Escalation 0 39,000 73, , , , Generation - Steam 28,512 19,644 13,633 7,342 7,342 7, Generation - Nuclear 73,818 73,818 73,818 73,818 73,818 73, Generation - Hydro 49,204 53,306 53,225 53,142 53,142 53, Generation - Other 101, , , , , , Transmission 151, , , , , , Distribution 508, , , , , , Customer Accounts 167, , , , , , Customer Service and Information 38,590 38,710 38,772 39,020 39,020 39, Total O&M Expenses 1,118,652 1,241,545 1,268,312 1,316,498 1,376,589 1,433, O&M Jurisdictional Factor % % % % % % 15. O&M Expenses Juris. 1,118,652 1,241,545 1,268,312 1,316,498 1,376,589 1,433, Administrative and General 901, , , , , , Total A&G Expenses 901, , , , , , Revenue Credits 197, , , , , , Other Uncollectibles 14,505 12,488 13,156 15,294 15,309 15, Franchise Requirements 48,430 55,205 58,156 58,446 58,503 58, Subtotal 1,884,984 2,050,267 2,102,990 2,062,136 2,123,908 2,187,347

52 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE SUMMARY OF EARNINGS ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Depreciation 1,297,830 1,443,899 1,611,375 1,893,245 1,958,642 2,021, Taxes Other Than On Income 265, , , , , , Taxes Based On Income 624, , , , , , Total Taxes 890, , , , , , Total Operating Expenses 4,072,826 4,402,686 4,572,957 4,682,476 4,721,011 4,782, Net Operating Revenue 1,852,090 1,689,215 1,844,617 1,743,736 1,711,391 1,653, Rate Base - System (Average) 16,876,148 18,647,163 20,986,345 23,316,688 25,356,032 27,011, Rate of Return 10.97% 9.06% 8.79% 7.48% 6.75% 6.12%

53 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE TAXES - OTHER ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Ad Valorem Taxes 2. Ad Valorem Taxes 193, , , , , , Total Ad Valorem Taxes 193, , , , , , Payroll Taxes 5. Federal Insurance Contribution Act (FICA) 70,393 64,864 64,920 63,722 65,942 68, Federal Unemployment Tax Act State Unemployment Tax Act 2,948 2,576 2,434 2,297 2,303 2, Total Payroll Taxes 73,773 67,818 67,711 66,356 68,583 71, Misc. Taxes 10. Federal - All Other (465) 4,628 4,787 4,920 5,066 5, Total Miscellaneous Taxes (465) 4,628 4,787 4,920 5,066 5, ITC Amortization on CTC Property (725) (725) (725) (692) (591) (590) 13. ARAM Expense on CTC Property Total Taxes Other Than Income 265, , , , , ,455

54 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE INCOME TAX ADJUSTMENTS ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description California Income Tax Adjustments 2. Tax Depreciation 1,170,679 1,263,192 1,419,047 1,482,723 1,531,538 1,566, Interest On Long-Term Debt 452, , , , , , Interest On Accumulated Deferred ITC (3,924) (3,576) (3,530) (3,289) (3,042) (2,815) 5. Uniform Capitalization 155,705 82,945 95,490 90,109 94,249 89, Capitalized Software 32,328 26,497 29,366 30,174 34,690 29, Ad Valorem Lien Date Adjustment 3,806 13,305 1,154 14,693 15,682 12, Percentage Repair Allowance Removal Costs 332, , , , , , Amortization of Land Rights 4,113 5,128 5,184 5,744 7,445 6, Salvage Warehouse Expense CIAC Revenues (229) 743 (6,931) (4,558) (3,629) (4,129) 13. Non Deductible Meals (3,099) (3,140) (3,188) (3,244) (3,307) (3,373) 14. Excess Compensation ESOP Dividends 20,191 22,915 20,483 18,309 16,365 14, Leased Vehicles (20) (20) (20) (20) (21) (21) 17. Total CCFT Adjustments 2,671,335 2,459,146 2,923,554 3,115,030 3,268,178 3,352,421

55 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE INCOME TAX ADJUSTMENTS ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Federal Income Tax Adjustments 2. Tax Depreciation 2,022,624 2,750,162 1,401,215 1,212,957 1,386,542 1,502, Interest On Long-Term Debt 452, , , , , , Uniform Capitalization 151,741 82,945 95,490 90,109 94,249 89, Capitalized Software 32,328 26,497 29,366 30,174 34,690 29, Ad Valorem Lien Date Adjustment 3,806 13,305 1,154 14,693 15,682 12, Percentage Repair Allowance Repair Deduction 506, , , , , , Removal Costs 332, , , , , , Amortization of Land Rights 4,055 5,068 5,124 5,683 7,385 6, Salvage Warehouse Expense CIAC Revenues 41,720 33,466 (13,124) (9,951) (6,932) (5,810) 13. Non Deductible Meals (3,099) (3,140) (3,188) (3,244) (3,307) (3,373) 14. Excess Compensation Leased Vehicles (20) (20) (20) (20) (21) (21) 16. ESOP Dividends 20,191 22,915 20,483 18,309 16,365 14, Preferred Dividend Deduction Section 199 Manufacturer's Deduction ,152 20,618 22,014 18, Medicare D 4, Total FIT Adjustments 3,569,593 3,982,354 2,925,960 2,864,525 3,145,683 3,309,780

56 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT TAXES - INCOME ($000) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description California Corporation Franchise Tax 2. Operating Revenues 5,924,916 6,091,902 6,417,575 6,426,212 6,432,402 6,436, Operating Expenses 1,884,984 2,050,267 2,102,990 2,062,136 2,123,908 2,187, Taxes Other Than Income 265, , , , , , Subtotal Expenses 2,150,919 2,332,454 2,399,688 2,373,492 2,468,113 2,562, Income Tax Adjustments 2,671,335 2,459,146 2,923,554 3,115,030 3,268,178 3,352, California Taxable Income 1,102,661 1,300,302 1,094, , , , CCFT Tax Rate % % % % % % 9. CCFT 94, ,058 96,739 82,892 61,536 46, California Alternate Minimum Tax Arizona Income Tax Rate % % % % % % 12. New Mexico Income Tax Rate % % % % % % 13. Arizona Income Tax 1,920 2,264 1, New Mexico Income Tax Total Other State State Income Taxes 2,224 2,623 1, Total State Income Taxes 96, ,681 98,379 83,145 61,724 46,199

57 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT TAXES - INCOME ($000) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Federal Income Tax 2. Operating Revenues 5,924,916 6,091,902 6,417,575 6,426,212 6,432,402 6,436, Operating Expenses 1,884,984 2,050,267 2,102,990 2,062,136 2,123,908 2,187, Taxes Other Than Income 265, , , , , , Taxes Other Than Income 265, , , , , , Total State Income Taxes 96, ,681 98,379 83,145 61,724 46, Less: Current Year's CCFT 94, ,058 96,739 82,892 61,536 46, Plus: Prior Year's CCFT 91,760 94, ,058 96,739 82,892 61, Subtotal - Expenses 2,244,903 2,429,254 2,512,386 2,470,484 2,551,193 2,624, Income Tax Adjustments (Sch M) 3,569,593 3,982,354 2,925,960 2,864,525 3,145,683 3,309, Federal Taxable Income 110,419 (319,706) 979,229 1,091, , , FIT Tax Rate 35% 35% 35% 35% 35% 35% 13. Federal Income Tax 38,647 (111,897) 342, , , , Federal Alternative Income Tax 16, Taxes Deferred-current (Plant) 417, ,354 98,331 (70,957) (49,237) (46,626) 16. Taxes Deferred-current (AFUDC Debt) 4,660 8,412 7,408 9,217 7,819 2, Taxes Deferred-current (Cap. Int.) 71,382 29,920 34,592 29,140 30,414 31, Contributions in Aid of Construction 4,720 16,213 (9,469) (6,632) (3,918) (1,421) 19. Investment Tax Credit Amortization (9,074) (9,349) (10,076) (10,095) (9,979) (9,838) 20. Total Federal Income Taxes 527, , , , , , Total Taxes-Income (State and Fed) 624, , , , , ,194

58 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE DEPRECIATION EXPENSE ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Depreciation Expense 1,297,830 1,443,899 1,611,375 1,893,245 1,958,642 2,021,367

59 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE WEIGHTED AVERAGE RATE BASE ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Fixed Capital 2. Plant in Service (Avg.) 29,349,427 32,401,486 35,701,688 38,634,600 41,502,908 44,052, Capitalized Software (Avg.) 1,431,694 1,560,583 1,644,304 1,664,347 1,473,884 1,250, Intangibles (Avg.) 145, , , , , , Property Held for Future Use (Avg.) Total Fixed Capital (Avg.) 30,926,991 34,114,054 37,509,494 40,477,919 43,164,207 45,498, Adjustments 8. Customer Advance for Construction (Avg.) (67,223) (57,359) (52,825) (54,676) (60,939) (67,721) 9. Total Adjustments (Avg.) (67,223) (57,359) (52,825) (54,676) (60,939) (67,721) 10. Working Capital 11. Materials and Supplies (Avg) 134, , , , , , Mountainview Emission Credits (Avg) 9,138 8,286 7,603 6, Working Cash (Avg.) 230, , , , , , Total Working Capital (Avg.) 374, , , , , , Total Before Deductions for Reserves (Avg) 31,233,952 34,399,730 37,808,436 40,801,330 43,511,830 45,857,281

60 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE WEIGHTED AVERAGE RATE BASE ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT (Thousands of Dollars) Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Deductions for Reserves 17. Depreciation Reserve (Avg) (10,265,650) (10,767,948) (11,180,977) (11,718,776) (12,492,923) (13,305,444) 18. Accum. Amort. - Capitalized Software (Avg.) (599,923) (765,904) (940,463) (978,698) (899,160) (783,157) 19. Taxes Def. - Plant ( Avg.) (3,644,752) (4,299,651) (4,729,153) (4,774,339) (4,710,420) (4,663,010) 20. Capitalized Interest (Avg) 53,749 (11,237) (50,524) (91,728) (129,783) (165,741) 21. Taxes Def. - CIAC (Avg.) 137, , , , , , Accrued Vacation (Avg) 27,072 26,773 26,466 26,152 25,828 25, Unfunded Pension Reserve (Avg.) (66,221) (69,020) (74,344) (79,396) (84,292) (88,690) 24. Total Deductions for Reserves ( Avg.) (14,357,804) (15,752,567) (16,822,091) (17,484,642) (18,155,798) (18,845,887) 25. Total Rate Base (Avg) 16,876,148 18,647,163 20,986,345 23,316,688 25,356,032 27,011,395

61 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE N-T-G MULTIPLIER ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Revenues Uncollectibles Tax Rate Uncollectibles Amount Applied Uncollectibles Juris Subtotal Franchise Fees Tax Rate Franchise Fees Amount Applied Franchise Fees Juris Subtotal Arizona/New Mexico/D.C. Income Tax Rates Other State I.T. Amount Applied Other State I.T. Juris Subtotal S. I. T. Rate S. I. T. Amount Applied S. I. T. Juris Subtotal Federal Income Tax Federal Income Tax Amount Applied Federal Income Tax Juris Net Operating Revenues Uncollectible and Franchise Fees Factor N-T-G MULTIPLIER

62 SOUTHERN CALIFORNIA EDISON TEST YEAR 2015 GENERAL RATE CASE RATE OF RETURN ESTIMATED REVENUE REQUIREMENTS AT AUTHORIZED BASE REVENUE REQUIREMENT Line Recorded Forecast Forecast Forecast Forecast Forecast No. Description Cost Factor 2. Long-Term Debt 6.22% 5.49% 5.49% 5.49% 5.49% 5.49% 3. Preferred Stock 6.01% 5.79% 5.79% 5.79% 5.79% 5.79% 4. Equity 11.50% 10.45% 10.45% 10.45% 10.45% 10.45% 5. Capitalization Ratios 6. Long-Term Debt 43.00% 43.00% 43.00% 43.00% 43.00% 43.00% 7. Preferred Stock 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 8. Equity 48.00% 48.00% 48.00% 48.00% 48.00% 48.00% 9. Weighted Cost 10. Long-Term Debt 2.68% 2.36% 2.36% 2.36% 2.36% 2.36% 11. Preferred Stock 0.54% 0.52% 0.52% 0.52% 0.52% 0.52% 12. Equity 5.52% 5.02% 5.02% 5.02% 5.02% 5.02% 13. Return on Rate Base 8.74% 7.90% 7.90% 7.90% 7.90% 7.90%

63 CPUC FUNCTIONALIZATION 2015 THROUGH 2017

64 2015 GRC 2015 Results of Operations Thousands of Dollars 2015 Line No. Item CPUC Generation Distribution Generation % Distribution % 1. TOTAL OPERATING REVENUES 5,714, ,151 4,830, % 84.53% 2. OPERATING EXPENSES: 3. Production 4. Steam 7,342 7, % 5. Nuclear 73,818 73, % 6. Hydro 53,142 53, % 7. Other 120, , % 8. Subtotal Production 255, , % 0.00% 9. Transmission 93,402-93, % 10. Distribution 545, , % 11. Customer Accounts 176, , % 12. Uncollectibles 13,579 2,104 11, % 84.50% 13. Customer Service & Information 39,020 1,259 37, % 96.77% 14. Administrative & General 819, , , % 85.53% 15. Franchise Requirements 51,974 8,041 43, % 84.53% 16. Revenue Credits (155,333) (2,631) (152,702) 1.69% 98.31% 17. Subtotal 1,840, ,504 1,457, % 79.21% 18. Escalation 109,543 20,350 89, % 81.42% 19. Depreciation 1,677, ,084 1,460, % 87.06% 20. Taxes Other Than On Income 21. Property Taxes 186,371 23, , % 87.30% 22. Payroll Taxes & Misc 66,271 9,588 56, % 85.53% 23. Taxes Based On Income 400,061 50, , % 87.49% 24. Total Taxes 652,704 83, , % 87.24% 25. TOTAL OPERATING EXPENSES 4,279, ,248 3,576, % 83.57% 26. NET OPERATING REVENUE 1,435, ,903 1,254, % 87.40% 27. RATE BASE 18,195,705 2,291,631 15,904, % 87.41% 28. RATE OF RETURN 7.89% 7.89% 7.89%

65 2015 GRC 2016 Results of Operations Thousands of Dollars 2016 Line No. Item CPUC Generation Distribution Generation % Distribution % 1. TOTAL OPERATING REVENUES 6,009, ,465 5,133, % 85.42% 2. OPERATING EXPENSES: 3. Production 4. Steam 7,342 7, % 5. Nuclear 73,818 73, % 6. Hydro 53,142 53, % 7. Other 120, , % 8. Subtotal Production 255, , % 0.00% 9. Transmission 93,402-93, % 10. Distribution 545, , % 11. Customer Accounts 176, , % 12. Uncollectibles 14,280 2,086 12, % 85.39% 13. Customer Service & Information 39,020 1,259 37, % 96.77% 14. Administrative & General 823, , , % 85.53% 15. Franchise Requirements 54,656 7,971 46, % 85.42% 16. Revenue Credits (157,156) (2,662) (154,494) 1.69% 98.31% 17. Subtotal 1,845, ,924 1,462, % 79.25% 18. Escalation 166,051 32, , % 80.55% 19. Depreciation 1,729, ,375 1,534, % 88.70% 20. Taxes Other Than On Income 21. Property Taxes 212,602 24, , % 88.29% 22. Payroll Taxes & Misc 68,595 9,924 58, % 85.53% 23. Taxes Based On Income 407,014 47, , % 88.44% 24. Total Taxes 688,211 81, , % 88.10% 25. TOTAL OPERATING EXPENSES 4,429, ,483 3,736, % 84.37% 26. NET OPERATING REVENUE 1,580, ,982 1,396, % 88.36% 27. RATE BASE 20,033,516 2,328,893 17,704, % 88.38% 28. RATE OF RETURN 7.89% 7.90% 7.89%

66 2015 GRC 2017 Results of Operations Thousands of Dollars 2017 Line No. Item CPUC Generation Distribution Generation % Distribution % 1. TOTAL OPERATING REVENUES 6,322, ,221 5,434, % 85.95% 2. OPERATING EXPENSES: 3. Production 4. Steam 7,342 7, % 5. Nuclear 73,818 73, % 6. Hydro 53,142 53, % 7. Other 120, , % 8. Subtotal Production 255, , % 0.00% 9. Transmission 93,402-93, % 10. Distribution 545, , % 11. Customer Accounts 176, , % 12. Uncollectibles 15,025 2,114 12, % 85.93% 13. Customer Service & Information 39,020 1,259 37, % 96.77% 14. Administrative & General 829, , , % 85.53% 15. Franchise Requirements 57,503 8,078 49, % 85.95% 16. Revenue Credits (156,874) (2,657) (154,217) 1.69% 98.31% 17. Subtotal 1,854, ,885 1,471, % 79.30% 18. Escalation 219,638 43, , % 80.42% 19. Depreciation 1,787, ,096 1,593, % 89.14% 20. Taxes Other Than On Income 21. Property Taxes 238,716 25, , % 89.18% 22. Payroll Taxes & Misc 71,238 10,307 60, % 85.53% 23. Taxes Based On Income 440,238 47, , % 89.31% 24. Total Taxes 750,193 83, , % 88.91% 25. TOTAL OPERATING EXPENSES 4,612, ,198 3,908, % 84.73% 26. NET OPERATING REVENUE 1,710, ,023 1,526, % 89.24% 27. RATE BASE 21,675,341 2,329,409 19,345, % 89.25% 28. RATE OF RETURN 7.89% 7.90% 7.89%

67 Appendix B

68 COST ESCALATION LABOR AND NONLABOR O&M ESCALATION B-1

69 SOUTHERN CALIFORNIA EDISON COMPANY IHS GLOBAL INSIGHT LABOR ESCALATION INDEXES ANNUAL PERCENT CHANGES AND ESCALATION FACTOR TO 2012$ Line No Year Steam Generation Nuclear Generation Hydro Generation Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change % % % % % % % % % % % % % % % Line No Year Other Generation Transmission Distribution Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change % % % % % % % % % % % % % % % Line No Year Customer Accounts CS&I Sales Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change % % % % % % % % % % % % % % % Line No Year Inflation Index A&G %_Change % % % % % B-2

70 SOUTHERN CALIFORNIA EDISON COMPANY IHS GLOBAL INSIGHT LABOR ESCALATION INDEXES ANNUAL PERCENT CHANGES AND ESCALATION FACTOR TO 2012$ Base Year Base Year Base Year Employment Cost Index, Wages and Sal, Private, Management, Business, Financial (2005:4=100) Employment Cost Index, Wages and Sal, Private, Professional and Related (2005:4=100) Utility Price and Wage Indicators, AHE, Transmission and Distribution Workers, ($/hr) O_ECIPWMBFNS % Change O_ECIPWPARNS % Change O_CEU % Change B-3

71 SOUTHERN CALIFORNIA EDISON COMPANY IHS GLOBAL INSIGHT NONLABOR ESCALATION INDEXES ANNUAL PERCENT CHANGES AND ESCALATION FACTOR TO 2012$ Line Year No Steam Generation Hydro Generation Other Generation Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change Line Year No Transmission Distribution Customer Accounts Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change Line No Year Inflation Index A&G@H CS&I Sales %_Change Inflation Index %_Change Inflation Index %_Change B-4

72 O&M Nonlabor Escalation Global Insight Variables and Correspondence to SCE Variables SCE Variable Name Steam Generation Hydro Generation Other Generation Transmission Distribution Customer Accounts CS&I Sales A&G Global Insight Variable Name Global Insight Description Type JEFOMMS Total Steam Production O&M Total Operation and Cost Index (MS) Maintenance JEHOMMS Total Hydro Production O&M Total Operation and Cost Index (MS) Maintenance JEOOMMS Total Other Production O&M Total Operation and Cost Index (MS) Maintenance JETOMMS Total Elec. Trans. O&M Index Total Operation and (MS) Maintenance JEDOMMS Total Elec. Distr. O&M Cost Total Operation and Index (MS) Maintenance JECAOMS Elec. Customer Accounts Operation Cost Index (MS) Operation JECSIOMS Elec. Customer Services and Info. Operation Cost Index (MS) Operation JESALOMS Elec. Sales Expenses Operation Cost Index (MS) Operation JEADGOMMS Total Elec Admin. And General O&M Cost Index (MS) Total Elec. Admin. And General O&M Cost Index Without Healthcare Expenses (MS) Total Operation and Maintenance Total Operation and Maintenance B-5

73 COMPOSITE WAGE ESCALATION B-6

74 Line No. Employee Category O&M Labor Escalation Composite Wage Escalation - Employee Category Share IHS Global Insight Variable IHS Global Insight Variable Description Share of Total Wages 1 Physical Workers CEU Utility Price and Wage Indicators, AHE, Transmission and Distribution Workers % 2 Clerical Workers CEU Utility Price and Wage Indicators, AHE, Transmission and Distribution Workers 8.598% 3 Managers and Employment Cost Index, ECIPWMBFNS Administrators Managers and Administrators % 4 Professional and Employment Cost Index, Wages and ECIPWPARNS Technical Workers Salaries, Prof. and Tech. Workers % 5 Total % B-7

75 O&M Labor Escalation Composite Wage Escalation - Employee Category Share Function Total Wages 2011 Percent share Clerical $ 187,211,343, % Physical $ 523,983,540, % Professional Technical $ 905,822,394, % Manager * $ 560,274,111, % Total $ 2,177,291,389, % * includes executives B-8

76 SOUTHERN CALIFORNIA EDISON COMPANY LABOR ESCALATION INDEXES ANNUAL PERCENT CHANGES AND ESCALATION FACTOR TO 2012$ Line No. Physical Workers Clerical Workers Managers and Administrators Professional and Technical Workers All Employees Inflation Index Employee Category 1 Share of Total Wages % 8.598% % % % 2 Year/Labor Escalation Rate % 2.75% 2.75% 2.75% 2.79% % 2.19% % 2.68% % % _= Indicates collective bargaining agreement B-9

77 PALO VERDE B-10

78 Palo Verde Escalation Line No Year Inflation Index %_Change % % % % % B-11

79 CAPITAL ESCALATION B-12

80 Capital Escalation Handy-Whitman and Global Insight Variables and Correspondence to SCE Variables Line No. SCE Variable Global Insight Variable Handy-Whitman Variable Global Insight Variable Name Region 1 Steam Generation Total Steam Production Plant Total Steam Production Plant JUEPPF@PCF Pacific 2 Hydro Generation Total Hydraulic Prod. Plant Total Hydraulic Prod. Plant JUEPPH@PCF Pacific 3 Other generation Total Other Production Plant Total Other Production Plant JUEPPO@PCF Pacific 4 Transmission Total Transmission Plant Total Transmission Plant JUEPT@PCF Pacific 5 Distribution Total Distribution Plant Total Distribution Plant JUEPD@PCF Pacific 6 Meters Installed (CSBU Dist.) Meters Installed Meters Installed JUEPDMTI@PCF Pacific 7 Nuclear Palo Verde Total Nuclear Production Plant Total Nuclear Production Plant JUEPPN@PLA Plateau B-13

81 SOUTHERN CALIFORNIA EDISON COMPANY IHS GLOBAL INSIGHT CAPITAL ESCALATION INDEXES ANNUAL PERCENT CHANGES AND ESCALATION FACTOR TO 2012$ Line Year No Steam Generation Inflation Index %_Change Hydro Generation Inflation Index %_Change Other Generation Inflation Index %_Change Line Year No Transmission Distribution Meters Installed Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change Line No Year Nuclear Palo Verde Nuclear SONGS General Plant Inflation Index %_Change Inflation Index %_Change Inflation Index %_Change B-14

82 SOUTHERN CALIFORNIA EDISON COMPANY IHS GLOBAL INSIGHT CAPITAL ESCALATION INDEXES ANNUAL PERCENT CHANGES AND ESCALATION FACTOR TO 2012$ Table A14 Cost Trends of Electric Utility Construction: Pacific Region (1973=100) Total Steam Production Plant: % change Total Hydraulic Prod. Plant: % change Total Other Production Plant: % change Total Transmission Plant: % change Total Distribution Plant: % change Cost Trends of Electric Utility Construction: Plateau Region (Palo Verde) Total Nuclear Production Plant: Percent Change Source: Q Power Planner B-15

83 GENERAL PLANT CAPITAL B-16

84 Capital Escalation - General Plant - Spending By FERC Account and Associated Global Insight Variables Line No. FERC Acct Spending Percent of Total Global Insight Variable 1 Account 395 $ 28,576, % JPGDP 2 Account 389 $ 1,486, % JPGDP 3 Account 397 $ 633, % JPIFNREEMISCB 4 Account 398 $ 227,578, % JPIFNREEMISCB 5 Account 399 $ 2,914, % JPIFNREEMISCB 6 Account 390 $ 270,421, % JPIFNRESXF 7 Account 396 $ 11,896, % WPI11 8 Account 391 $ 342,912, % WPI12 9 Account 393 $ 893, % WPI14 10 Account 394 $ 2,324, % WPI14 11 Account 394 $ 4,875, % WPI14 12 Account 392 $ 5,119, % WPI14 13 Total $ 899,632,690 B-17

85 Line No. Global Insight Variable Capital Escalation - General Plant Description of Variables and Weights Global Insight Variable Description Percent of Total 1 JPGDP Chained price index--gross domestic product, 2005=100, BEA 3.34% 2 JPIFNREEMISCB Base for Chained price index--miscellaneous equipment, 2005=100, IHS Global Insight 25.69% 3 JPIFNRESXF Chained price index--nonresidential construction of nonfarm buildings, 2005=100, BEA 30.06% 4 WPI11 Producer price index--machinery & equipment, 1982=1.0, BLS 1.32% 5 WPI12 Producer price index--furniture & household durables, 1982=1.0, BLS 38.12% 6 WPI14 Producer price index--transportation equipment, 1982=1.0, BLS 1.47% 7 Total % B-18

86 Line No. Capital Escalation - General Plant Global Insight Variables, Weights, Global Insight Indexes, and General Plant Index Global Insight Variable 1 WPI % 2 Percent Change 3 WPI % 4 Percent Change 5 JPIFNREEMISC 25.69% 6 Percent Change 7 WPI % 8 Percent Change 9 JPIFNRESXF 30.06% 10 Percent Change 11 JPGDP 3.34% 12 Percent Change General Plant Weight General Plant Escalation Index General Plant Index 15 Percent Change B-19

87 Appendix C

88 2015 General Rate Case Update Testimony Customer Service RSDMA Recorded O&M and Uncollectible Amounts Residential Service Disconnection Memorandum Account Residential Disconnect OIR Impact on Uncollectibles Medical Baseline & Critical Care Expense Customer Contact Center Training Expense C-1

89 SCE WORKPAPER RESIDENTIAL SERVICE DISCONNECTION MEMORANDUM ACCOUNT Line Activity Item # Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 1 Field Disconnection / Visits $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 2 IT System Upgrades , ,922 $ 35,208 3 Call Center $ - 4 Uncollectibles $ - 5 Interest $ 15 6 Total $ - $ - $ - $ - $ - $ - $ - $ 7,286 $ - $ - $ - $ 27,937 $ 35, Line Activity Item # Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 7 Field Disconnection / Visits $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 8 IT System Upgrades $ - 9 Call Center $ - 10 Uncollectibles , $ 417, Interest $ - 12 Total $ - $ - $ - $ 417,719 $ - $ - $ - $ - $ - $ - $ - $ - $ 417, Line Activity Item # Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 13 Field Disconnection / Visits $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 669,640 $ 669, IT System Upgrades ,160 71, , , ,143 $ 539, Call Center $ - 16 Uncollectibles , $ 969, Interest , , $ 3, Total $ - $ - $ 969,152 $ - $ 53,389 $ 71,358 $ - $ - $ - $ 166,117 $ 119,393 $ 802,155 $ 2,181, Line Activity Item # Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 19 Field Disconnection / Visits $ - $ - $ - $ - $ 198,352 $ - $ - $ - $ - $ - $ - $ - $ 198, IT System Upgrades 1,914 11,618-3, , $ 19, Call Center $ - 22 Uncollectibles ,986, ,336, $ 6,322, Interest $ 7, Total $ 2,353 $ 11,970 $ - $ 4,990,082 $ 199,116 $ 653 $ 1,336,746 $ 841 $ 688 $ 3,720 $ 842 $ 689 $ 6,547, Line Item # Activity Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec1 Total 25 Field Disconnection / Visits $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 62,805 $ 62, IT System Upgrades $ - 27 Call Center , $ 32, Uncollectibles ,631, ,853,360 $ 8,484, Interest ,151 1,152 1,152 1,270 1,155 1,155 1,848 $ 12, Total $ 689 $ 689 $ 765 $ 765 $ 4,632,131 $ 1,151 $ 1,152 $ 33,393 $ 1,270 $ 1,155 $ 1,155 $ 3,918,013 $ 8,592, TOTAL $ 17,774,533 1 $3.9M in Uncollectible Expense to be reflected in 1st Quarter 2015 C-2

90 SUPPLEMENTAL WORKPAPER FERC UNCOLLECTIBLE Residential Disconnect OIR Impact on Uncollectible Expense Disconnect OIR Directive Net Write-Off (WO) in 2010 for Participating Accounts Subtract expected Net WO that would occur under normal standard operating collection procedures (If there were no OIR) Incremental Net WO attributable directly to OIR OIR memorandum account for incremental WO over authorized FY2010 level (apply for recovery through rates) Extend Payment Arrangements (2) $ 557,817 $ 351,354 $ 206,463 $ 206,463 Deposit Waive (CARE only) $ 554,531 $ 343,275 $ 211,256 $ 211,256 Total $ 1,112,348 $ 694,629 $ 417,719 $ 417,719 Recorded Net Write-off SCE Revenue (No DWR) Uncollectible Percent Authorized Level Amount Over Authorized FY 2010 FY 2010 Authorized in 2010 FY 2010 $ 24,790,986 $ 10,091, % $ 24,219,138 $ 571,848 Process: (1) Incremental Net Write-off costs for each account that participated in the Disconnect OIR was archived. (2) For accounts with Payment Arrangements (PA), the incremental Net Write-off amount was calculated as the amount over 3 months of usage. (3) On average, SCE loses 2 to 3 months of Energy Revenue for accounts that go to Write-off C-3

91 SUPPLEMENTAL WORKPAPER FERC UNCOLLECTIBLE Residential Disconnect OIR Impact on Uncollectible Expense Disconnect OIR Directive Net Write-Off (WO) in 2011 for Participating Accounts Subtract expected Net WO that would occur under normal standard operating collection procedures (If there were no OIR) Incremental Net WO attributable directly to OIR OIR memorandum account for incremental WO over authorized FY2011 level(apply for recovery through rates) Extend Payment Arrangements (2) $ 3,517,395 $ 1,447,146 $ 2,070,249 $ 734,156 Deposit Waive (CARE only) $ 673,814 $ 462,174 $ 211,640 $ 211,640 In Direct Lieu of Deposit $ 43,722 $ 20,366 $ 23,356 $ 23,356 Total $ 4,234,930 $ 1,929,685 $ 2,305,245 $ 969,152 Recorded Net Write-off SCE Revenue (No DWR) Uncollectible Percent Authorized Level Amount Over Authorized FY 2011 FY 2011 Authorized in 2011 FY2011 $ 25,139,077 $ 10,070,802, % $ 24,169,925 $ 969,152 Process: (1) Incremental Net Write-off costs for each account that participated in the Disconnect OIR was archived. (2) For accounts with Payment Arrangements (PA), the incremental Net Write-off amount was calculated as the amount over 3 months of usage. (3) On average, SCE loses 2 to 3 months of Energy Revenue for accounts that go to Write-off. C-4

92 SUPPLEMENTAL WORKPAPER FERC UNCOLLECTIBLE Residential Disconnect OIR Impact on Uncollectible Expense Disconnect OIR Directive Net Write-Off (WO) in 2012 for Participating Accounts Subtract expected Net WO that would occur under normal standard operating collection procedures (If there were no OIR) Incremental Net WO attributable directly to OIR OIR memorandum account for incremental WO over authorized FY2012 level(apply for recovery through rates) Extend Payment Arrangements (2) $ 9,773,207 $ 4,896,174 $ 4,877,033 $ 4,877,033 Deposit Waive (CARE only) $ 122,930 $ 47,670 $ 75,261 $ 75,261 In Direct Lieu of Deposit $ 51,150 $ 17,071 $ 34,078 $ 34,078 Total $ 9,947,287 $ 4,960,915 $ 4,986,372 $ 4,986,372 Recorded Net Write-off SCE Revenue (No DWR) Uncollectible Percent Authorized Level Amount Over Authorized FY 2012 FY 2012 Authorized in 2012 FY2012 $ 29,939,171 $ 11,243,208, % $ 23,048,577 $ 6,890,594 Process: (1) The incremental Net Write-off costs for each account that participated in the Disconnect OIR was archived. (2) For accounts with Payment Arrangements (PA), the incremental Net Write-off amount was calculated as the amount over 3 months of usage. (3) On average, SCE loses 2 to 3 months of Energy Revenue for accounts that go to Write-off. C-5

93 SUPPLEMENTAL WORKPAPER FERC UNCOLLECTIBLE Residential Disconnect OIR Impact on Uncollectible Expense Disconnect OIR Directive Net Write-Off (WO) in 2013 for Participating Accounts Subtract expected Net WO that would occur under normal standard operating collection procedures (If there were no OIR) Incremental Net WO attributable directly to OIR OIR memorandum account for incremental WO over authorized FY2013 level(apply for recovery through rates) Extend Payment Arrangements (2) $ 8,676,244 $ 4,163,607 $ 4,512,637 $ 4,512,637 Deposit Waive (CARE only) $ 86,918 $ 54,040 $ 32,878 $ 32,878 In Direct Lieu of Deposit $ 216,159 $ 130,308 $ 85,851 $ 85,851 Total $ 8,979,321 $ 4,347,955 $ 4,631,366 $ 4,631,366 Recorded Net Write-off SCE Revenue (No DWR) Uncollectible Percent Authorized Level Amount Over Authorized FY 2013 FY 2013 Authorized in 2013 FY2013 $ 30,446,974 $ 11,611,360, % $ 23,803,288 $ 6,643,686 Process: (1) The incremental Net Write-off costs for each account that participated in the Disconnect OIR was archived. (2) For accounts with Payment Arrangements (PA), the incremental Net Write-off amount was calculated as the amount over 3 months of usage. (3) On average, SCE loses 2 to 3 months of Energy Revenue for accounts that go to Write-off. C-6

94 Residential Disconnect OIR Estimated Impact on Uncollectible Expense subject to true-up in Q Line No. 2014*(estimates) 1 SCE Revenue 12,191,000,000 2 Uncollectible Recorded 28,000,000 3 GRC Authorized Uncollectible Factor 0.205% 4 GRC Authorized Uncollectible Expense 24,991,550 5 Difference = Recorded vs. Authorized 3,008,450 6 Incremental Write-off Due to OIR, line 7 x line 2) 3,853,360 7 estimated OIR Impact as a % of Recorded Unc. Expense for 2014** 13.76% ** Calculation of expected ratio for 2014, line 7 year OIR Incremental Write-off Recorded Unc. Expense OIR Incremental Writeoff Impact as a % of Recorded Unc. Expense ,305,245 25,139, % ,986,372 29,939, % ,631,366 30,446, % 11 Decrease in basis points rate from 2012 to 2013, line 10 minus line % Estimate (2013 combine line 10 with line 11) 13.76% *Estimates for full year 2014 with all the information known as of December 11, 2014 C-7

95 SCE Workpaper Residential Disconnect OIR Medical Baseline & Critical Care Expense Nominal in $ 2013 Line No. Activity Calculation Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2013 Total 1 Medical Baseline a ,494 2 Critical Care b ,105 3 Total Visits c=a+b ,599 4 Total Minutes (15 min per visit) d=c*15 4,425 5,205 6,030 6,480 6,000 5,670 5,175 38,985 5 Total Actual Number of Hours) e=d/ RSS OIR Disconnect Costs* f=e*$33.45 $ 2, $ 2, $ 3, $ 3, $ 3, $ 3, $ 2, $ 21, * Based on 2013 IBEW preliminary wage schedule for an FSR Line No. Activity Calculation Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2014 Total 7 Medical Baseline a ,859 8 Critical Care b ,932 9 Total Visit c=a+b , Total Minutes (15 min per visit) d=c*15 8,040 9,045 8,580 8,475 5,760 6,105 5,205 4,665 5,220 6,090 4,680-71, Total Actual Number of Hours) e=d/ , RSS OIR Disconnect Costs* f=e*$34.29 $ 4, $ 5, $ 4, $ 4, $ 3, $ 3, $ 2, $ 2, $ 2, $ 3, $ 2, $ - $ 41, ** Based on 2013 IBEW preliminary wage schedule for an FSR 2 with a 2.51% escalation for June Dec 2014 Total $ 62, C-8

96 SCE Workpaper Residential Disconnect OIR Customer Contact Center Training Expense Labor: Customer Contact Center employee training expense to respond to customers regarding new practices associated with the Residential Disconnect OIR. Line No. a b c = a*b d e = c*d f g = e+f Hours per # of Total Blended Total Direct Paid Total 1 Activity Employee Employee Employees Hours Rate Labor Absence Labor 2 Seat Time Customer Service Rep ,070 $ $ 24,214 $ 5,037 $ 29,251 3 Training Delivery Instructor $ $ 2,476 $ 515 $ 2,991 4 Totals 540 1,143 $ 26,690 $ 5,552 $ 32,241 C-9

97 Appendix D

98 2015 General Rate Case Update Testimony Customer Service Postage U.S. Postal Service Announces New Prices for 2014 United States Postal Service Notice of Market-Dominant Price Adjustment Postal Regulatory Commission Approves Postal Service Request for Exigent Rate Increase; Rejects Permanent Price Increase D-1

99 FOR IMMEDIATE RELEASE Sept. 25, 2013 Contact: Katina Fields (o) (c) usps.com/news Release No U.S. Postal Service Announces New Prices for 2014 Price increases expected to generate $2 billion in new revenue to improve financial situation WASHINGTON The United States Postal Service today announced proposed price changes, including an increase in the price of a First-Class Mail single-piece letter from 46 cents to 49 cents. The proposed changes, which would go into effect in January 2014, are intended to generate $2 billion in incremental annual revenue for the Postal Service. Highlights of the new single-piece First-Class Mail pricing, effective Jan. 26, 2014 include: Letters (1 oz.) 3-cent increase to 49 cents Letters additional ounces 1-cent increase to 21 cents Letters to all international destinations (1 oz.) $1.15 Postcards 1-cent increase to 34 cents Stamp prices have stayed consistent with the average annual rate of inflation of 4.2 percent since the Postal Service was formed in Pricing for Standard Mail, Periodicals, Package Services and Extra Services also will be adjusted as part of a filing to the Postal Regulatory Commission (PRC) scheduled to take place Sept. 26. The Governors of the Postal Service voted Sept. 24 to seek price increases above the typical annual increases associated with changes in the Consumer Price Index (CPI). In a letter disseminated to customers today, Board of Governors Chairman Mickey Barnett described the precarious financial condition of the Postal Service and the uncertain path toward enactment of postal reform legislation as primary reasons for seeking price changes above the CPI increase. He also indicated that the price adjustment above the CPI increase is necessary in order to ensure that the Postal Service will be able to maintain and continue the development of postal services of the type and quality which America needs. Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges, said Barnett in the letter. However, if these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy. We are encouraged by the recent introduction of comprehensive postal reform legislation in Congress, and despite an uncertain legislative process, we are hopeful that legislation can be enacted this year. D-2

100 2 Except in exceptional or extraordinary circumstances, postage price increases are capped at the rate of inflation as measured by the CPI-U. The Postal Service is filing a price increase above CPI-U due to extraordinary and exceptional circumstances which have contributed to continued financial losses. The Postal Service recorded a $15.9 billion net loss last fiscal year and expects to record a loss of roughly $6 billion in the current fiscal year, and has an intolerably low level of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits. The PRC will review the prices before they become effective Jan. 26, 2014, and must agree the prices are consistent with applicable law. The new price proposals are scheduled to be filed Sept. 26 and will be available on the PRC website at and also will be available at The full text of the Board chairman s letter sent to postal customers about the pricing decision will be available later today at the following link: The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations. # # # For reporters interested in speaking with a regional Postal Service public relations professional, please go to Please Note: For broadcast quality video and audio, photo stills and other media resources, visit the USPS Newsroom at A self-supporting government enterprise, the U.S. Postal Service is the only delivery service that reaches every address in the nation: 152 million residences, businesses and Post Office Boxes. The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations. With more than 31,000 retail locations and the most frequently visited website in the federal government, usps.com, the Postal Service has annual revenue of more than $65 billion and delivers nearly 40 percent of the world's mail. If it were a private-sector company, the U.S. Postal Service would rank 42nd in the 2012 Fortune 500. The Postal Service has been named the Most Trusted Government Agency for seven years and the fourth Most Trusted Business in the nation by the Ponemon Institute. Follow the Postal Service on twitter.com/usps and at facebook.com/usps D-3

101 Postal Regulatory Commission Submitted 9/26/2013 1:52:24 PM Filing ID: Accepted 9/26/2013 BEFORE THE POSTAL REGULATORY COMMISSION WASHINGTON, D.C NOTICE OF MARKET-DOMINANT PRICE ADJUSTMENT Docket No. R UNITED STATES POSTAL SERVICE NOTICE OF MARKET-DOMINANT PRICE ADJUSTMENT (September 26, 2013) Pursuant to section 3622 of title 39 and 39 C.F.R. part 3010, the United States Postal Service hereby provides notice that the Governors have authorized the Postal Service to adjust the prices for its market-dominant products. This adjustment will take effect at 12:01 a.m. on January 26, 2014, and affects all the market-dominant classes. This Notice is being filed today along with the Postal Service s Renewed Exigent Request of the United States Postal Service in Response to Commission Order No (Exigent Request). 1 In this Notice, the Postal Service provides the information required by Rule , including a schedule of the new prices set forth in Attachment A. 2 The Postal Service certifies that it will inform customers of these price adjustments, as required by Rule (a)(3). In addition to this Notice, the Postal Service is publishing notice of these price changes on USPS.com, the Postal Explorer website, and the DMM News Advisory, as well as issuing a Press Release announcing the changes. Thus, widespread notice of these prices is being given prior to their planned implementation 1 See Docket No. R2010-4, Renewed Exigent Request of the United States Postal Service in Response to Commission Order No. 1059, Section VIII (September 26, 2013). 2 Attachment A also contains the proposed Mail Classification Schedule changes. 1 D-4

102 date. Furthermore, the Postal Service plans to provide public notice of these price changes in future issues of the PCC Insider, Postal Bulletin, and Federal Register. The Postal Service, pursuant to Rule (a)(4), identifies Mr. Steve Monteith as the official who will be available to provide responses to queries from the Commission. Mr. Monteith s contact information is as follows: Mr. Steve Monteith Manager, Pricing 475 L Enfant Plaza S.W. Room 4136 Washington, D.C The remainder of this Notice is structured as follows. In Part I, the Postal Service discusses its compliance with the price cap, which limits the average percentage price increase for each class of mail. In Part II, the Postal Service describes several temporary promotions that it is proposing as part of this filing. In Part III, the Postal Service provides a more detailed discussion of its prices, including the workshare discounts associated with the new prices. It also explains how the prices are consistent with the objectives and factors of section 3622, and the preferential pricing requirements of section In Part IV, the Postal Service describes the changes to the Mail Classification Schedule (MCS) related to this price change. I. Price Cap Compliance In compliance with Rules (b)(1) through (4), the following section discusses and describes the applicable CPI-U price cap, the amount of unused price adjustment authority available for each class of mail, the percentage change in prices for each class of mail, and the amount of any new unused price adjustment authority generated by this price change. 2 D-5

103 A. Inflation-Based Price Adjustment Authority Based on the most recently available data from the Bureau of Labor Statistics, the Postal Service has inflation-based price adjustment authority of percent for Special Services and percent for all other mail classes. See Attachment C. This is based on the Consumer Price Index All Urban Consumers, U.S. All Items (the CUUR0000SA0 series), and is in accordance with the calculated percentage currently provided on the Commission s website. B. Unused Price Adjustment Authority The existing unused rate authority, by class, is provided below. 3 Table 1 Available Unused Price Adjustment Authority, By Mail Class Class Unused Authority (%) First-Class Mail Standard Mail Periodicals Package Services Special Services C. Overall Price Adjustment Authority In accordance with 39 C.F.R , the Postal Service can use up to two percent of unused price adjustment authority for the Special Services class. Thus, the Postal Service is authorized to raise the prices for each class by the following percentages: 3 Order No. 1541, at 9, 62, 68; Order No at 3. The banked amounts established in Docket No. R include unused price adjustment authority from Docket No. R (Order Nos. 66 and 69), which has since expired. Thus, the banked amounts in Table 1 are those reported in Order Nos and 1573, minus the banked amounts reported from Order Nos. 66 and D-6

104 Table 2 Price Adjustment Authority By Mail Class Class Price Adjustment Authority (%) First-Class Mail Standard Mail Periodicals Package Services Special Services D. The New Prices The cap compliance calculation, as defined by the Commission, uses a set of fixed weights applied to the current and new prices to construct a weighted average price change for each market-dominant class. These fixed weights are the most recent twelve months of Postal Service billing determinants, with adjustments that are supported and reasonable. For example, these adjustments include elimination of rate cells active in the previous year, and the consequent assignment of billing determinants to more applicable rate cells. For each of the five classes (First-Class Mail, Standard Mail, Periodicals, Package Services, and Special Services), the resulting average price change must be less than or equal to the Postal Service s available price adjustment authority in Table 2. The new prices are in Attachment A. For each class, the Postal Service has prepared separate workpapers demonstrating how these prices comply with the price cap. These workpapers are designated as follows: USPS-LR-R /1 USPS-LR-R /2 First-Class Mail Workpapers Standard Mail Workpapers 4 D-7

105 USPS-LR-R /3 USPS-LR-R /4 USPS-LR-R /5 USPS-LR-R /NP1 Periodicals Workpapers Package Services Workpapers Special Services Workpapers First-Class Mail International Workpapers Each set of workpapers has a Preface that explains the contents in detail. The Preface in each of the first five workpapers provides an overview, a discussion of any necessary adjustments to the billing determinants for the four quarters ending Q3 FY 2013, and an explanation of the revenue calculations. E. Percentage Change by Mail Class As demonstrated in USPS-LR-R2013-1/1 through 5, the prices for each class comply with the annual limitation of price adjustment authority available to the Postal Service. The percentage change by class is as follows: Table Price Change Percentage by Mail Class Class Percent Change First-Class Mail Standard Mail Periodicals Package Services Special Services F. Unused Pricing Authority Resulting From this Change For Periodicals and Package Services, this change adds to the unused pricing authority resulting from prior market-dominant price changes under the price cap. The 5 D-8

106 Postal Service calculates the unused price adjustment authority that it will have following this price change as follows: 4 Table 4 Unused Pricing Authority Available Following this Price Change Class Percentage Points First-Class Mail R2013-1[1] R [2] Total Standard Mail R [1] R [2] Total Periodicals R [1] R [2] Total Package Services R [1] R [2] Total Special Services R R [2] Total [1] Table 1. [2] Cap Calculation worksheets (USPS-LR-R /1 through 5). II. Promotions and Incentives As was the case in Docket No.R2013-1, in this filing the Postal Service seeks approval for a total of eight promotions, and one incentive, to be held during Calendar Year By seeking approval for these promotions and incentives in this price 4 To the extent that the calculated percentage change for any class is revised during the course of this proceeding (or upon the resolution of Docket No. R2010-4R) from what has been calculated by the Postal Service in this Notice, the Postal Service notes that the unused price adjustment authority should be adjusted, regardless of the figures set forth in this Table. 6 D-9

107 Postal Regulatory Commission Postal Regulatory Commission 901 New York Avenue, NW Suite 200 Washington, DC Phone: Fax: Contact: Gail Adams Press Release December 4, 2014 PRC Approves Postal Service Request for Exigent Rate Increase; Rejects Permanent Price Increases Washington, DC Today the Postal Regulatory Commission issued Order No in Docket R partially approving a request by the Postal Service for an exigent rate increase to offset losses suffered as a result of the Great Recession of In its majority decision, the Commission found that the Postal Service experienced financial harm as a result of the Great Recession and is legally entitled to implement price increases in excess of the CPI cap for less than two years. The Commission denied the Postal Service s request to make the increases permanent. It found allowing the increases to remain in effect indefinitely would be inconsistent with fundamental postal policies underlying the price cap. The Commission s decision closely follows the law we are charged by the President and Congress to uphold, said Commission Chairman Ruth Y. Goldway. The Postal Service will be reimbursed for exigent losses that can be reasonably quantified. We have determined that amount to be $2.8 billion to cover the 25.3 billion pieces of volume lost between 2008 and The funds will come from a rate surcharge that will last just long enough to recover the loss, she added. The Postal Accountability and Enhancement Act of 2006 requires the Postal Service to demonstrate to the Commission its need for an exigent price increase above the CPI cap by describing the exigent circumstances and showing why they necessitate the increase, showing that the proposed rates are reasonable and equitable, and describing the circumstances under which the increases could be rescinded or reduced. The Commission determined that the proposed price increases were reasonable in amount, equitable in that they are approximately equal for all categories of mail, and necessary to maintain and continue needed postal services. However, the Commission also concluded that the Postal Service conflated losses that are a result of internet diversion with losses that were a result of the Great Recession, and that it failed to provide justification for permanent price increases in connection with recession-related mail volume losses. In its order, the Commission directed the Postal Service to report quarterly on revenues generated by the rate increases, and to develop a plan to phase out the rates once they have produced the revenue justified by their request. The 4.3 percent exigent rate increases are scheduled to be implemented in conjunction with the inflation-based rate adjustment of 1.7 percent (one cent for ordinary mailers), approved earlier by the Commission. The overall adjustment is 6.0 percent (a total of three cents from 2013 rates or 49 cents). D-10

108 - 2 - The Commission s decision was issued on a 2-1 vote. The Postal Regulatory Commission is an independent federal agency that provides regulatory oversight over the U.S. Postal Service to ensure the transparency and accountability of the Postal Service and foster a vital and efficient universal mail system. The Commission is comprised of five Presidentially-appointed and Senate-confirmed Commissioners, each serving terms of six years. The Chairman is designated by the President. In addition to Chairman Goldway, the other Commissioners are Vice Chairman Robert Taub, and Mark Acton. D-11

109 Appendix E

110 Consulting Retirement SOUTHERN CALIFORNIA EDISON COMPANY SOUTHERN CALIFORNIA EDISON COMPANY RETIREMENT PLAN PROJECTED ACTUARIAL VALUATION RESULTS PLAN YEARS: 2014 TO 2020 DATE OF REPORT: DECEMBER 2, 2014 E-1