2018 General Rate Case Rebuttal Testimony

Transcription

1 Application No.: A Exhibit No.: SCE-23, Vol. 01 Witnesses: D. Daigler D. McMullen T. Guntrip D. Neal P. Jeske S. Schuffels K. Landrith (U 338-E) 2018 General Rate Case Rebuttal Testimony Operational Services (OS) Volume 1 Before the Public Utilities Commission of the State of California Rosemead, California June 16, 2017

2 SCE-23: Operational Services (OS) Volume 01 Table Of Contents Section Page Witness I. BUSINESS RESILIENCY...1 D. Daigler A. Business Resiliency Business Resiliency O&M Forecast Summary...1 Business Resiliency Capital Forecast Summary...2 B. O&M Expenses Business Resiliency Administrative and General Expenses: FERC Account 920/ a) b) c) d) SCE Application...3 ORA s Position...4 SCE s Rebuttal to ORA s Position...4 Conclusion...6 C. Capital Expenditures Seismic Assessment and Mitigation Program...7 a) b) c) d) SCE s Application...7 SBUA s Position...7 SCE s Rebuttal to SBUA s Position...7 Conclusion...9 II. CORPORATE ENVIRONMENTAL SERVICES...10 D. Neal A. Corporate Environmental Services Corporate Environmental Services O&M Forecast Summary...10 Corporate Environmental Services Capital Forecast Summary...11 B. O&M Expenses i-

3 SCE-23: Operational Services (OS) Volume 01 Table Of Contents (Continued) Section Page Witness 1. San Dieguito Wetlands and Wheeler North Reef: FERC Account a) b) c) SCE Application...12 SDG&E s Position...13 SCE s Rebuttal to SDG&E s Position...13 (1) SCE agrees with SDG&E s proposed 20% share and overhead costs for Marine Mitigation with escalation III. CORPORATE HEALTH AND SAFETY...15 P. Jeske A. Corporate Health and Safety Corporate Health and Safety O&M Forecast Summary...15 B. O&M Expenses Corporate Health & Safety FERC Account a) b) SCE Application...16 ORA...17 (1) (2) ORA Position...17 SCE s Rebuttal to ORA s Position...18 c) Conclusion...22 IV. CORPORATE SECURITY...23 D. McMullen A. Corporate Security Corporate Security O&M Forecast Summary...23 Corporate Security Capital Forecast Summary...24 V. SUPPLY MANAGEMENT...25 K. Landrith A. Supply Management ii-

4 SCE-23: Operational Services (OS) Volume 01 Table Of Contents (Continued) Section Page Witness Supply Management O&M Forecast Summary...25 Supply Management Capital Forecast Summary...26 B. O&M Expenses Supply Management FERC Accounts 920/ a) b) SCE Application...26 SBUA...27 (1) (2) SBUA s Position...27 SCE s Rebuttal to SBUA s Position...28 VI. SUPPLIER DIVERSITY...30 S. Schuffels A. Supplier Diversity and Development Supplier Diversity and Development O&M Forecast Summary...30 B. National Diversity Council NDC Position...31 SCE s Rebuttal to NDC s Position...31 VII. TRANSPORTATION SERVICES...33 T. Guntrip A. Transportation Services TSD s Operating Cost Forecast Summary...33 TSD s Capital Forecast Summary...34 B. Operating Costs Operating Costs Non-Fuel...36 a) b) SCE Application...36 TURN s Position iii-

5 SCE-23: Operational Services (OS) Volume 01 Table Of Contents (Continued) Section Page Witness c) d) SCE s Rebuttal to TURN s Position...37 Conclusion Operating Costs Fuel...38 a) a) SCE Application...38 TURN s Position...39 (1) (2) (3) TURN uses a lower forecast of the 2018 per-gallon price of gasoline...40 TURN uses a lower forecast of the 2018 per gallon price of diesel...40 TURN removes the forecast for costs associated with diesel fuel pumping services...40 b) SCE s Rebuttal to TURN s Position...40 (1) (2) (3) SCE accepts TURN s 2018 pergallon estimate for price of gasoline...40 SCE accepts TURN s 2018 per gallon estimate for price of diesel...41 SCE contests TURN s recommendation to remove costs associated with diesel fuel pumping services...41 c) Conclusion...42 Appendix A: Business Resiliency Workpapers... Appendix B: Corporate Health and Safety Workpapers... Appendix C: Transportation Services Workpapers... D. Daigler P. Jeske T. Guntrip -iv-

6 I. BUSINESS RESILIENCY A. Business Resiliency SCE s Business Resiliency organization provides company-wide governance and program management for business continuity, disaster recovery, assessment and mitigation, and emergency planning and response programs. Business Resiliency establishes and manages company-wide protocols and maintains consistency with national standards and industry best practices. The organization provides the direction and oversight needed for SCE to meet applicable regulatory mandates and standards. Business Resiliency s Plans and Programs, Emergency Management Operations, and Governance and Analytics teams establish, implement and manage multiple projects including assessment and mitigation plan development, training and exercise programs, a 24/7 Watch Office, incident response operations and various internal and external engagement activities Business Resiliency O&M Forecast Summary Table I-1 provides a summary of the 2018 O&M expense forecast for SCE, 2 the Office of Ratepayer Advocates (ORA), and The Utility Reform Network (TURN) and the variance from SCE s forecast. TURN does not contest Business Resiliency s O&M forecast. ORA contests the addition of an analyst to support Emergency Management Operations training and exercise activities. SCE addresses ORA s position in Section B of this testimony. 1 Refer to Exhibit SCE-07, Vol. 1, pp Refer to Exhibit SCE-07, Vol. 1, pp

7 Table I-1 Business Resiliency 2018 O&M Forecast by FERC Account Summary of SCE, ORA, and TURN Positions Constant 2015 $ Forecast Variance From SCE Forecast Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position Administrative and General Salaries/Office 1 Supplies and Expenses FERC 920/921 $ 6,431 $ 6,357 NC $ (74) NC $ 6,431 Seismic Assessment and Mitigation Program 2 FERC 935 $ 1,533 NC NC NC NC $ 1,533 3 Total $ 7,964 $ 6,357 NC $ (74) NC $ 7,964 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. 2. Business Resiliency Capital Forecast Summary Table I-2 provides a summary of Business Resiliency s capital expenditure forecast for SCE. 3 ORA recommends adopting Business Resiliency s 2016 recorded capital expenditures in place of the 2016 capital forecast and adopting Business Resiliency s 2017 and 2018 forecast. 4 SCE s rebuttal position in the table below is updated to reflect 2016 recorded capital expenditures. TURN does not contest SCE s Business Resiliency capital expenditure forecast. While Small Business Utility Advocates (SBUA) does not submit a proposed forecast, SBUA presents testimony that comments on the Seismic Assessment and Mitigation Program. SCE responds to SBUA s comments in Section C of this testimony. Table I-2 Business Resiliency Capital Expenditures Forecast Summary of SCE, ORA, and TURN Positions Nominal $000 Forecast Variance From SCE Forecast Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position 1 Seismic Assessment and Mitigation Program $ 71,519 $ 69,201 NC $ (2,318) NC $ 69,201 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. 3 Refer to Exhibit SCE-07, Vol. 1, pp Refer to Exhibit ORA-16, pp

8 B. O&M Expenses Business Resiliency O&M expenses are recorded and forecast in the FERC Accounts shown in Table I-3. The table provides the recorded amounts for and the forecast for 2018 for SCE, ORA, and TURN. ORA proposed changes to the Business Resiliency forecast for FERC Account 920/921. Table I-3 Business Resiliency O&M by FERC Account Recorded / 2018 Forecast Summary of SCE, ORA, and TURN Positions Constant 2015 $000 Line No. FERC Accont 1 920/21 Description Recorded SCE Application ORA TURN 2018 Forecast SCE Rebuttal Position Administrative and General Salaries/Office Supplies and Expenses $ 2,587 $ 1,934 $ 2,559 $ 5,328 $ 6,230 $ 6,431 $ 6,357 NC $ 6, Seismic Assessment and Mitigation Program $ - $ - $ - $ - $ - $ 1,533 NC NC $ 1,533 3 Total $ 2,587 $ 1,934 $ 2,559 $ 5,328 $ 6,230 $ 7,964 $ 6,357 NC $ 7,964 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested Business Resiliency Administrative and General Expenses: FERC Account 920/921 a) SCE Application Business Resiliency s Administrative and General (A&G) expenses fund ongoing operations and strategic improvements to SCE s business resiliency assessment and mitigation planning, training and exercise program, and emergency response capabilities including the operation of SCE s 24/7 Watch Office. 5 The 2018 A&G forecast is based on the last year recorded with an incremental labor increase of $201,000 for the addition of an analyst to support Emergency Management Operations training and exercises and a project manager to support the Seismic Assessment and Mitigation Program. 6 Table I-4 provides the Business Resiliency s A&G expenses from and the 2018 forecast for labor and non-labor expenses for SCE, ORA, and TURN. 5 Refer to Exhibit SCE-07, Vol. 1, pp Refer to Exhibit SCE-07, Vol. 1, pp

9 Table I-4 Business Resiliency Administrative and General Expenses - FERC Account 920/921 Recorded / 2018 Forecast Summary of SCE, ORA, and TURN Positions Constant 2015 $000 Variance From SCE 2018 Forecast Application Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position 1 Labor $ 1,427 $ 1,462 $ 1,729 $ 2,965 $ 3,510 $ 3,711 $ 3,637 NC $ (74) NC $ 3,711 2 Non-Labor $ 1,160 $ 472 $ 830 $ 2,363 $ 2,720 $ 2,720 $ 2,720 NC $ - NC $ 2,720 3 Total $ 2,587 $ 1,934 $ 2,559 $ 5,328 $ 6,230 $ 6,431 $ 6,357 NC $ (74) NC $ 6,431 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested b) ORA s Position ORA recommends disallowing $74,000 to fund an analyst to support Emergency Management Operations training and exercise activities. ORA states: 7 A workload study was not provided to support SCE s request. The information SCE provided in relation to the duties and salaries of the two new positions does not support SCE s request for both positions. Business Resiliency can operate sufficiently with the addition of the project manager only to support the Seismic Assessment and Mitigation Program. ORA states that adding both positions is excessive and burdensome. The ORA recommends $3.637 million for Business Resiliency Labor, which is $74,000 less than SCE s request of $3.711 million in Test Year c) SCE s Rebuttal to ORA s Position From 2013 to 2016, SCE expanded its emergency response program by doubling the number of members staffing its Incident Support Teams (IST) and Incident Management Teams (IMT) to provide 24/7 coverage over multiple operational periods. This significant increase in workload to train and drill approximately 300 new members and support qualified personnel for IST/IMT, is required to help ensure the teams are adequately prepared and ready to respond in the event of a disaster. The additional analyst is required to support the effectiveness of the training and exercise program that 7 Refer to Exhibit ORA-16, p. 5. 4

10 supports the effectiveness of the incident response teams during an emergency to recover and restore power to our customers and the communities we serve as quickly as possible. ORA states that a workload study was not provided to support SCE s request. While a formal workload study was not conducted, it became apparent with 300 new IST/IMT members and the associated increased workload to locate, select, and engage with new members and obtain their qualifications for IST/IMT that the one existing analyst could no longer provide the support required for the teams. With the expansion from 18 to 36 teams, the workload to coordinate required emergency management activities became too much for a single analyst to manage. In 2016, Business Resiliency contracted a supplemental worker to support the increased volume and workload for the emergency management training and exercise program. Because SCE identified that this support is needed on an on-going basis, and the non-labor cost of a supplemental analyst is greater than the labor cost of an SCE analyst, SCE filled this position with a full time analyst position within Business Resiliency. ORA states that the information SCE provided in relation to the duties and salaries of the two new positions does not support SCE s request for both positions. The job duties and salary information SCE provided ORA 8 was based on SCE s general job classification descriptions and not specific to the Emergency Management and Seismic functions. To clarify further, the specific ongoing responsibilities for the Emergency Management analyst position include: (1) tracking IST/IMT team assignments and weekly duty rosters, (2) scheduling Incident Command System (ICS) training and tabletop, functional and full scale exercise participation, (3) coordinating contractor provided ICS training and public agency exercise participation, (4) invoicing for all logistical requirements and contractors, (5) updating ICS course descriptions and revising curriculum, (6) modifying specialized ICS course content and exercise documentation, (7) tracking, monitoring and reporting on IST/IMT team qualification/requalification requirements, and (8) providing logistical and technology support for exercises and real world emergency activations of our emergency response teams. ORA suggests that SCE can operate sufficiently with the only staff addition being a project manager to support the Seismic Assessment and Mitigation Program. The Seismic Assessment and Mitigation Program is a newly created program that requires an experienced project manager to work collectively with external seismic experts and SCE staff in the Transmission & Distribution, Generation, and Corporate Real Estate organizational units. Improvements to SCE infrastructure and 8 Refer to ORA-SCE-Verbal-028, Question 8. 5

11 facilities are essential to provide for the safety of our workers, first responders and the public. The Training and Exercise program analyst position is independent from the Seismic Assessment & Mitigation project manager as this analyst is required to support the increased work volume associated with the IST/IMT members to better prepare SCE to respond to an emergency. Given SCE s expansive and diverse service territory, the utility requires ample resources to support its incident response efforts and maintain grid reliability for the customers and communities it serves. Considering the expanded scope of the training and exercise program, the increased complexity of integrating the business continuity and disaster recovery plans, and SCE s need to engage with and establish public sector partnerships, SCE respectfully disagrees with ORA s position and requests the Commission approve the analyst to support the training and exercise program essential for SCE s response and recovery teams. d) Conclusion Based on the increased number of IST/IMT team members (540 total), SCE s request for an additional analyst is needed to support the training and exercise program. These incident teams support the effectiveness of SCE s response during an emergency and our efforts to recover and restore power as quickly as possible for our customers and the communities we serve. C. Capital Expenditures Business Resiliency capital expenditures allow SCE s Seismic Assessment and Mitigation Program to perform detailed site assessments and high-priority seismic mitigation work on certain electric and generation infrastructure and non-electric facilities. Table I-5 below shows recorded amounts for and the forecast for SCE. SCE has updated its rebuttal forecast to reflect 2016 recorded expenditures. ORA recommends adopting Business Resiliency s 2016 recorded capital expenditures in place of the 2016 capital forecast and does not contest SCE s forecast. TURN does not contest Business Resiliency s capital forecast. SBUA presents testimony that comments on the Seismic Assessment and Mitigation Program, however, SBUA does not provide a proposed capital forecast. 9 Because the Seismic Assessment and Mitigation Program was launched in 2016, there are no recorded costs for this program prior to

12 Table I-5 Business Resiliency Capital Expenditures 2016 Recorded / Forecast Summary of SCE, ORA, and TURN Positions Nominal $ Seismic Assessment and Mitigation Program a) SCE s Application The Seismic Assessment and Mitigation Program will manage seismic work across three SCE organizations: (1) Transmission and Distribution will assess and mitigate electric infrastructure, (2) Corporate Real Estate will assess and mitigate non-electric facilities, and (3) Power Supply will assess and mitigate generation systems. The work is needed to mitigate impacts to safety and service reliability and to support the customers and communities served arising from significant seismic events. 10 b) SBUA s Position SCE Recorded SCE Forecast ORA TURN Total Total Total SBUA believes that the detail and the specificity of the testimony and workpapers related to the Seismic Assessment and Mitigation Program are insufficient to justify SCE s request. SBUA expresses concern that, due to the lack of detail, SCE may spend funds authorized for this program on other capital projects that are not tied to the seismic projects. SBUA asks the Commission to require that SCE break down its request into specific projects. SBUA does not present a proposed forecast for the Seismic Assessment and Mitigation Program. 11 c) SCE s Rebuttal to SBUA s Position SCE Rebuttal Forecast Total Line No. Description 1 Seismic Assessment and Mitigation Program $ 4,019 $ 31,261 $ 33,921 $ 65,182 $ 65,182 NC $ 65,182 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. SBUA s testimony make conclusory assertions about the actual costs of assessments and work projected without citation to any contrary evidence and does not provide a definitive recommendation on the capital forecast. SCE s application, on the other hand, provides detail, 10 Refer to Exhibit SCE-07, Vol. 1, pp Refer to SBUA Michael Brown Opening Testimony, pp

13 specificity, and justification to support its request for the Seismic Assessment and Mitigation program. Specifically, SCE operates in one of the most seismically active areas in the United States. In its 2015 report, the United States Geological Survey (USGS) introduced its latest earthquake model, the third Uniform California Earthquake Rupture Forecast (UCERF3). 12 The UCERF3 model shows a prediction rate for earthquakes in Southern California with magnitudes between 5.0 and 8.0 greater than that in prior published earthquake models. According to the USGS report, the increased threat is due to the many interconnected faults in California. These interconnected faults can trigger seismic activities in one another, increasing the probability of multi-fault ruptures. This probability is significant due to the number of faults interconnected with the San Andreas fault, the fault most likely to be the source of the most catastrophic earthquakes in the state. The report also reveals that the number of known faults in California is 250,000, not 10,000 as previously reported, and more faults are expected to be discovered. The report supports recent predictions there is a 60 percent chance Southern California will experience a magnitude 6.7 earthquake in the next 30 years and a 46 percent chance an even higher magnitude earthquake will occur. Contrary to SBUA s portrayal of SCE s request as painting possible doomsday scenarios, these undisputed predictions drive SCE s focus on preparing for and mitigating the potential impacts of moderate to large-scale earthquakes. SCE s direct testimony and supporting workpapers provide detailed breakdowns of the assessments and mitigation work needed for various electric and non-electric facilities. 13 The assessments involve actual site investigations performed by third party seismic engineering experts using the USGS probabilistic scenarios and seismic maps. Those assessments have been and will continue to be used to calculate the scope and cost of the mitigation work needed. 14 SBUA s testimony does not appear to dispute the need to conduct assessments to determine the full scope of mitigation work needed at those facilities or the value to be gained from performing mitigation work as requested. Rather, SBUA s testimony makes unsupported assertions that SCE will spend authorized funds on other non-seismic capital projects. 12 Refer to Exhibit SCE-07, Vol. 1, p. 19 and see Appendix A, pp. 2-7 for UCERF3, A New Earthquake Forecast for California s Complex Fault System. 13 Refer to Exhibit SCE-07, Vol. 1, pp and Exhibit WP SCE-07, Vol. 1, pp Refer to Exhibit SCE-07, Vol. 3, pp

14 SCE has no intention of using dollars forecast for Seismic Assessment and Mitigation for other SCE capital projects. The creation of the Seismic Assessment and Mitigation program is a direct result of SCE s commitment to spend capital on mitigating seismic risks. In 2016, SCE centralized ongoing seismic improvement projects into Business Resiliency. Business Resiliency has developed a new process to combine seismic assessments and created a team to prioritize the mitigation work and oversee the funding for infrastructure and facilities projects. This centralized program consolidates a dedicated portion of spending from multiple organizational units for seismic projects and not for other capital projects. Further, this program prioritizes mitigation projects and funding with a focus on keeping people safe and minimizing interruptions in electric service. d) Conclusion SBUA makes a vague unfounded argument that contests SCE s need to assess and mitigate the seismic risk of our infrastructure. Seismic improvements to SCE infrastructure and facilities are essential to support the safety of our workers, first responders, and the public and to reinforce our ability to perform critical operations and business functions during and following a major earthquake. Therefore, SCE requests the Commission approve the Seismic Assessment and Mitigation program rebuttal forecast of $ million for detailed site assessments and prioritized seismic mitigation work. 9

15 II. CORPORATE ENVIRONMENTAL SERVICES A. Corporate Environmental Services The primary responsibility of Corporate Environmental Services (CES) is the coordination of activities involving various public, private, and governmental agencies and organizations on environmental matters and issues that affect company operations, including legislative, regulatory, compliance trends, and policies. CES also supports non-capitalized project environmental siting, licensing, permitting, project construction mitigation, monitoring, and reporting. 15 Southern California Edison s (SCE) O&M expenses and capital expenditures forecast for CES is to protect the natural resources in our communities through environmental compliance. By managing environmental compliance programs and complying with mandatory maintenance and monitoring of reef and wetlands, and securing and deconstructing wells no longer in use, SCE fulfilling its obligation in accordance with applicable environmental, safety, regulatory, and engineering standards to mitigate environmental impacts. 1. Corporate Environmental Services O&M Forecast Summary The forecast of CES s O&M expenses for SCE, Office of Ratepayer Advocates (ORA), The Utility Reform Network (TURN), and San Diego Gas and Electric (SDG&E) follow. Table II-6 provides a summary of the 2018 O&M forecast. No party contested SCE s CES O&M forecast. SDG&E submitted testimony requesting recovery for their costs related to the San Dieguito Wetlands and Wheeler North Reef costs proposed by SCE. SCE addresses SDG&E s testimony B.1 of this testimony. Table II-6 Corporate Environmental Services 2018 O&M Forecast by FERC Account Summary of SCE, ORA, and TURN Positions Constant 2015 $ Forecast Variance From SCE Forecast Line No. Description SCE Application ORA TURN SDG&E ORA TURN SDG&E SCE Rebuttal Position 1 A&G Accounts FERC 920, 921 $ 10,618 NC NC NC $ 10,618 2 San Dieguito Wetlands & Wheeler North Reef Account FERC 921 $ 3,493 NC NC NC $ 3,493 3 Environmental Operational Excellence Accounts FERC 920/921 $ (1,991) NC NC NC $ (1,991) 4 Total $ 12,120 NC NC NC $ 12,120 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. 15 Refer to Exhibit SCE-07, Vol. 2, pp

16 Corporate Environmental Services Capital Forecast Summary Table II-7 below provides a summary of SCE s CES capital expenditure forecast for SCE, ORA, TURN, and SDG&E and the variance from SCE s forecast. 16 ORA recommended the Commission adopt SCE s CES 2016 recorded capital expenditures and 2017 and 2018 forecasts as presented in SCE s original request. SCE s rebuttal position in the below table is updated to reflect 2016 recorded capital expenditures. No other party contested SCE s CES s capital expenditure forecast. Table II-7 Corporate Environmental Services Capital Expenditures Forecast Summary of SCE, ORA, and TURN Positions Nominal $000 Line Forecast Variance From SCE Forecast SCE Rebuttal No. Description SCE ORA TURN SDG&E ORA TURN SDG&E Position 1 Well Decommission Project $ 1,983 $ 1,864 NC NC $ (119) - - $ 1,864 2 Total $ 1,983 $ 1,864 NC NC $ (119) - - $ 1,864 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested B. O&M Expenses CES O&M expenses are recorded and forecasted in the FERC Accounts shown in Table II-8 below. 17 The table provides the recorded amounts for and the forecast for 2018 for SCE, ORA, and TURN. ORA proposed no changes to CES s forecast. For this FERC Account, TURN did not make any recommendations. SDG&E did not propose any changes to FERC 921 for Wheeler North Reef and San Dieguito Wetlands. 16 Refer to Exhibit SCE-07, Vol. 2, pp The marine mitigation was moved from other generation FERC 549 to FERC 921. The 2015 GRC decision authorized marine mitigation spending in A&G instead of capital and placed those amounts as non-labor in Corporate Environment Health and Safety. 11

17 Table II-8 Corporate Environmental Services O&M by FERC Account Recorded / 2018 Forecast Summary of SCE, ORA, and TURN Positions Constant 2015 $ Line No. FERC Accont 1. San Dieguito Wetlands and Wheeler North Reef: FERC Account 921 a) SCE Application SCE must comply with the mitigation requirements under its Coastal Development Permit (CDP) mandated by the California Coastal Commission (CCC) beginning July 16, The CDP requires SCE to mitigate environmental impacts on marine life and SCE must maintain and monitor the wetlands and reef per the conditions in the CDP. To manage environmental compliance programs, mandatory maintenance and monitoring of reef and wetlands, the O&M forecast includes CES labor, contracts between SCE and third-party vendors for maintenance, CCC monitoring, and park rangers. The labor expenses were based on last recorded year labor expenses, which funds one project manager, analytical support, and a portion of manager labor to support the project. For non-labor expenses, SCE proposes last year recorded for these projects that have remained relatively stable the past three years ( ), as all construction activities for the three required mitigation activities have been completed. 18 Description Recorded SCE Application ORA TURN 2018 Forecast SCE Rebuttal Position 1 920/921 Administrative and General $ 6,002 $ 4,939 $ 8,468 $ 7,701 $ 9,798 $ 10,618 NC NC $ 10, San Dieguito Wetlands & Wheeler North Reef $ - $ - $ - $ - $ 3,493 $ 3,493 NC NC $ 3, /921 Environmental Operational Excellence $ - $ - $ - $ - $ - $ (1,991) NC NC $ (1,991) 4 Total $ 8,013 $ 6,951 $ 10,481 $ 9,715 $ 15,306 $ 12,120 NC NC $ 12,120 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. Table II-9 below 19 provides the San Dieguito Wetlands and Wheeler North Reef recorded O&M from and the 2018 forecast for SCE, ORA, TURN, and SDG&E. No party contested the forecast. The following rebuttal addresses SDG&E s testimony requesting recovery for 18 Refer to Exhibit SCE-07, Vol. 2, p ORA-16 references San Dieguito Wetlands and Wheeler North Reef as FERC 549. Per errata submitted on June 16, 2017, FERC Account 549 has been moved to FERC Account 921 due to the 2015 GRC decision authorizing marine mitigation spending in A&G instead of capital and placed those amounts as non-labor in Corporate Environment Health and Safety. 12

18 1 2 their costs related to the San Dieguito Wetlands and Wheeler North Reef costs proposed by SCE, which SCE does not dispute. Table II-9 San Dieguito Wetlands and Wheeler North Reef - FERC Account 921 Recorded / 2018 Forecast Summary of SCE, ORA, and TURN Positions Constant 2015 $ Forecast Variance From SCE Application Line No. Description SCE Application ORA TURN SDG&E ORA TURN SDG&E SCE Rebuttal Position 1 Labor $ 465 $ 391 $ 272 $ 292 $ 208 $ 208 NC NC NC $ Non-Labor $ 8,251 $ 4,416 $ 3,116 $ 3,475 $ 3,285 $ 3,285 NC NC NC $ 3,285 3 Total $ 8,716 $ 4,807 $ 3,388 $ 3,767 $ 3,493 $ 3,493 NC NC NC $ 3,493 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested b) SDG&E s Position SDG&E agrees with SCE s proposal and is asking for 20% of 100% of the Marine Mitigation costs proposed by SCE with an escalation rate as shown in Table II-10 below. 20 In addition SDG&E is requesting overhead charges to cover their contractual obligation to SCE for pension, benefits, and payroll taxes. SDG&E s 20% forecast in nominal dollars is $991 for 2018, $1,015 in 2019, and $1,038 in 2020 as shown in Table II-11 and Table II-12 below. 21 c) SCE s Rebuttal to SDG&E s Position (1) SCE agrees with SDG&E s proposed 20% share and overhead costs for Marine Mitigation with escalation. 20 Refer to SCE escalation factors, SCE-09, Vol. 1, pp Refer to SDG&E-01, pp

19 Table II-10 SCE O&M and A&G Escalation Rates SCE 2018 GRC Labor and Non-Labor Table II-11 SDG&E Share of Marine Mitigation Labor and Non-Labor SCE 2018 GRC Nominal $000 Table II-12 SDG&E s 20% Share of Marine Mitigation Calculation SCE 2018 GRC Nominal $ Marine Mitigation SCE Share 78.21% Marine Mitigation SCE Share 78.21% 3,499 3,581 3,663 Sub-Total 3,726 3,814 3,902 SCE Labor SCE Share 78.21% SCE Non-Labor SCE Share 78.21% Total SCE Share at 78.21% with Overheads 3,876 3,968 4, % Share with Overheads 4,956 5,074 5,191 SDG&E 20% Share with SCE Billed Overheads 991 1,015 1,038 14

20 III. CORPORATE HEALTH AND SAFETY A. Corporate Health and Safety Safely delivering reliable electricity to our customers is our most important objective and our number one company core value. SCE s Corporate Health and Safety (CHS) department is responsible for the health and safety oversight and services at the corporate level. This includes developing and managing programs that meet regulatory requirements outlined in the Occupational Safety and Health Act (OSHA), leading all major safety incident investigations, tracking and analyzing the company s safety data and records, managing and implementing enterprise-wide initiatives, as well as managing all other office safety programs and standards. CHS also partners with other operating units (OUs) so that each OU s activity-specific safety programs meet the requirements outlined in OSHA Corporate Health and Safety O&M Forecast Summary CHS s Operation and Maintenance (O&M) forecast for SCE, ORA, and TURN follow. Table III-13 below provides a summary of the 2018 O&M expense forecast for SCE 23 and ORA and the variance from SCE s forecast. TURN did not contest CHS s O&M Forecast. Table III O&M Forecast by FERC Account Summary of SCE, ORA, and TURN Positions Constant 2015 $ Forecast Variance From SCE Forecast Line No. Description SCE Application* ORA* TURN ORA TURN SCE Rebuttal Position 1 Corporate Health & Safety FERC 925 $ 5,470 $ 4,770 NC $ (700) - $ 5,470 2 Total $ 5,470 $ 4,770 NC $ (700) - $ 5,470 *Reflects SCE's forecast with errata submitted June 16, ORA's forecast has been updated to reflect alignment with SCE's revised forecast. **Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. B. O&M Expenses CHS addresses ORA s recommended adjustments to CHS s O&M forecast in Section B. O&M expenses are recorded and forecast in the FERC Account 925 shown in Table III-14 below. The table below provides the recorded amounts for and the forecast for 2018 for SCE and ORA. TURN did not contest CHS s O&M Forecast. ORA proposes a reduction of $700, Refer to Exhibit SCE-07, Vol. 4A, p Refer to Exhibit SCE-07, Vol. 4A, pp

21 1 2 associated with SCE s participation in the Electric Power Research Institute s (EPRI) Program 60 (Electric and Magnetic Fields and Radio-Frequency Health Assessment and Safety) research. Table III-14 O&M by FERC Account Recorded / 2018 Forecast Summary of SCE, ORA, and TURN Positions Constant 2015 $ Corporate Health & Safety FERC Account 925 a) SCE Application FERC Account 925 includes the labor and non-labor expenses for safety programs, safety analytics, employee safety, and safety regulations implemented within the company. The 2018 labor forecast is based on 2015 recorded expenses of $3.795 million minus the anticipated $431,000 savings from the Safety OpX. CHS forecasts O&M labor expenses for FERC Account 925 at $3.364 million (2015 constant) for Test Year The 2018 non-labor forecast is based on a three-year average of expenses ($1.406 million) with an adjustment of $700,000 for EPRI Program 60 research costs. CHS forecasts O&M non-labor expenses for FERC Account 925 at $2.106 million for Test Year Table III-15 below provides recorded O&M from and the 2018 forecast by labor and non-labor components for SCE and ORA. TURN did not contest the CHS O&M forecast. Recorded SCE Application* ORA* TURN SCE Rebuttal Position Line FERC No. Accont Description Forecast Corporate Health & Safety $ 6,586 $ 5,662 $ 5,022 $ 5,721 $ 5,053 $ 5,470 $ 4,770 - $ 5,470 2 Total $ 6,586 $ 5,662 $ 5,022 $ 5,721 $ 5,053 $ 5,470 $ 4,770 - $ 5,470 *Reflects SCE's forecast with errata submitted June 16, ORA's forecast has been updated to reflect alignment with SCE's revised forecast. **Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. 24 Refer to Exhibit SCE-07, Vol. 4A, pp

22 Table III-15 Corporate Health & Safety FERC Account 925 Recorded / 2018 Forecast Summary of SCE, ORA, and TURN Positions Constant 2015 $000 Variance From SCE 2018 Forecast Application Line No. Description SCE Application* ORA* TURN ORA TURN SCE Rebuttal Position 1 Labor $ 4,229 $ 4,153 $ 4,154 $ 3,628 $ 3,795 $ 3,364 $ 3,364 NC $ - NC $ 3,364 2 Non-Labor $ 2,357 $ 1,509 $ 868 $ 2,093 $ 1,258 $ 2,106 $ 1,406 NC $ (700) NC $ 2,106 3 Total $ 6,586 $ 5,662 $ 5,022 $ 5,721 $ 5,053 $ 5,470 $ 4,770 NC $ (700) NC $ 5,470 *Reflects SCE's forecast with errata submitted June 16, ORA's forecast has been updated to reflect alignment with SCE's revised forecast. **Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested b) ORA (1) ORA Position ORA does not oppose SCE s $3.364 million O&M labor request for Test Year 2018 expenses or its forecasting methodology. ORA also does not oppose SCE s non-labor forecasting methodology. However, ORA opposes non-labor funding of $700,000 for SCE s participation in the EPRI Program 60. ORA s position is based on its interpretation of the Commission s 2015 decision 25 to decline funding for EPRI Program 60 via the Electric Program Investment Charge (EPIC). 26 Based on ORA s reading of D , ORA requests the Commission not allow funding for EPRI Program 60 in the 2018 GRC because it was not funded through EPIC in ORA indicates that the Commission should not allow ratepayer funding for SCE s participation in EPRI Program 60 in this 2018 General Rate Case proceeding See Appendix B, p. 4 for D , p See Appendix B, p. 8. In ORA s response to Q. 6 of SCE-ORA-011, the only authority ORA could cite that precludes SCE from seeking recovery in SCE s 2018 GRC application is D : Q. 6: Please identify any law, CPUC decision, or authority that ORA is aware of that precludes SCE from seeking recovery in A (SCE s 2018 GRC application) for the cost for SCE s participation in the EPRI Program 60. Please explain. A. 6: D Refer to Exhibit ORA-16, p. 20, lines See Appendix B, p. 7 for SCE-ORA-011, Question 4. 17

23 Further, ORA asserts via a data request response that the four-year period of funding authorized by the Commission in its 1993 decision 29 for a coordinated electric and magnetic fields (EMF) education and research program has lapsed. 30 (2) SCE s Rebuttal to ORA s Position In SCE s testimony, SCE indicates that EPRI Program 60 research addresses key environmental health and safety issues related to public and worker exposure to EMF associated with electric power system infrastructure, 31 to which ORA does not disagree. 32 ORA s dispute with SCE lies fundamentally in whether SCE can receive funding for EPRI Program 60 in the GRC. ORA relies on D as the basis for its conclusion that EPRI Program 60 cannot be funded in the GRC 33 and on D as the basis for its conclusion that EMF research should not be continued. 34 However, neither decision precludes SCE from seeking EPRI Program 60 funding in the GRC for the following reasons. (a) The Commission supports ratepayer funding for Electric Power Research Institute s Program 60 research outside of the Electric Program Investment Charge ORA is wrong in its interpretation that the Commission s decision not to fund EPRI Program 60 research via EPIC funding indicates a lack of support by the Commission to fund EPRI Research within a GRC. To clarify, in D , the Commission affirmed funding for research institutes like EPRI, but it declined to provide funding via EPIC for certain Program 60 research activities since not all research activities of Program 60 are of technology demonstration and deployment (TD&D) type. This decision was specific to the EPIC account, not with regard to the research itself. 29 See Appendix B, p. 19 for D , Ordering Paragraph See Appendix B, pp for SCE-ORA-022, Question Refer to Exhibit SCE-07, Vol. 4A, p See Appendix B, p. 6 for SCE-ORA-011, Question See Appendix B, p. 8 for SCE-ORA-011, Question See Appendix B, pp for SCE-ORA-022, Question 1. 18

24 SCE s reply is a misrepresentation of ORA s concern. To our understanding, ORA is not concerned that SCE will fund research institutes; ORA is concerned that SCE will fund RD&D-type activities with its TD&D budget. As we have previously discussed, research institutes may indeed be funded, but IOUs may only fund TD&D activities using EPIC funds. Therefore, SCE is directed to ensure that the projects its funds under EPIC support TD&D activities. Furthermore, upon reviewing the project in question, we find that the proposal contains multiple references to research activities that appear to qualify as Applied R&D ( research investigating safety questions ; exposure characterization research ; analyses of key external studies ). Overall the project is described as research and public communication on EMF and RF health and safety questions. We find that ORA s concerns are justified and that this project appears to propose non-td&d activities. Some of the technologies and strategies listed may qualify as TD&D, however, and insofar as they do, this would be an acceptable project. We approve the project subject to the requirement that SCE must only fund the demonstration and deployment of technologies and strategies in this area, not background research. We extend this requirement to all SCE s projects and strongly reprove the IOU administrators to carefully ensure their proposals for TD&D funding include only activities that fall into that category as defined by the Phase 2 EPIC Decision. 35 Contrary to ORA s interpretation, there is nothing in D that precludes SCE from seeking recovery of EPRI Program 60 funding in the GRC, as SCE s 2018 GRC application allocates EPRI Program 60 research expenses to a non-epic account, specifically Corporate Health and Safety O&M expenses (FERC Account 925). Therefore, based on D , SCE should be allowed to receive funding. The Commission should allow SCE to continue its EMF research efforts, as it benefits its customers. As mentioned above, ORA does not disagree with SCE that EPRI Program 60 research addresses key environmental health and safety issues related to public and worker exposure to EMF associated with electric power system infrastructure. 36 Funding EPRI research allows SCE to stay at the forefront of EMF research for changing industry technologies, and enables SCE to adequately address customer concerns with credible, independent, and industry-leading research. For example, SCE leveraged EPRI radio frequency exposure research to inform decision-making and educate its customer base during the 2010 smart meter roll-out in the service territory. Given that no 35 See Appendix B, p. 4 for D , p. 23 (emphasis added). 36 Refer to Exhibit SCE-07, Vol. 4A, p. 13 and see Appendix B, p. 6 for SCE-ORA-011, Question 2. 19

25 definitive determination has been made regarding EMF exposure health hazards, the Commission states that, in the absence of further research, the utilities will be running the risk that public policy would be guided by perception rather than scientific analysis, resulting in the adoption of reactive and expensive policies. 37 Identification of any EMF health concerns as well as mitigation of any potential hazards for ratepayers are valid regulated utilities' management responsibilities needed to provide ratepayers safe and reliable utility service. 38 The Commission directly addresses the use of shareholder funding for EMF Education Programs, and concludes that using shareholder funding for reasonable costs associated with providing energy services in a safe and efficient way is not a viable alternative. 39 Moreover, the Commission has indicated its on-going support for EMF research by authorizing funding for SCE s participation in EPRI Program 60 research in prior GRCs in the early 1990s 40 and as recent as SCE did not seek funding for EPRI Program 60 research in its 2015 GRC because the Company sought funding via EPIC, which the Commission declined in D but also continued to affirm that research institutes may indeed be funded. 42 Given the Commission s decision to decline EPRI Program 60 funding via EPIC, SCE is now seeking funding for participation in the program via the GRC, as the Commission has authorized in the past. As expressly stated by the Commission in D , EMF research should be approved 43 and research is necessary to determine whether there is a health hazard from EMF. 44 For the reasons listed in SCE s direct testimony and this rebuttal testimony, SCE respectfully requests that the Commission approve its request of $700,000 in ratepayer funding for EPRI Program 60 research in the GRC. 37 See Appendix B, p. 13 for D , 5.3 Discussion, paragraph See Appendix B, p. 14 for D , 5.2 Parties Positions, paragraph See Appendix B, p. 15 for D , Discussion, paragraph See Appendix B, p. 13 for D , Discussion, paragraph See Appendix B, pp for Exhibit SCE-03, Vol. 2 from A , p. 110 and D , p D , p See Appendix B, p. 18 for D , Section 10: Conclusions of Law, paragraph See Appendix B, p. 17 for D , Section 8: Finding of Facts, paragraph

26 (b) The Commission has demonstrated continued, recent support for participation in Electric Power Research Institute s Program 60 research ORA is wrong in its assertion that EMF research should have ceased 45 after completion of the four-year coordinated EMF education and research program led by the Department of Health Services (DHS). 46 ORA apparently believes that EMF research in which SCE participates should have also concluded by March 1, 1999 when the four-year coordinated EMF program managed by DHS was completed. The final report issued by DHS upon completion of the coordinated EMF program was released in It found no consensus among the three scientists regarding their conclusions 47 and the report did not conclusively associate or find direct causation of disease or cancer as a result of exposure to EMFs. 48 Given the inconclusive findings, the Commission affirmed in 2006 its low-cost/no-cost policy from its 1993 decision 49 and stated, should such studies indicate negative EMF health impacts, we will reconsider our EMF policies, and open a new rulemaking if necessary. 50 To date, the Commission has not instituted any new rulemaking regarding EMF that would preclude SCE from participating in a coordinated research program. Despite completion of the Commission-mandated EMF program, the Commission has demonstrated its continued support of SCE s participation in EPRI Program 60 by 45 Refer to ORA s response to SCE-ORA-022, Question 1 where ORA states, ORA s understanding, based on OP 15 is that funding for a coordinated EMF education and research program had a maximum four-year budget of $1.489,000 for education and $5,600,000 for a research program. Since the Commission adopted D in 4 year period has elapsed. 46 See D , Ordering Paragraph 15. The four-year coordinated EMF education and research program was approved by the Commission on December 2, 1993, and a final report on short-term formalized research activities was to have been completed by December 1997 and the program was to have ended by December Due to staffing concerns and DHS conclusion that it could not conclude the program by December 1998, the Commission ordered that the Electric and Magnetic Fields program approved in D end no later than March 1, See Re: Potential Health Effects of Electric and Magnetic Fields of Utility Facilities, D , 77 CPUC2d 91, (December 3, 1997). 47 See Appendix B, p. 33 for R , Section IV, p See Appendix B, p. 34 for R , Section VI, p See Appendix B, p. 35 for D , Section I, p See Appendix B, p. 36 for D , Section I, p

27 approving funding as recent as the 2012 GRC, long after the DHS program concluded in As explained in the previous sub-section, SCE applied for EPIC funding in 2015, and therefore did not apply for GRC funding in 2015 for EPRI Program 60 research. Further, the Commission recognized in 1993 that independent research was already being conducted by utilities and EPRI. The Consensus Group created by the Commission to advise it on this issue emphasized the California utilities ability to support and manage their individual research programs or to support research of the EPRI program. 52 The Commission goes on to say coordination is needed to avoid unnecessary duplication and to assist in directing resources in a cost-effective and efficient manner. 53 SCE s participation in EPRI Program 60 complies with the Commission s expectations set forth in its 1993 decision and affirmed in its 2006 decision (D ), therefore SCE urges the Commission to grant the Company s request of $700,000 in ratepayer funding for EPRI Program 60 in this GRC. c) Conclusion ORA agrees with SCE that EPRI Program 60 provides research valuable to investor-owned utilities. The Commission has stated that funding is not appropriate through EPIC, but it has authorized funding for SCE s participation in EPRI Program 60 via prior GRC proceedings. SCE respectfully requests that EPRI Program 60 funding should come from the GRC, as it has in the past See Appendix B, pp for A , p. 110 and D , p See Appendix B, p. 13 for D , 5.1 Consensus Group Proposal, paragraph See Appendix B, p. 16 for D , 5.6 Research Program Coordination, paragraph SCE has provided evidence that participation in EPRI Program 60 should be funded by the GRC. However, if the Commission declines to authorize funding in this GRC (which it should not), SCE respectfully requests that the Commission expressly identify the proceeding SCE should receive funding for participation in the EPRI Program

28 IV. CORPORATE SECURITY A. Corporate Security The primary responsibility of Corporate Security is the physical protection of SCE s workforce, customers, facilities, and infrastructure from threats, intrusions, attacks, theft, and property damage. Our physical security strategies, activities, and programs support the reliability of the Bulk Electric System (BES), reinforce effective security operations to include monitoring/response activities, improve workplace security, and address and integrate administration and maintenance of security systems. 55 Corporate Security s O&M forecasts include: 1) Security Operations functions, such as contract security officers, ESOC monitoring and response activities, workplace violence prevention, pre-hire background checks, and the SCE Badging Office, 2) Security Technology activities, which includes security-related project management, maintenance and repair of security systems, and remediation activities to comply with North American Reliability Corporation Critical Infrastructure Protection (NERC CIP) Standards, and 3) Administrative and General functions, such as strategic, financial, organizational and governance tasks. 56 Corporate Security Capital projects support SCE s physical security strategy, facilitate compliance with NERC CIP Standards, and enhance the physical security of our workers and assets through the ongoing Physical Security Systems programs for electric and nonelectric facilities Corporate Security O&M Forecast Summary Table IV-16 below provides a summary of the forecast for Corporate Security s O&M expenses for SCE, ORA, and TURN. No party contested SCE s Corporate Security O&M forecast. 55 Refer to Exhibit SCE-07, Vol. 5, pp Refer to Exhibit SCE-07, Vol. 5, pp Refer to Exhibit SCE-07, Vol. 5, pp

29 Table IV-16 Corporate Security 2018 O&M Forecast by FERC Account Summary of SCE, ORA, and TURN Positions Constant 2015 $ Forecast Variance From SCE Forecast Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position Administrative and General Salaries/Office 1 Supplies and Expenses FERC 920/921/923 $ 26,906 NC NC NC NC $ 26,906 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested Corporate Security Capital Forecast Summary Table IV-17 below provides a summary of Corporate Security s capital expenditure forecast for SCE, ORA and TURN. ORA recommended the Commission adopt SCE s Corporate Security 2016 recorded capital expenditures and 2017 and 2018 forecasts as presented in SCE s original request. 58 SCE s rebuttal position in the below table is updated to reflect 2016 recorded capital expenditures. No other party contested SCE s Corporate Security s capital expenditure forecast. Table IV-17 Corporate Security Capital Expenditures Forecast Summary of SCE, ORA, and TURN Positions Nominal $000 Forecast Variance From SCE Forecast Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position 1 NERC CIP-014 $ 29,538 $ 18,677 NC $ (10,861) NC $ 18,677 2 NERC CIP V6 Low BES Sites $ 10,233 $ 9,336 NC $ (897) NC $ 9,336 3 Physical Security Systems - Non Electric Facilities (Blanket) $ 29,001 $ 38,298 NC $ 9,297 NC $ 38,298 4 Physical Security Systems - Electric Facilities (Blanket) $ 15,891 $ 14,995 NC $ (896) NC $ 14,995 5 Asset Management $ 1,797 $ - NC $ (1,797) NC $ - 6 Total $ 86,460 $ 81,306 NC $ (5,154) NC $ 81,306 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. 58 Refer to Exhibit ORA-16, pp

30 V. SUPPLY MANAGEMENT A. Supply Management Supply Management provides materials procurement, logistics, and support services for SCE. Supply Management is responsible for supporting the supply of materials from the identification of need through to the delivery of materials at the point of use. The organization also commissions a wide variety of services that directly or indirectly serve construction, generation, transmission, distribution, substation, customer service, administration and other support activities. The majority of Supply Management activities are funded through the Internal Marketing Mechanism. However, three groups including, Mailing Services, Graphics Production and the Office of the Senior Vice President (OSVP) are funded through O&M. The Mailing Services Department performs inter-office mail delivery and internal light freight pickup and delivery at SCE s major office facilities. The Graphics Production department coordinates SCE s printing, duplication, binding, framing, and graphics jobs with established vendors. In-house graphics designers provide expertise to Operating Units to produce assorted collateral materials, corporate stationary, stamps, media, etc. OSVP provides strategic direction and leadership to the Operational Services Operating Unit, maintains oversight of operating and financial performance, and directs organizational change efforts. This includes A&G salaries, employee all-hands meetings, office supplies, training, strategic management activities and organization change management activities to effectively perform its functions. Supply Management also utilizes capital funding for projects primarily associated with the Logistics division. Capital expenditures are needed to replace and upgrade the warehouse infrastructure, transition to electrically powered forklifts and replace and upgrade hand-held scanners due to technology changes and obsolescence Supply Management O&M Forecast Summary The forecast of Supply Management s O&M expenses follows. Table V-18 provides a summary of the 2018 O&M expense forecast for SCE. 60 No parties contested SCE s Supply Management O&M forecast. SBUA presented testimony that makes certain recommendations on actions 59 Refer to Exhibit SCE-07, Vol. 6, pp Refer to Exhibit SCE-07, Vol. 6, pp

31 1 2 SCE should take for non-diverse small businesses. SCE s response to SBUA s recommendations is provided in Section B.1 below. Table V-18 Supply Management 2018 O&M Forecast by FERC Account Summary of SCE, ORA and TURN Positions Constant 2015 $ Supply Management Capital Forecast Summary Table V-19 below summarizes SCE s capital forecast for Supply Management. 61 No parties contested SCE s Supply Management capital forecast. Table V-19 Supply Management Capital Expenditures Forecast Summary of SCE, ORA and TURN Positions Nominal $ B. O&M Expenses 1. Supply Management FERC Accounts 920/921 a) SCE Application Supply Management records in FERC Accounts 920/921 the labor and non-labor costs associated with administrative and general costs of the on-going operations of the SM Department, specifically Graphics Production, Mailing Services and the Office of the Senior Vice President. Table V-20 below provides the recorded O&M from and the 2018 forecast by labor and nonlabor components for SCE. 62 No parties contested SCE s Supply Management O&M forecast. SBUA, 61 Refer to Exhibit SCE-07, Vol. 6, pp Refer to Exhibit SCE-07, Vol. 6, pp and Exhibit SCE-07, Vol. 6A2, pp

32 1 2 however, did present testimony requesting certain actions by SCE concerning non-diverse small businesses. SBUA s position is summarized and addressed in the section b) below. Table V-20 Supply Management FERC Accounts 920/921 Recorded / 2018 Forecast Summary of SCE, ORA and TURN Positions Constant 2015 $ b) SBUA (1) SBUA s Position While the Small Business Utility Advocates (SBUA) did not contest SM s O&M or Capital forecasts, SBUA does recommend that SCE perform the following actions: Track and report on the total direct spend it awards to nondiverse small business customers; Conduct a comprehensive study on the question or how best to provide targeted assistance to non-diverse small businesses to participate in SCE s procurement spend; and Publicly file the results of its study prior to the next Phase 1 GRC and submit testimony specifically dedicated to discussing the results of this study. 63 Although SBUA does not provide a specific definition of what constitutes a small business in relation to its recommendations, SBUA does indicate that its recommendations only encompasses those small business suppliers who are not women, minority, disabled veteran, or lesbian, gay, bisexual or transgender owned business enterprises falling within General Order 156 (GO156) Refer to Exhibit SBUA-01, p Relative to SBUA s recommendation on tracking and reporting on spend awarded to non-diverse small businesses, its recommendation appears to be confined to those non-diverse small businesses who are also customers of SCE. See SBUA-01, p

33 (2) SCE s Rebuttal to SBUA s Position As an initial matter, SCE strongly values the small business community that comprise a significant part of its customer and supplier base. The entrepreneurship and innovation that are the hallmarks of small business enterprises are recognized by SCE as contributing to its success and the success of many other corporations. In recognition of this perspective, SCE s procurement processes are designed to offer the same level of access to small business enterprises as they do to larger organizations. However, the Commission should not adopt SBUA s recommendations. SBUA has not provided a uniform definition of what it considers a small business encompassed by its recommendations. SBUA cites to various definitions used by other parties, including 2014 US Census data concerning businesses with less than 100 employees in California, 65 California s Small Business Procurement and Contract Act which defines small businesses based on a variety of factors including number of employees, non-dominance in field of operation and average annual gross receipts, 66 and a US Census Bureau report which defines small businesses as firms with fewer than 500 employees. 67 Rather, SBUA s recommendations are more defined by those who are excluded, namely, small businesses which are owed by women, minorities, veterans with disabilities, and gay, lesbian, bi-sexual or transgender individuals. At present, SCE does not track information from suppliers concerning workforce size, annual gross receipts or other features intended to identify the size of the suppliers. 68 Currently, the Commission s Clearinghouse collects and verifies women, minority, disabled veteran, lesbian, gay, bisexual and transgender owned business enterprises (WMDVLGBTBE) certifications and maintains the data base for this type of information, which the utilities report in their 65 Refer to Exhibit SBUA-01, p Refer to Exhibit SBUA-01, p. 4. See also, Government Code 14837(d)(1). 67 Refer to Exhibit SBUA-01. p. 7, fn To the extent that an entity, (1) pursuant to Section of the Commission s General Order (G.O.) 156, is found to be disadvantaged by the Small Business Administration pursuant to Section 8(a) of the Small Business Act or the Secretary of Commerce pursuant to Section 5 of Executive Order 11625, (2) identifies itself as meeting the definition of Section of G.O. 156, and (3) provides goods or services that SCE does not report as a women, minority, disabled veteran, lesbian, gay, bisexual and transgender owned business enterprise, then SCE will report in its G.O. 156 annual report any spend for goods and services to that entity. 28

34 GO 156 reports. These certifications are recorded by SCE to the extent they are voluntarily provided to SCE by suppliers. Pursuant to Commission Decision No , SCE and the other utilities submit their WMDVLGBTBE revenue reports to the Commission, which then provides information on the utilities spending based on the WMDVLGBTBE s reported revenue to the Clearinghouse. Even if SCE were to begin requesting information from suppliers concerning workforce size or annual gross receipts (and excluding those who submit WMDVLGBTBE certifications from the Clearinghouse), SCE has no way to verify or otherwise police the accuracy of the information voluntarily submitted by those suppliers. Effectively, SBUA s recommendations seek to expand the Clearinghouse s function to include collecting and verifying small business certifications. To the extent the Commission is inclined to do so, such an initiative should be done on a statewide basis and only after seeking input from all stakeholders. Additionally, SBUA s recommendations create the need to authorize additional funds for SCE s Supply Management organization to cover the additional tracking and reporting of and the comprehensive study requested on providing targeted assistance to non-diverse, small business customers. 29

35 VI. SUPPLIER DIVERSITY A. Supplier Diversity and Development SCE s Supplier Diversity and Development Department (SDD) manages the Company s efforts to procure materials and services from diverse business enterprises (DBEs). This encompasses women, minority, disabled veteran, lesbian, gay, bisexual and transgender owned business enterprises (WMDVLGBTBE), as well as the Company s efforts to comply with the California Public Utilities Commission s (CPUC) General Order 156 (GO 156). The Department is also responsible for the Company s initiatives and programs to foster the success of DBEs. SCE s SDD program consists of key activities such as outreach, capacity building and technical assistance, compliance, and data collection, tracking, and reporting. 69 SDD O&M labor and non-labor costs associated with administrative and general costs of the ongoing operations of SDD and implementation of SDD programs. Also included in O&M is the non-labor expenses associated with outside services and expenses for DBE certificate agency, sponsorships, outreach activities, membership to ethnic trade and chambers of commerce, technical assistance and capacity building programs and DBE spend report and validation Supplier Diversity and Development O&M Forecast Summary The forecast of Supplier Diversity and Development s O&M expenses for SCE is provided in Table VI-21 below. 71 No parties contested SCE s Supplier Diversity s O&M forecast. The National Diversity Council (NDC), however, presented testimony that makes proposals in relation to SCE s aspirational goals for DBE procurement. SCE responds to NDC s testimony in Section B below. 69 Refer to Exhibit SCE-07, Vol. 6, pp Refer to Exhibit SCE-07, Vol. 6, p Refer to Exhibit SCE-07, Vol. 6, pp

36 Table VI-21 Supplier Diversity and Development 2018 O&M Forecast for FERC Account Summary of SCE, ORA, TURN, NDC, SBUA Positions Constant 2015 $ Line No. 1 Description Administrative and General Salaries/Office Supplies and Expenses FERC 920/921/923 B. National Diversity Council 1. NDC Position While NDC does not contest SDD s O&M forecasts, NDC does recommend that SCE: Adopt an aspirational goal of 42.9% for diverse business enterprise (DBEs) spend, and and MBEs, respectively. Adopt an aspiration goal of 25.5% for minority diverse business enterprise (MBEs). 72 NDC s proposed percentages are based on the three year average ( ) for DBEs 2. SCE s Rebuttal to NDC s Position 2018 Forecast Variance From SCE Forecast SCE Application ORA TURN NDC ORA TURN NDC Section 8 of General Order 156 requires utilities to set a long term goal of not less than 21.5% for the procurement of goods and services from diverse suppliers, specifically 15% from MBEs, 5% from women owned businesses, and 1.5% from disabled veteran business enterprises. SCE is committed to supplier diversity and has worked to assist DBEs in procurement opportunities for 38 years since Our commitment is evidenced by SCE s achievement of over 40% DBE for the past four years and in SCE s 2016 achievement of 44.7% DBE spend. SCE believes that the Commission should not adopt an increase in diverse enterprise and minority diverse enterprise spend goal. If the Commission wishes to increase goals in GO 156 of 21.5% for DBE and 15% for MBE spend, then the Commission must modify GO 156 and must do so on a state-wide basis. SCE Rebuttal Position $ 3,387 NC NC NC NC NC NC $ 3,387 In terms of aspirational goals, these goals should be left to the discretion of the utilities. As indicated in Section 8 of GO 156, the utility (not the Commission or an intervenor) is the party that sets substantial and verifiable short term (one year), mid-term (three years), and long term (five years) 72 Refer to Exhibit NDC Faith Bautista Prepared Testimony, pp

37 goals for the use of DBEs. As indicated in SCE s 2016 annual supplier diversity report, SCE s current aspirational goal for DBE procurement is 40%. Under SCE s aspiration goal of 40%, SCE activity creates opportunities for DBEs to do business with SCE and exceeded its goal. Pursuant to Section 8 of GO 156, SCE should continue to be permitted to set an aspirational goal that is realistic and demonstrates the company s commitment to encourage DBE participation in utility purchase and contracts. The Commission cannot and should not mandate SCE s aspiration goal based on NDC s proposal, as this would be contrary to Section 8. 32

38 VII. TRANSPORTATION SERVICES A. Transportation Services The Transportation Services Department (TSD) manages the Southern California Edison (SCE) vehicle and equipment fleet comprised of passenger cars, vans, pick-up trucks, forklifts, heavy-duty trucks with aerial equipment (buckets and cranes), loaders, tractors, stringing equipment, trailers, helicopters, and other vehicles to support delivery of safe and reliable electrical service. The SCE fleet sustains the operation and maintenance of transmission, distribution, and generation facilities, customer service activities, material supply logistics, and other workforce needs. TSD provides fleet management and maintenance services (e.g., acquisition, maintenance, repair, and disposal), aircraft support of utility operations, crane operations, regulatory compliance oversight for drivers, pilots, and fleet, technical training for SCE employees, and other transportation-related services. Fleet spending is driven by operational needs and regulatory requirements. TSD is organized into three major groups: Fleet Operations and Maintenance (FOM), Fleet Asset Management (FAM), and Aircraft Operations. 1. TSD s Operating Cost Forecast Summary Table VII-22 provides a summary of TSD s 2018 operating cost forecast for SCE and TURN, and the variance from SCE s forecast. ORA did not contest TSD s operating cost forecast. TSD s direct testimony was presented in nominal dollars as TSD was not directly seeking recovery of these costs which are embedded in the forecasts of the other SCE Operating Units (OUs). TURN made certain adjustments to TSD s operating cost forecast associated with traditional Operation and Maintenance (O&M) expense forecasts and, as such, we are presenting the forecast in both constant 2015 and nominal dollars and applying TURN s recommended methodology. 33

39 Table VII-22 Transportation Services Operating Costs 2018 Forecast Summary of SCE, ORA, and TURN Positions Nominal ($000) Forecast Variance From SCE Forecast Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position 1 Fleet Ownership $ 58,254 NC $ 56,358 NC $ (1,896) $ 62,048 2 Fleet Maintenance $ 42,754 NC $ 39,467 NC $ (3,287) $ 40,799 3 Aircraft Operations $ 7,604 NC $ 6,595 NC $ (1,009) $ 7,035 4 Fuel Costs $ 18,352 NC $ 14,099 NC $ (4,253) $ 15,654 5 Total $ 126,965 NC $ 116,519 NC $ (10,446) $ 125,537 Constant 2015 ($000) 2018 Forecast Variance From SCE Forecast Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position 1 Fleet Ownership $ 54,894 NC $ 53,107 NC $ (1,787) $ 58,470 2 Fleet Maintenance $ 40,288 NC $ 37,191 NC $ (3,097) $ 38,446 3 Aircraft Operations $ 7,166 NC $ 6,215 NC $ (951) $ 6,629 4 Fuel Costs $ 17,294 NC $ 13,285 NC $ (4,009) $ 14,751 5 Total $ 119,642 NC $ 109,798 NC $ (9,844) $ 118,296 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested SCE addresses TURN s recommended adjustments to TSD s operating costs in Section B below. 2. TSD s Capital Forecast Summary Table VII-23 below provides a summary of TSD s capital forecast. ORA recommends the Commission adopt TSD s 2016 recorded capital expenditures and 2017 and 2018 capital forecasts as presented in SCE s original request. SCE s rebuttal position in the below table is updated to reflect 2016 recorded capital expenditures. No other party contested TSD s capital forecast. 73 The total of each of TURN s individual forecasts is $ million, as shown in the tables in this testimony. TURN s fuel cost forecast total is incorrectly stated in its testimony as $ million. See TURN-12, p

40 Table VII-23 Transportation Services Capital Expenditures Forecast Summary of SCE ORA, and TURN Positions Nominal $ Forecast Variance From SCE Forecast Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position 1 Vehicle Electrification Program $ 723 $ 723 NC $ - NC $ EV Fleet Charger $ 313 $ 318 NC $ 5 NC $ Vehicle Leasehold Capital Improvements $ 6,051 $ 5,190 NC $ (861) NC $ 5,190 4 TSD Garage Tools & Equipment $ 1,676 $ 1,655 NC $ (21) NC $ 1,655 5 Aircraft Operations Program $ 3,357 $ 3,190 NC $ (167) NC $ 3,190 6 Helicopter Lease Buyout $ 6,569 $ 6,569 NC $ - NC $ 6,569 7 Total $ 18,688 $ 17,645 NC $ (1,044) NC $ 17,645 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. B. Operating Costs TSD s operating costs fall into four categories: Fleet Ownership, Fleet Maintenance, Fuel, and Aircraft Operations. These costs are charged back to other SCE OUs and embedded within the O&M and capital forecasts of those OUs. TSD s testimony does not separately request recovery for them. 74 Table VII-24 below shows recorded amounts for and 2018 forecasts for SCE and TURN by each category. ORA did not contest TSD s operating cost forecast. 74 Refer to Exhibit SCE-07, Vol. 7, pp

41 Table VII-24 Transportation Services Operating Costs by Category Recorded / 2018 Forecast Summary of SCE, ORA, and TURN Positions Nominal ($000) Recorded Line No. Description SCE Application ORA TURN SCE Rebuttal Position 1 Fleet Ownership $ 56,100 $ 58,600 $ 52,116 $ 59,989 $ 57,746 $ 58,254 NC $ 56,358 $ 62,048 2 Fleet Maintenance $ 42,000 $ 39,300 $ 39,006 $ 38,119 $ 40,985 $ 42,754 NC $ 39,467 $ 40,799 3 Aircraft Operations $ 6,440 $ 6,618 $ 6,491 $ 6,036 $ 6,763 $ 7,604 NC $ 6,595 $ 7,035 4 Fuel Costs $ 23,354 $ 24,400 $ 21,783 $ 19,896 $ 14,378 $ 18,352 NC $ 14,099 $ 15,654 5 Total $ 127,894 $ 128,918 $ 119,396 $ 124,039 $ 119,873 $ 126,965 NC $ 116,519 $ 125,537 Constant 2015 ($000) Recorded 2018 Forecast 2018 Forecast Line No. Description SCE Application ORA TURN SCE Rebuttal Position 1 Fleet Ownership $ 60,059 $ 61,589 $ 57,914 $ 63,727 $ 57,746 $ 54,894 NC $ 53,107 $ 58,470 2 Fleet Maintenance $ 45,453 $ 41,515 $ 38,033 $ 35,877 $ 40,985 $ 40,288 NC $ 37,191 $ 38,446 3 Aircraft Operations $ 6,965 $ 6,990 $ 6,712 $ 6,091 $ 6,763 $ 7,166 NC $ 6,215 $ 6,629 4 Fuel Costs $ 24,917 $ 24,423 $ 22,476 $ 20,200 $ 14,378 $ 17,294 NC $ 13,285 $ 14,751 5 Total $ 137,394 $ 134,517 $ 125,135 $ 125,895 $ 119,873 $ 119,642 NC $ 109,798 $ 118,296 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested Operating Costs Non-Fuel a) SCE Application TSD s Non-Fuel operating costs consist of the following categories: Fleet Ownership, Fleet Maintenance, and Aircraft Operations. This represents every operating cost category with the exception of fuel costs discussed in Section 2 below. Fleet Ownership includes vehicle leases, rental expenses, lease buy-outs, licensing expenses, and activities to responsibly administer these assets. Fleet Maintenance includes maintenance and repair work to support the safety and dependability of SCE s vehicles and equipment, and comply with applicable regulations. Aircraft Operations provides aviation services for maintaining and constructing SCE s infrastructure. TSD s Non-Fuel operating costs were forecast using an itemized forecast methodology. 75 Table VII-25 below shows recorded amounts for and the 2018 forecast of SCE and TURN for TSD s Non-Fuel operating costs and variance to SCE s forecast in nominal and constant 2015 dollars. ORA did not contest TSD s non-fuel operating cost forecast. 75 Refer to Exhibit SCE-07, Vol. 7, pp

42 Table VII-25 Transportation Services Non-Fuel Operating Costs Recorded / 2018 Forecast Summary of SCE, ORA, and TURN Positions 76 Recorded Nominal ($000) Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position 1 Fleet Ownership $ 56,100 $ 58,600 $ 52,116 $ 59,989 $ 57,746 $ 55,581 $ 58,254 NC $ 56,358 NC $ (1,896) $ 62,048 2 Fleet Maintenance $ 42,000 $ 39,300 $ 39,006 $ 38,119 $ 40,985 $ 39,760 $ 42,754 NC $ 39,467 NC $ (3,287) $ 40,799 3 Aircraft Operations $ 6,440 $ 6,618 $ 6,491 $ 6,036 $ 6,763 $ 7,090 $ 7,604 NC $ 6,595 NC $ (1,009) $ 7,035 4 Total $ 104,540 $ 104,518 $ 97,613 $ 104,144 $ 105,494 $ 102,431 $ 108,612 NC $ 102,420 NC $ (6,192) $ 109,883 Constant 2015 ($000) 2018 Forecast Variance From SCE Application Recorded 2018 Forecast Variance From SCE Application Line No. Description SCE Application ORA TURN ORA TURN SCE Rebuttal Position 1 Fleet Ownership $ 60,059 $ 61,589 $ 57,914 $ 63,727 $ 57,746 $ 54,491 $ 54,894 NC $ 53,107 NC $ (1,787) $ 58,470 2 Fleet Maintenance $ 45,453 $ 41,515 $ 38,033 $ 35,877 $ 40,985 $ 38,890 $ 40,288 NC $ 37,191 NC $ (3,097) $ 38,446 3 Aircraft Operations $ 6,965 $ 6,990 $ 6,712 $ 6,091 $ 6,763 $ 6,951 $ 7,166 NC $ 6,215 NC $ (951) $ 6,629 4 Total $ 112,477 $ 110,094 $ 102,659 $ 105,695 $ 105,494 $ 100,332 $ 102,348 NC $ 96,513 NC $ (5,835) $ 103,545 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested b) TURN s Position TURN recommends a 2018 forecast of TSD s non-fuel operating costs by using a four-year average of SCE s recorded costs from TURN asserts that TSD s non-fuel operating costs have held relatively steady and, therefore, an average of historical costs is the appropriate methodology to forecast future costs. TURN s application of the four-year average using nominal dollars yields a forecast of $ million, $6.192 million below SCE s forecast in nominal dollars. 77 c) SCE s Rebuttal to TURN s Position SCE maintains that TSD s non-fuel operating cost forecast and application of an itemized forecast methodology is appropriate since it takes into account fleet size, long lead time CARB 76 In TURN-12, pp , TURN presents a nominal dollar total forecast of $ million. In Table VII-25, SCE presents TURN s forecast in nominal dollars and converts TURN s forecast to constant 2015 dollars ($ million) for the constant dollar comparison of TURN s forecast with SCE s constant dollar forecast. SCE s constant dollars rebuttal position is based on a constant 2015 dollar average of recorded spend ($ million). SCE then converts its constant dollar forecast to nominal dollars ($ million) for comparison with TURN s nominal dollar forecast. 77 Refer to Exhibit TURN-12, pp

43 vehicle replacements, realignment and reduction of vehicle maintenance personnel, the use of outsourced maintenance support, and continuing aircraft operations work. Notwithstanding, SCE accepts TURN s recommendation to forecast 2018 operating costs using an averaging methodology and to use recorded costs as the basis for the 2018 forecast. However, SCE notes that TURN s forecast was based on recorded costs and forecast using nominal dollars as presented in TSD s testimony. TSD applied nominal dollars since TSD was not directly seeking recovery of those costs which are embedded in the forecasts of other OUs. As TURN s recommendation applies an averaging methodology to historical operating costs, such a methodology should be applied to constant dollar historical expenses because those costs are normalized for comparison. Specifically, converting the historical costs to 2015 constant dollars normalizes escalations in spend due to inflationary pressures. When TSD s historical costs are normalized to constant dollars, as shown in Table VII-25, a true four-year average of $ million is derived from years TURN s forecasting method of averaging nominal dollars is inappropriate as it yields a forecast approximately $7.000 million lower than a normalized constant dollar forecast and several millions lower than TSD s spend in each of the last six years. Further, SCE notes that a four-year average applied to years in constant dollars is more in line with SCE s original forecast based on an itemized forecast methodology. The average of recorded costs using constant 2015 dollars yields a 2018 forecast of $ million (or $ million in nominal dollars). Accordingly, SCE has updated its 2018 TSD non-fuel operating cost forecast in this rebuttal testimony to $ million constant 2015 (or $ million nominal) in line with a four-year average of recorded constant dollar costs. d) Conclusion Subject to application of historic costs in constant 2015 dollars, SCE accepts TURN s recommendation of a four-year average of recorded costs ( ) to forecast 2018 TSD non-fuel operating costs and updates its forecast to $ million (constant 2015) based on a fouryear average of TSD s historic costs ( ) normalized to constant dollars. 2. Operating Costs Fuel a) SCE Application TSD s fuel operating costs consists of costs to procure gas, diesel, oil, propane and fuel pumping services. These fuel costs are also charged back to other SCE OUs and TSD s 38

44 testimony does not separately request recovery for them. SCE utilizes the Department of Energy s Energy Information Administration (EIA) Annual Energy Outlook, to forecast gas and diesel fuel costs. SCE also forecasts costs for the use of a fuel pumping service to support the refueling of diesel vehicles. Table VII-26 below shows recorded amounts for and 2018 forecast in nominal and constant 2015 dollars for SCE and TURN for TSD s fuel operating cost forecast and the variance to SCE s forecast. ORA did not contest TSD s fuel operating cost forecast. Table VII-26 Transportation Services Fuel Operating Costs Recorded 78 /2018 Forecast Summary of SCE, ORA, and TURN Positions Nominal ($000) Recorded 2018 Forecast Variance From SCE Application SCE Line No. Description SCE Application ORA TURN ORA TURN Rebuttal Position 1 Gasoline Fuel $ 13,234 $ 13,843 $ 11,759 $ 11,015 $ 7,954 $ 10,045 NC $ 8,131 NC $ (1,914) $ 8,131 2 Diesel Fuel $ 9,042 $ 9,566 $ 9,679 $ 8,565 $ 5,360 $ 6,469 NC $ 5,684 NC $ (785) $ 5,684 3 Diesel Pumping $ - $ - $ - $ 97 $ 829 $ 1,555 NC $ - NC $ (1,555) $ 1,555 4 Oil/Propane $ 545 $ 394 $ 345 $ 219 $ 235 $ 284 NC $ 284 NC $ - $ Fuel Allocation Adjustment $ 490 $ 614 $ - $ - $ - $ - NC NC NC NC $ - 6 Total $ 23,311 $ 24,417 $ 21,783 $ 19,896 $ 14,378 $ 18,353 NC $ 14,099 NC $ (4,254) $ 15,654 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested. Constant 2015 ($000) Variance From SCE Recorded 2018 Forecast Application SCE Line No. Description SCE Application ORA TURN ORA TURN Rebuttal Position 1 Gasoline Fuel $ 14,120 $ 14,523 $ 12,133 $ 11,183 $ 7,954 $ 9,465 NC $ 7,662 NC $ (1,803) $ 7,662 2 Diesel Fuel $ 9,647 $ 10,035 $ 9,987 $ 8,695 $ 5,360 $ 6,096 NC $ 5,356 NC $ (740) $ 5,356 3 Diesel Pumping $ - $ - $ - $ 99 $ 829 $ 1,466 NC $ - NC $ (1,466) $ 1,466 4 Oil/Propane $ 582 $ 414 $ 356 $ 222 $ 235 $ 267 NC $ 267 NC $ - $ Fuel Allocation Adjustment $ 523 $ 644 $ - $ - $ - $ - NC NC NC NC $ - 6 Total $ 24,872 $ 25,616 $ 22,476 $ 20,199 $ 14,378 $ 17,294 NC $ 13,285 NC $ (4,009) $ 14,751 * Due to rounding, subtotals may not sum to the totals. "NC" indicates that the activity was not contested a) TURN s Position TURN recommends a 2018 forecast of $ million (nominal), $4.254 million below SCE s forecast for TSD fuel operating costs. TURN s forecast is based on updates to gas and diesel price forecasts and the removal of costs associated with diesel fuel pumping services. 79 These are described further below. 78 The recorded Fuel Allocation Adjustment in 2011 and 2012 reconciles fuel costs to allow comparison with recorded costs in 2013 and beyond. 79 Refer to Exhibit TURN-12, pp

45 (1) TURN uses a lower forecast of the 2018 per-gallon price of gasoline TURN s forecast calculates SCE s gasoline fuel costs using the amount of $3.46 per gallon (nominal), rather than the $4.27 per gallon (nominal) SCE used in direct testimony. TURN s gasoline price estimate is based on an updated forecast for gasoline fuel price in the 2016 EIA Annual Energy Outlook. TURN s gasoline fuel forecast is $8.131 million (nominal), or $1.914 million below SCE s gasoline fuel forecast. (2) TURN uses a lower forecast of the 2018 per gallon price of diesel TURN s forecast calculates SCE s diesel fuel costs using the amount of $2.63 per gallon (nominal), rather than the $2.99 per gallon (nominal) SCE used to calculate diesel fuel costs in direct testimony. TURN s diesel price estimate is based on an updated forecast for diesel fuel price in the 2016 EIA Annual Energy Outlook. TURN s diesel fuel forecast is $5.684 million (nominal), or $785,000 below SCE s diesel fuel forecast. (3) TURN removes the forecast for costs associated with diesel fuel pumping services TURN argues that ratepayers should not fund diesel fuel pumping services because SCE has not provided analyses that demonstrate the savings from these services exceeds the costs and because SCE s service centers have their own diesel fuel storage and pumping facilities. TURN s forecast for diesel fuel pumping services is $0, or $1.555 million (nominal) below SCE s forecast. b) SCE s Rebuttal to TURN s Position 80 SCE responds to TURN s recommendation as follows: (1) SCE accepts TURN s 2018 per-gallon estimate for price of gasoline At the time of submission of TSD s direct testimony (SCE-07, Volume 7), SCE used the 2015 Energy Outlook Database published in April Given the change in the EIA s 2018 gasoline fuel price forecast from the 2015 Annual Energy Outlook to the 2016 Annual Energy Outlook, SCE accepts TURN s figures for gasoline fuel that are based on the 2016 EIA Annual Energy 80 On April 28, 2017, Governor Brown signed into law Senate Bill 1, the Road Repair and Accountability Act of 2017 (accessible via The Road Repair and Accountability Act of 2017 includes increases to gas and diesel taxes starting in November 2017 and vehicle registration fees starting in SCE shall address the impact of this new legislation on SCE forecasts, including TSD s fuel operating costs, during the update phase of our 2018 GRC. 40

46 Outlook. SCE has updated its 2018 gasoline fuel operating cost forecast in this rebuttal testimony to $8.131 million (nominal) to reflect EIA s 2016 forecast for 2018 gasoline fuel costs. (2) SCE accepts TURN s 2018 per gallon estimate for price of diesel Correspondingly, given the change in EIA s 2018 diesel fuel price forecast from the 2015 Annual Energy Outlook to the 2016 Annual Energy Outlook, SCE accepts TURN s figures for diesel fuel that are based on the 2016 EIA Annual Energy Outlook. SCE has updated its 2018 diesel fuel operating cost forecast in this rebuttal testimony to $5.684 million (nominal) to reflect EIA s 2016 forecast for 2018 diesel fuel costs. (3) SCE contests TURN s recommendation to remove costs associated with diesel fuel pumping services Fueled trucks are a basic requirement for SCE to execute the work required to operate and maintain the electrical power grid. Prior to 2014, TSD staff provided the majority of diesel fuel pumping services at service centers by filling a fuel truck in the evening (to avoid work interruptions during normal work hours) and going vehicle by vehicle refueling, checking fluid levels, and performing additional vehicle safety checks. SCE maintains that funding for the work to refuel diesel vehicles should not be determined by whether that work is performed by TSD staff or by a third party. As described in greater detail below, SCE s use of third party diesel fuel pumping services (which also include checking fluid levels and performing additional vehicle safety checks) are a cost effective alternative to TSD staff providing those services and that having fuel storage and pumping facilities at a service center is immaterial to the beneficial use of a third party to perform diesel fuel pumping services at that service center. (a) Diesel fuel pumping services are a cost effective alternative to TSD staff providing the same diesel fuel pumping services Refueling, checking fluid levels and performing additional vehicle safety checks on SCE vehicles must be performed, whether by TSD staff or contract labor. SCE initially went to contract labor due to a significant reduction in TSD staffing. 81 If this service is not performed by an outside service provider, SCE will need to increase staff and reacquire and maintain diesel fuel trucks to bring this work back in house. The costs for fuel pumping services represented in Table VII See Appendix C, p. 2 for TURN-SCE-100, Question 9b. 41

47 represent the average 2012 fuel truck cost combined with the labor costs to perform these services. The net result shows that use of contract labor is more cost effective than the use of TSD staff. SCE s internal cost for this activity is $1.32 per gallon 82 as compared the $1.20 per gallon cost for contract labor cited in TURN s testimony. 83 Table VII-27 SCE Diesel Fuel Pumping Services Cost Analysis 2018 Forecast Nominal $000 (b) Fuel storage and pumping facilities are irrelevant to the use of a third party to perform diesel fuel pumping services TURN s reference to SCE service centers having their own fuel storage and pumping facilities on site does not impact the reasonableness of SCE s use of contract labor to provide the fuel pumping services. Those fuel storage and pumping facilities remain necessary to allow SCE to respond in emergencies and to refuel vehicles during off hours. Moreover, the use of contract labor for fuel pumping services does not affect the amount of fuel SCE forecasts to consume. For these reasons, having fuel storage at a service center is immaterial. As such, SCE contests TURN s proposal to eliminate the diesel pumping fees as the use of contract labor presents a reasonable and effective solution given the current TSD staffing levels. c) Conclusion SCE has updated its 2018 fuel operating cost forecast to reflect revised lower forecasts for both gasoline and diesel fuel. SCE maintains that fueled vehicles are a basic requirement to operate and maintain the power grid and that using a third party diesel fueling service is a cost effective alternative to TSD employees providing diesel fuel pumping services. Therefore, SCE respectfully requests the Commission to approve SCE s 2018 GRC forecast of $ million (nominal) for TSD fuel operating costs. Forecasted Number of Gallons (Diesel) 2,160,000 Total Equipment Costs (SCE Fuel Trucks) $ 1,230,813 Total SCE Labor Costs $ 1,623,758 SCE Cost Per Gallon to Dispense $ See Appendix C, pp. 3-4 for SCE Diesel Fuel Pumping Services Cost Details. 83 Refer to Exhibit TURN-12, p

48 Appendix A Business Resiliency Workpapers

49 2018 General Rate Case Rebuttal SCE-23: Operational Services Business Resiliency Workpaper Index Workpaper Page(s) UCERF3 A New Earthquake Forecast for California s Complex Fault System 2-7 A-1

50 UCERF3: A New Earthquake Forecast for California s Complex Fault System What is UCERF3? With innovations, fresh data, and lessons learned from recent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³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± KWWS SXEV XVJV JRY IV earthquakes, scientists have developed a new earthquake forecast model for California, a region under constant threat from potentially damaging events. The new model, referred to as the third Uniform California Earthquake Rupture Forecast, or UCERF3 ( UCERF3), provides authoritative estimates of the magnitude, location, and likelihood of earthquake fault rupture throughout the state. Overall the results confirm previous findings, but with some significant changes because of model improvements. For example, compared to the previous forecast (UCERF2), the likelihood of moderate-sized earthquakes (magnitude 6.5 to 7.5) is lower, whereas that of larger events is higher. This is because of the inclusion of multifault ruptures, where earthquakes are no longer confined to separate, individual faults, but can occasionally rupture multiple faults simultaneously. The public-safety implications of this and other model improvements depend on several factors, including site location and type of structure (for example, family dwelling compared to a long-span bridge). Building codes, earthquake insurance products, emergency plans, and other risk-mitigation efforts will be updated accordingly. This model also serves as a reminder that damaging earthquakes are inevitable for California. Fortunately, there are many simple steps residents can take to protect lives and property. Figure 1. Three-dimensional perspective view of the likelihood that each region of California will experience a magnitude 6.7 or larger (Mt6.7) earthquake in the next 30 years (6.7 matches the magnitude of the 1994 Northridge earthquake, and 30 years is the typical duration of a homeowner mortgage). San Francisco region Los Angeles region Uniform California Earthquake Rupture Forecast (Version 3) (UCERF3) 1/1000 1/100 1/ year Mt6.7 likelihood (percent) 10 State boundary 100 Faults are shown by the rectangles outlined in black. The entire colored area represents greater California, and the white line across the middle defines northern versus southern California. Results do not include earthquakes on the Cascadia Subduction Zone, a 750-mile offshore fault that extends about 150 miles into California from Oregon and Washington to the north. U.S. Department of the Interior U.S. Geological Survey ISSN (print) ISSN (online) $ Fact Sheet March 2015

51 Fault Model Evolution WGCEP 2014 WGCEP 2007 WGCEP Slip rate (mm/year) Figure 2. Changes with time of the inventory of faults used in California earthquake forecast models (WGCEP, Working Group on California Earthquake Probabilities). Why a New Earthquake Forecast Model? nuclear disaster.

52 Readiness of Faults (probability gain for M 6.7 earthquakes) Recent earthquakes (less ready): 1906 San Francisco Figure 3. California earthquake likelihood in UCERF3 incorporates the concept that earthquake probabilities change with time according to elastic-rebound theory. Faults are less likely to rupture (less ready) when and where there has been a recent earthquake, and are more likely to rupture (more ready) where tectonic forces have built up during many years without an earthquake (although the event may still be several decades away) (M 6.7, magnitude 6.7 or larger) Coalinga 1952 Kern County Particularly ready faults: Hayward 1992 Landers 1999 Hector Mine Calaveras Current earthquake likelihood relative to long-term likelihood Very low Equal 2 times greater Southern San Andreas ruptures in the interconnected fault What Are the Results, and How Do They Differ from Previous Estimates? and faults of interest are shown in the

53 Table 1. Average time between earthquakes in the various regions together with the likelihood of having one or more such earthquakes in the next 30 years (starting from 2014). Values listed in parentheses indicate the factor by which the rates and likelihoods have increased, or decreased, since the previous model (UCERF2). Readiness indicates the factor by which likelihoods are currently elevated, or lower, because of the length of time since the most recent large earthquakes (see text). These values include aftershocks. It is important to note that actual repeat times will exhibit a high degree of variability, and will almost never exactly equal the average listed here. Magnitude (greater than or equal to) Greater California region 30-year Average likelihood of repeat time one or more (years) events Readiness (0.7) 100% (1.0) (0.9) 100% (1.0) (1.3) >99% (1.0) (1.3) 93% (1.0) (1.0) 48% (1.0) (0.8) 7% (1.5) 1.2 Magnitude (greater than or equal to) Magnitude (greater than or equal to) Southern California region 30-year Average likelihood of repeat time one or more (years) events Northern California region 30-year Average likelihood of repeat time one or more (years) events Readiness (0.7) 100% (1.0) (0.9) 100% (1.0) (1.5) 93% (1.0) (1.4) 75% (0.9) (1.2) 36% (0.9) (0.4) 7% (2.5) 1.3 Readiness (0.7) 100% (1.0) (0.9) 100% (1.0) (1.2) 95% (1.0) (1.2) 76% (1.0) (0.9) 28% (1.1) (0.8) 5% (1.4) 1.1 Magnitude (greater than or equal to) San Francisco region Average repeat time (years) 30-year likelihood of one or more events Readiness (0.7) 100% (1.0) (1.0) 98% (1.0) (1.1) 72% (1.1) (0.9) 51% (1.3) (0.7) 20% (1.6) (0.7) 4% (1.9) 1.0 Magnitude (greater than or equal to) Los Angeles region Average repeat time (years) 30-year likelihood of one or more events Readiness (0.6) 100% (1.0) (1.1) 96% (1.0) (2.1) 60% (0.8) (2.0) 46% (0.7) (1.3) 31% (0.9) (0.4) 7% (2.5) 1.3 tifault ruptures and the particular readi One particularly ready fault is the of this decrease is because of the inclusion entirely dependent on what you are What Next?

54 Tabulated values represent the likelihood of having one or more earthquakes in the next 30 years (starting from 2014). Hayward M 6.7: 14.3% (1.2) M 7.5: 3.6% (93.7) M 8.0: <0.1% Readiness: 1.6 San Francisco region Calaveras M 6.7: 7.4% (1.1) M 7.5: 0.5% M 8.0: 0.1% Readiness: 1.4 Northern San Andreas M 6.7: 6.4% (0.8) M 7.5: 5.7% (1.1) M 8.0: 2.1% (1.4) Readiness: 0.6 Map data: Google TM Earth Data SIO, NOAA, U.S. Navy, NGA, GEBCO Image Landsat Data LDEO-Columbia, NSF, NOAA Data MBARI Figure 4. 1/100 1/ year M 6.7 likelihood (percent) Likelihood of magnitude 6.7 or greater earthquakes in the next 30 years, from 2014, on the faults near San Francisco, Calif. in the future.

55 Tabulated values represent the likelihood of having one or more earthquakes in the next 30 years (starting from 2014). >$W WKH SRLQWV RQ WKH IDXOW LQGLFDWHG E\ ZKLWH FLUFOHV 0 PHDQV PDJQLWXGH JUHDWHU WKDQ RU HTXDO WR DQG OLNHZLVH IRU WKH RWKHU WZR PDJQLWXGH WKUHVKROGV SHUFHQW 9DOXHV OLVWHG LQ SDUHQWKHVHV LQGLFDWH WKH IDFWRU E\ ZKLFK WKH OLNHOLKRRGV KDYH LQFUHDVHG RU GHFUHDVHG UHODWLYH WR WKH SUHYLRXV PRGHO 8&(5) ZKHUH ³ PHDQV WKH SUHYLRXV YDOXH ZDV ]HUR ³5HDGLQHVV LQGLFDWHV WKH IDFWRU E\ ZKLFK SUREDELOLWLHV DUH FXUUHQWO\ HOHYDWHG RU ORZHU EHFDXVH RI WKH OHQJWK RI WLPH VLQFH WKH SUHYLRXV ODUJH HDUWKTXDNH@ Southern San Andreas Mt6.7: 19.0% (0.9) Mt7.5: 17.3% (1.0) Mt8.0: 6.8% (2.5) Readiness: 1.5 Mt6.7: Mt7.5: Mt8.0: Readiness: San Jacinto 5.0% 4.9% 2.7% 1.1 (0.4) (1.3) (56.7) Los Angeles region Mt6.7: Mt7.5: Mt8.0: Readiness: Elsinore 3.8% 1.0% <0.1% 1.0 (0.9) (1.0) (0.3) Map data: GoogleTM Earth Data SIO, NOAA, U.S. Navy, NGA, GEBCO Image Landsat Data LDEO-Columbia, NSF, NOAA Data MBARI 1/100 1/ year Mt6.7 likelihood (percent) 100 Figure 5. Likelihood of magnitude 6.7 or greater earthquakes in the next 30 years, from 2014, on the faults near Los Angeles, Calif. References.RU]\EVNL $ $ QRQ $ULVWRWHOLDQ 6\VWHP DQG LWV QHFHVVLW\ IRU ULJRXU LQ PDWKHPDWLFV DQG SK\VLFV SUHVHQWLRQ DW WKH $PHULFDQ 0DWKHPDWLFDO 6RFLHW\ 'HFHPEHU 1HZ 2UOHDQV /RXLVLDQD PHHWLQJ RI WKH $PHULFDQ $VVRFLDWLRQ IRU WKH $GYDQFHPHQW RI 6FLHQFH 5HSULQWHG LQ 6FLHQFH DQG 6DQLW\ S ± 5HLG + ) 7KH HODVWLF UHERXQG WKHRU\ RI HDUWKTXDNHV 8QLYHUVLW\ RI &DOLIRUQLD 3XEOLFDWLRQV %XOOHWLQ RI WKH 'HSDUW PHQW RI *HRORJLFDO 6FLHQFHV Y S :RUNLQJ *URXS RQ &DOLIRUQLD (DUWKTXDNH 3UREDELOLWLHV 3XEOLVKHG DV )LHOG ( + 'DZVRQ 7 ( )HO]HU. 5 )UDQNHO $ ' *XSWD 9 -RUGDQ 7 + 3DUVRQV 7 3HWHUVHQ 0 ' 6WHLQ 5 6 :HOGRQ,, 5 - DQG :LOOV & - 8QLIRUP &DOLIRUQLD HDUWKTXDNH UXSWXUH IRUHFDVW 9HUVLRQ 8&(5) %XOOHWLQ RI WKH 6HLVPRORJLFDO 6RFLHW\ RI $PHULFD Y S ± GRL :RUNLQJ *URXS RQ &DOLIRUQLD (DUWKTXDNH 3UREDELOLWLHV LQ SUHVV 3XEOLVKHG DV )LHOG ( + %LDVL * 3 %LUG 3 'DZVRQ 7 ( )HO]HU. 5 -DFNVRQ ' ' -RKQVRQ. 0 -RUGDQ 7 + 0DGGHQ & 0LFKDHO $ - 0LOQHU. 5 3DJH 0 7 3DUVRQV 7 3RZHUV 3 0 6KDZ % ( 7KDWFKHU : 5 :HOGRQ 5 -,, DQG =HQJ < /RQJ WHUP WLPH GHSHQGHQW SUREDELOLWLHV IRU WKH WKLUG XQLIRUP &DOLIRU QLD HDUWKTXDNH UXSWXUH IRUHFDVW 8&(5) %XOOHWLQ RI WKH 6HLVPRORJLFDO 6RFLHW\ RI $PHULFD Authors: Edward H. Field and members of the 2014 WGCEP &RRSHUDWLQJ RUJDQL]DWLRQV 6RXWKHUQ &DOLIRUQLD (DUWKTXDNH &HQWHU 6&(& &DOLIRUQLD *HRORJLFDO 6XUYH\ &*6 &DOLIRUQLD (DUWKTXDNH $XWKRULW\ 8 6 *HRORJLFDO 6XUYH\ $ Additional Resources: For general earthquake information contact: ASK-USGS ( ) or SCEC Education and Outreach: For UCERF3 information see: For technical questions contact: Edward (Ned) Field: field@usgs.gov

56 Appendix B Corporate Health and Safety Workpapers

57 2018 General Rate Case Rebuttal SCE-23: Operational Services Corporate Health and Safety Workpaper Index Workpaper Page(s) D , p SCE-ORA SCE-ORA-011, Q SCE-ORA-011, Q SCE-ORA-011, Q Exhibit ORA-16, p. 20, lines D D , 4.6.2: Discussion, paragraph D , 4.6.2: Discussion, paragraph D , 5.1 Consensus Group Proposal, paragraph 2 13 D , 5.2: Parties Positions, paragraph D , 5.3: Discussion, paragraph D , 5.6 Research Program Coordination, paragraph D , Section 8: Finding of Facts, paragraph D , Section 10: Conclusions of Law, paragraph D , Ordering Paragraph SCE-ORA-022, Q A , p. 110 and D , p B-1

58 2018 General Rate Case Rebuttal SCE-23: Operational Services Corporate Health and Safety Workpaper Index (cont d) Workpaper Page(s) D D , paragraph 2, p D , paragraph 4, p D , Findings of Fact 20, p D , Ordering Paragraph 4, p R R , Section IV, p R , Section VI, p D , Section I, p D , Section I, p B-2

59 ALJ/DMG/sbf/vm2 Date of Issuance 4/15/2015 Decision April 9, 2015 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of the California Energy Commission for Approval of Electric Program Investment Charge Proposed 2015 through 2017 Triennial Investment Plan. Application (April 29, 2014) And Related Matters. Application Application Application DECISION ADDRESSING APPLICATIONS OF THE CALIFORNIA ENERGY COMMISSION, PACIFIC GAS AND ELECTRIC COMPANY, SAN DIEGO GAS & ELECTRIC COMPANY AND SOUTHERN CALIFORNIA EDISON COMPANY FOR APPROVAL OF THEIR TRIENNIAL INVESTMENT PLANS FOR THE ELECTRIC PROGRAM INVESTMENT CHARGE PROGRAM FOR THE YEARS 2015 THROUGH B-3

60 A et al. ALJ/DMG/sbf/vm2 fund via EPIC. SCE s reply states that the Commission expressly permitted EPIC Administrators to fund research institutes. 25 SCE s reply is a misrepresentation of ORA s concern. To our understanding, ORA is not concerned that SCE will fund research institutes; ORA is concerned that SCE will fund RD&D-type activities with its TD&D budget. As we have previously discussed, research institutes may indeed be funded, but IOUs may only fund TD&D activities using EPIC funds. Therefore, SCE is directed to ensure that the projects its funds under EPIC support TD&D activities. Furthermore, upon reviewing the project in question, we find that the proposal contains multiple references to research activities that appear to qualify as Applied R&D ( research investigating safety questions ; exposure characterization research ; analyses of key external studies ). Overall the project is described as research and public communication on EMF and RF health and safety questions. We find that ORA s concerns are justified and that this project appears to propose non-td&d activities. Some of the technologies and strategies listed may qualify as TD&D, however, and insofar as they do, this would be an acceptable project. We approve the project subject to the requirement that SCE must only fund the demonstration and deployment of technologies and strategies in this area, not background research. We extend this requirement to all SCE s projects and strongly reprove the IOU administrators to carefully ensure their proposals for TD&D funding include only activities that fall into that category as defined by the Phase 2 EPIC Decision. 25 SCE Reply to ORA s protest, June 16, B-4

61 B-5

62 B-6

63 B-7

64 B-8

65 B-9

66 B-10

67 NAME: Order Instituting Investigation on the Commission's own motion to develop policies and procedures for addressing the potential health effects of electric and magnetic fields of utility facilities NUMBER: Decision No , Investigation No (Filed January 15, 1991) AGENCY: California Public Utilities Commission CITE: 1993 Cal. PUC LEXIS 844; 52 CPUC2d 1 DATE: November 2, 1993 PANEL: [*1] Daniel Wm. Fessler, President; Patricia M. Eckert, Norman D. Shumway, P. Gregory Conlon, Jessie J. Knight, Jr., Commissioners COUNSEL: Otis Mc Gee, Jr. Attorney at Law, McGee, Lafayette, Willis & Green, and Barbara S. Benson, Attorney at Law, for Pacific Gas & Electric Company; John Tinker and Sumner J. Koch, Attorneys at Law, for Southern California Edison Company; Steven C. Nelson and E. Gregory Barnes, Attorneys at Law, for San Diego Gas & Electric Company; respondents; Peter V. Allen, Attorney at Law, for Toward Utility Rate Normalization (TURN); William B. Chapman, Attorney at Law, and Ellen Stern Harris, for the Fund for the Environment and Concern for Tenants' Rights; Sam DeFrawi, Attorney at Law, for the Department of the Navy; Frances C. Schreiberg, Attorney at Law, and Peter Frech, for Citizens Concerned About EMFs; Norman Furuta, Attorney at Law, for Federal Executive Agencies; Landis Martilla, for the International Brotherhood of Electrical Workers, Local Union 1245 and 47; Raymond Richard Neutra, appearing for the California Department of Health Services; Spiegel & McDiamid by Scott H. Strauss, Attorney at Law, for California Municipal Utilities Association; Margaret A. Verges [*2] and Ramona Albright, for Committee to Investigate EMF-ELF; and Shirley D. Linde, for Citizens for Safer EMF; interested parties; Kathleen C. Maloney, Attorney at Law, for the Division of Ratepayer Advocates. INTERIM OPINION 1 Summary By this order we are taking interim steps to address electric and magnetic fields n1 (EMF) n2 related to electric utility facilities and power lines. Upon consideration of all the evidence presented in the electric utility phase of this investigation we specifically are implementing: * No-cost and low-cost steps to reduce EMF levels; * Workshops to develop EMF design guidelines; * Uniform residential and workplace EMF measurement programs; * Stakeholder and public involvement; * A $1,489,000 four-year education program; * A $5,600,000 four-year non-experimental and administrative research program; and B-11

68 CMUA While CMUA did not take a position on the appropriateness of the education program budget, it testified that CMUA would support and fund on a voluntary basis its fair share of the costs of running the EMF education program TURN and FEA Both TURN and FEA opposed ratepayer funding for the education program. TURN supported a broad-based funding mechanism to address the EMF education program through a tax to be imposed by the Legislature. TURN reasoned that it is poor public policy for utility ratepayers to become the primary source of funding because the California Health and Safety Code 210 spells out DHS' responsibilities with regard to suspected cancer causing substances in the workplace and the general environment, and directs the Legislature to appropriate funds for this [*44] purpose. Alternatively, TURN recommended that utility shareholders and unregulated energy utilities bear a proportional share of the funding costs with ratepayers. Utility shareholders should bear part of the financial burden due to their financial stake in reducing EMF uncertainty. The cost of reducing this uncertainty is distinctly different from what is ordinarily thought of as a cost of service for which unregulated electric utilities should bear a share because they also may be producing EMF. Although FEA concurred that regulated utilities need to do a better public relations job with regard to EMF, FEA did not recommend approval of program costs being passed through to ratepayers. Instead, FEA proposed that the Commission intervene in the utilities' current education programs to improve a coordinated effort between the utilities and DHS Discussion If we assume that the adopted program would be broad-based, and that wages would increase 8 percent per year, for which no testimony was provided, then DHS' budget would be considered reasonable. However, this is not a reality. An adjustment is in order to reflect California's current employment market, which does not [*45] support a 8 percent yearly salary increase, and to reflect the adoption of a program restricted to EMF related to regulated electric utilities' facilities and power lines, and the exclusion of program activities of the SAC. Furthermore, we do not find it appropriate for investor-owned utility ratepayers to be funding California Energy Commission programs targeted at manufacturers. If the Energy Commission wishes to enlist DHS' support in developing an EMF education program for manufacturers, it should do so. Therefore, the education program budget should be reduced from $2.5 million to $1.489 million as follows: Program Requested Approved Advisory Committee $ 101,000 $ 0 Clearinghouse 408, ,000 Manufacturer Training 167,000 0 Local Training 1,039, ,000 Response Team 635, ,000 Guidelines & Measurement Protocols 167, ,000 Total Four-Year Program $2,517,000 $1,489,000 TURN may be correct in suggesting that the Legislature should appropriate funds for this program. However, we find that the education program being adopted has been narrowed down to EMF impacts of electric utilities under our jurisdiction. TURN testified [*46] that was appropriate for utilities to educate their customers and workers about the potential health hazards of EMF associated with utility-owned or operated generation, transmission, and distribution facilities. It is for these reasons that TURN's concern is not valid. TURN, having participated in numerous proceedings before this Commission, must be well aware of the traditional cost of service principles that are the basis for utility ratemaking. Specifically, regulated utilities should have the opportunity to receive sufficient revenue in rates to recover reasonable costs and a fair return on invested capital. For B-12

69 example, in Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591 (1944), the U.S. Supreme Court clearly affirmed that shareholders in regulated firms must be allowed the opportunity to earn returns that are sufficient to attract capital and are comparable to those they would expect in the unregulated sector for bearing the same degree of risk. Prudent EMF costs associated with electric utility related work and facilities are part of a utility's cost to provide energy services in a safe and efficient way. Absent substantive testimony from TURN and a [*47] change in the regulatory policy of allowing utilities to recover reasonable costs incurred in the performance of utility service, shareholder funding for the EMF education program is not a viable alternative. Not all electric utilities have an EMF education program. Therefore, FEA's proposal for consolidating utility education programs would not accomplish its desired result. Some of the respondent electric utilities, such as Edison, have already taken the lead in providing EMF education to their workers and ratepayers and are currently recovering costs of these programs from their ratepayers. The program implemented by this order is intended to coordinate and focus, not to replace, existing education programs. It is also designed to draw from the utilities' experiences in educating ratepayers. In addition, the utilities would have the ultimate responsibility for educating and informing their ratepayers, such as through bill inserts, which may require costs above the level authorized for the coordinated education program. The existing education programs should continue to the extent that they do not duplicate the coordinated education program. Therefore, additional funds should [*48] be made available for the coordinated program. However, respondent electric utilities should review their current EMF educational programs to eliminate duplicative or noncooperative EMF education. In this regard, respondent electric utilities should be required to substantiate in future general rate proceedings that ratepayers are not paying for duplicative EMF education programs. Regulated utilities should use ratepayer funding to contribute their fair share of the $1.49 million, four-year EMF coordinated education program. This fair share should be based on the ratio of an individual utility's prior calendar year's electric sales to the total participants' (regulated and participating municipal electric utilities) prior calendar year's total electricity sales in California. Concurrent with the establishment of this education program, regulated utilities should file uniform advice letters to establish EMF Memorandum Accounts to track their individual portions of the total $1.49 million education program costs and transfer such costs to their ERAM accounts annually on January 1st. Those utilities currently recovering costs in rates for EMF education should also include in [*49] this memorandum account actual savings derived from their elimination of duplicative or non-cooperative EMF education. 5 EMF Research 5.1 Consensus Group Proposal The CG, based on its thorough examination of the issue and collaboration with 15 scientists and scientist managers of EMF research programs, concluded that a "California EMF research program" and funding for such a program should be established. The principal goal of this research program would be to increase the likelihood that useful information would be available to assist rational regulatory decisions in California by the mid-1990's. At the same time, the CG emphasized that the California utilities' ability to support and manage their individual research programs or to support research of the EPRI program, which is distinctly different from the CG's proposed research program, should not be restricted upon implementation of the CG's proposed research program. Specifics of the research program included establishment of a management structure which would ensure the research program had independent oversight, SAC involvement, and the ability to communicate progress and results. The CG proposed that the DHS manage [*50] the research program and that DHS be responsible for selecting a program manager possessing characteristics of accountability, independence, expertise in program management and administration, working knowledge of EMF, and relevant scientific expertise. The SAC would be given the responsibility to assess the design and progress of the research program, including the ability to employ scientific advisors. The SAC also would be responsible for providing overall guidance on priorities to B-13

70 assure that the research is relevant to policy makers and for monitoring the research process to ensure that no one "captures" the research. Six priority research categories would be undertaken in the proposed research program. These categories, defined in Appendix C to this order, are policy options research, dose exploration and replication research, biological mechanism research, human exposure assessment, clarifying epidemiology, and engineering research. In addition to conducting research on the defined categories, the utilities on their own and in partnership with EPRI would be able to continue EMF-related research that was distinctly different from the research program. On the national level, [*51] the Commission would be expected to participate with the DHS, California Energy Commission, and the California utility industry to actively work toward establishing and participating in a national research program. To avoid unnecessary research duplication, the California research program would be required to coordinate with international, national, federal, state, and privately funded research activities. 5.2 Parties' Positions A majority of the parties participating in the evidentiary phase of this investigation concurred with the CG proposal for the research program. However, it should be noted that these same parties, except for FEA, also were members of the CG who participated in the process which resulted in the CG's consensus research proposal. DRA, Edison, and other parties emphasized that this research program is necessary to help understand whether or not there is a true health hazard from EMF, to identify what factors are important to those health hazards potentially being expressed, to determine available options to lower any health hazard found to exist, and to determine policies to help make choices in the ratepayers' best interest. Such concerns are valid regulated [*52] utilities' management responsibilities needed to provide ratepayers safe and reliable utility service, as addressed in the EMF policy discussion. On the opposite side of this issue were TURN and FEA. TURN, a member of the CG, opposed California regulated utilities bearing the cost to fund the EMF research program. TURN argued that regulated utilities are not the sole sources of potential EMF exposure, and 210 of the California Health and Safety Code specifically directs DHS to conduct the proposed research and the Legislature to appropriate funds for this purpose in the state's annual budget. TURN believed that DHS activities should be funded by the state general fund. TURN also asserted that public hearings need to be held to assess the level of ratepayer concern about EMF prior to implementing the proposed research program. If it is determined that the research program should be undertaken, TURN recommended that the appropriate ratepayer contribution to such an effort not be addressed until the Commission has worked with the Legislature and other state agencies to secure broad-based funding from industry and taxpayers. FEA also opposed the CG's research program. FEA reasoned [*53] that the evidence did not provide any realistic expectation that this research effort would reach any definitive conclusions. Scientists have been unable to develop a consensus that there is a definite link between EMF and adverse health effects on humans after more than thirty years of research and thousands of studies. 5.3 Discussion TURN's opposition to the proposed research program parallels its opposition to the proposed education program. We have already concluded that the Commission has the necessary authority to require regulated utilities to furnish and maintain service, equipment, and facilities necessary to promote the health and safety of their ratepayers and employees. TURN's authority argument is without merit and should be denied because we have narrowed the proposed California research program to regulated electric utilities only. While further public hearings may be a beneficial part of an ongoing research program, it is not necessary to conduct such hearings at this time. In D , we appointed to the CG five representatives of non-affiliated or citizen groups, including TURN, an experienced advocate of ratepayer interests, with the expectation they [*54] would reflect and articulate ratepayers' concerns. In addition, as part of the CG process identified in that decision, the CG was B-14

71 instructed to conduct its business in public, and its members instructed to do all that they could to incorporate the concerns of those interested parties, including ratepayers, who were not identified members of the CG. The reason for public CG meetings was to receive input from interested ratepayers and citizens. The culmination of the CG process was the production of a consensus report resulting in evidentiary hearings to address EMF consensus recommendations. Further public hearings at this time are premature, absent a demonstrated failure on the part of the CG to consider and include public concern and until a review of the preliminary results of the education and research programs implemented by this order has been conducted. We concur with FEA's concern about the potential impact of the proposed research program in consideration of the past 30 years of EMF research and thousands of studies. To date, a vast majority of the research has not reached a definitive conclusion. We also agree with CMUA that, due to the lack of information available [*55] to determine whether or not EMF exposure poses a health hazard and in the absence of further research, the utilities will be running the risk that public policy would be guided by perception rather than scientific analysis, resulting in the adoption of reactive and expensive policies. We therefore conclude that a prudent regulatory response requires the establishment of a limited research program applicable to EMF impacts to the regulated electric utility facilities and power lines and which would directly benefit regulated utilities' ratepayers. 5.4 Research Program Manager Parties' Positions The order instituting this investigation identified the DHS as the appropriate agency to define the research needed to determine whether there is a clear cause and effect relationship between EMF from utility property and public health. Consistent with this position, and with the desire to have independent oversight of the research, the CG recommended that the DHS manage the research program. DHS acknowledged in the evidentiary phase of this investigation that it would be willing to select a program manager from within its agency to take an active role in the management of the research [*56] program. Opposition to DHS being selected as the research program manager came from TURN and FEA. Both parties opposed DHS being the program manager because, as the state agency charged with protecting the public health, DHS should already be doing EMF research. DHS's witness acknowledged that it should be doing such research, but has not done so due to a lack of necessary funds. FEA also disputed whether the Commission could direct funds not appropriated by the legislature and approved by the Governor for DHS activities pursuant to the state budget act of 1992 n14 (A.B. 979, Section 2.00(c), (1992)). n14 The budget act provided that whenever by constitutional or statutory provision revenues or receipts of any institution, department, board, bureau, commission, officer, employee, or other agency, or any monies in any special fund created by law therefore, are to be used for salaries, support or any proper purpose, expenditures shall be made therefrom for any such purposes, to the extent only of the amount therein appropriated, unless otherwise stated herein, or authorized pursuant to Section of the Government Code Discussion The objections to DHS being designated [*57] the program manager are not directly pertinent to an assessment of whether DHS possesses the requisite characteristics of a program manager. For example, DHS's inability to conduct research due to lack of funds has no bearing on its qualifications to conduct independent research. In addition, research being considered in this investigation impacts regulated electric utilities' operations and is a cost of doing business for such utilities regardless of whether the research is being conducted by the utilities or some other entity. The DHS has not proposed to spend non-appropriated funds for any activities it undertakes. As explained in its reply brief, the DHS has participated in research funded by sources other than the state, a practice authorized by 215 of the Health and Safety Code. The objections to DHS being named program manager to the research program are without merit. B-15

72 While we are leaving the precise form of stakeholder and public involvement to DHS, we still wish to ensure interested parties the opportunity to advise us on the progress of the EMF programs we are adopting today. We therefore will authorize interested parties who participate in any advisory group that DHS may adopt to report yearly to the CACD Director following receipt of the research program manager's report if the group believes that report is not [*62] accurate. If the group should choose to do this, it should provide a copy to the research program manager on the results of its review of the research projects conducted under the direction of the research program manager. If at any time interested parties believe that the program manager is not meeting appropriate responsibility or accountability standards, or have concerns about the direction of the research program, parties should inform the CACD Director in writing with a copy to the program manager. The program manager should have fifteen working days to prepare a reply to the CACD Director and a copy to the involved public members and stakeholders. Upon review of both letters, the CACD Director should recommend to the Commission the appropriate course of action to take. The program manager should approve research requests for proposals, criteria to select the panels of scientists reviewing research, and contracts covering topics such as quality assurance, quality control, and subcontractors. 5.6 Research Program Coordination The CG recommended that the Commission, working with the DHS, the California Energy Commission, and the California utility industry, work to facilitate [*63] the establishment of, and to actively participate in a national EMF research program to coordinate federal and private efforts and resources. The CG also proposed coordinating the "California EMF program" with international, national, federal, state, and privately funded research to avoid unnecessary duplication and to engage, when possible, in collaborative agreements to leverage California resources. Edison's witness explained that a federal EMF research program has been in existence since This federal program uses federal agencies and is funded by federal tax dollars. Sponsors of this program include the Department of Energy, Environmental Protection Agency, National Institute of Health, Department of Defense, and the Veterans Administration. Edison also explained that a national EMF program came into existence when President Bush signed the National Energy Policy Act (NEPA) in October This program, in the start-up phase, is intended to derive funding for EMF research from both federal agencies and private entities. Private entities include the electric utility industry, other utilities, and people interested in the EMF issue. As for international coordination, [*64] Edison's witness also explained that Edison is a member of the International EMF Coordinators Group. This international group consists of approximately 13 major EMF funders from Australia, France, Sweden, England, Japan, and the United States. In addition, EMF research is being conducted by individual electric utilities and EPRI. The existence of these diverse EMF research activities makes it apparent that coordination is needed to avoid unnecessary duplication and to assist in directing resources in a cost-effective and efficient manner. Consistent with our approach to education program coordination, the electric utilities and the DHS, as the research program manager, should continue their interaction and work toward enhancing a coordinated EMF research program to the extent that EMF relates to electric utility facilities and power lines. We encourage the utilities and DHS to work with EPRI to explore the possibility of obtaining matching funds for EMF research, to the extent it is consistent with the program we authorize today. Federal, national and international participation should be pursued as can be financially supported by the research budget adopted in this order, and [*65] by individual electric utilities to the extent that participation benefits their ratepayers. 5.7 Research Program Funding Parties' Positions B-16

73 15. The purpose of the EMF design guidelines is for the utilities to establish written EMF policies which incorporate concepts and criteria required by this order to standardize those guidelines, where possible, and to exchange information. 16. Electric utilities are responsible for electric power leading up to the meter on a residential or commercial structure, or in the case of industrial customers with their own substations, up to the point of connection with the substation. 17. EMF comes from many sources beyond the control of the electric [*79] utilities. 18. Involvement from stakeholders and the public is very important to the development of effective EMF policies in California. 19. CG members were provided a $100 daily honorarium for attendance and participation in official CG meetings. 20. Electric utilities have a responsibility to provide individuals and organizations with credible, meaningful, consistent, and timely information regarding EMFs so that such persons may have the ability to make informed decisions about EMF issues related to electric utility facilities and power lines. 21. The utilities' EMF education programs have been tailor-made for individual utilities and do not necessarily result in the coordinated distribution of information. 22. PU Code 451 requires regulated utilities to furnish and maintain service, equipment, and facilities as necessary to promote the health and safety of their patrons or ratepayers and employees. 23. The Commission has no authority over municipal utilities, manufacturers, other state agencies, or other individual organizations. 24. SAC's composition makes it difficult to provide independent input into an EMF education program. 25. There was no consensus on [*80] a coordinated EMF education program budget. 26. CMUA supports and intends to fund, on a voluntary basis, its fair share of the costs of an EMF education and research program. 27. Prudent EMF costs associated with electric utility-related work and facilities are part of an electric utility's cost to provide service in a safe and efficient way. 28. Research is necessary to determine whether there is a health hazard from EMF. 29. Scientists have been unable to develop a consensus that there is a definite link between EMF exposure and adverse public health. 30. The lack of information available to determine whether EMF exposure poses a health hazard and the absence of further research could result in the adoption of reactive and expensive policies. 31. The DHS is the appropriate agency to define the research needed to determine whether there is a clear cause and effect relationship between EMF from utility property and public health. 32. It is not cost effective to require electric utilities or ratepayers to pay an administrative charge for the passing through of EMF experimental research funds from the research program manager to the federal government. 33. D [*81] authorized Edison, PG&E, and SDG&E to establish a CG memorandum account. B-17

74 34. The ERAM balancing account is a reasonable method for respondent electric utilities to close out their CG memorandum account. 10. Conclusions of Law 1. Respondent electric utilities should establish an EMF policy. 2. EMF policy should be implemented to the extent that such policy will enable the electric utilities to maintain safe and reliable utility service. 3. It is not appropriate to adopt any specific numerical standard in association with EMFs until we have a firm scientific basis for adopting any particular value. 4. Low cost is in the range of 4 percent of the total cost of a budgeted project. 5. The CACD should set and chair an EMF design guidelines workshop. 6. The EMF design guidelines should incorporate EMF mitigation options and reflect a concerted attempt to standardize EMF design guidelines to the maximum extent possible. 7. The certification process provided by General Order 131 should incorporate no- and low-cost EMF mitigation measures. 8. The EMF policy established in the Kramer-Victor decision should be continued for new and upgraded facilities. 9. A standard [*82] EMF measurement policy should be established. 10. DHS should determine what form of stakeholder and public involvement will best meet its needs in implementing the EMF research and education programs. 11. Funds should be budgeted to DHS to solicit input from stakeholders and the public. 12. The budget for stakeholder and public involvement for the four-year research and education programs should not exceed $100, The utilities' tailor-made education programs should be supplemented with an integrated and uniform EMF education program. 14. A coordinated EMF education program related to regulated energy utilities' facilities and power lines or otherwise useful to regulated electric utilities should be established. 15. The DHS should be designated program manager for the EMF education and research programs. 16. Interested parties with ideas on EMF education related to electric utilities should channel their ideas to the DHS and to individual utilities. 17. Respondent electric utilities should substantiate in future general rate proceedings that their ratepayers are not paying for duplicative EMF education programs. 18. EMF research should be approved. 19. Respondent [*83] electric utilities should close out their Consensus Group memorandum accounts. INTERIM ORDER B-18

75 15. Respondent electric utilities shall participate in a coordinated EMF education and research program specifically related to electric utilities' facilities and power lines with a maximum four-year budget of $1,489,000 for education and $5,600,000 for a research program, as authorized in the body of this order. Electric utilities not subject to Commission jurisdiction shall be invited to participate in the coordinated EMF education program on a voluntary basis. 16. The Department of Health Services (DHS) shall be the EMF education and research program manager to the extent that DHS is able to do so within its statutory authority and to the extent that it has sufficient funding. To the extent that the DHS may be unable to manage the EMF education or research program, the CACD Director shall nominate, and the Commission shall approve a replacement program manager that possesses the quality of independence. 17. Respondent electric [*87] utilities shall recover their fair share of the costs of support the maximum $7.2 million coordinated program authorized in Ordering Paragraph 15. Fair share shall be based on the ratio of an individual utility's prior calendar year's electricity sales to the total participants' (regulated and municipal electric utilities) prior calendar year's total electricity sales in California. EMF education and research program costs shall be accumulated in the EMF memorandum account and transferred to the respective utility's ERAM account annually on January 1st. 18. Respondent electric utilities shall include a yearly bill insert as part of their EMF education programs. The insert should identify what is known about EMFs, what is being done, and what options exist based on current knowledge about potential health risks. The insert should incorporate EMF educational information developed by DHS. The utilities shall submit the proposed bill insert to the Commission's Public Advisor's Office for review and approval. 19. Respondent electric utilities currently recovering costs in rates for EMF education shall include in the EMF memorandum account actual savings derived from their elimination [*88] of duplicative or non-cooperative EMF education. 20. Respondent electric utilities shall be authorized to participate in an experimental research program to be conducted by the federal government pursuant to the National Energy Policy Act (NEPA) of Respondent utilities shall file an advice letter to establish a EMF experimental research program balancing account to track their fair share of the adopted California regulated utility contribution to the NEPA experimental research program cost as specified in this order. Fair share shall be based on the ratio of an individual utility's prior calendar year's electricity sales to the total participants' (regulated and municipal energy utilities) prior calendar year's total electricity sales in California. 21. Respondent electric utilities shall accumulate in their EMF experimental research balancing account only their fair share of the cost of national experimental research which addresses EMF related to electric utility facilities and power lines, or to the extent that regulated electric utility funding may be required by law. Each respondent electric utility shall transfer any balance in its experimental research balancing [*89] account to its ERAM account annually on January 1st. 22. Respondent electric utilities shall close their Consensus Group memorandum account by transferring any balance in the memorandum account to their respective ERAM balancing account. This order becomes effective 30 days from today. Dated November 2, 1993, at San Francisco, California I will file a concurring opinion. P. GREGORY CONLON, Commissioner APPENDIX A ABBREVIATIONS AND ACRONYMS B-19

76 B-20