Document in Exhibit€¦ · IP&EA is comprised of Integrated Planning (Chapter IV), Transportation...

Application No.: Exhibit No.: SCE-09 Witnesses: V. Gutierrez

M. Jordan E. Kjaer M. Nelson J. Pespisa M. Scott-Kakures

(U 338-E)

External Relations

Before the

Public Utilities Commission of the State of California

Rosemead, CaliforniaNovember 2013

SUMMARY

Exhibit SCE-09 is composed of the following nine chapters:

Chapter I – Corporate Communications

Chapter II – Corporate Membership Dues & Fees

Chapter III to VI – Integrated Planning & Environmental Affairs

Chapter VII – Regulatory Operations and Regulatory Policy & Affairs

Chapter VIII – Corporate NERC Critical Infrastructure Protection

Chapter IX – Local Public Affairs

Chapter I discusses a request from Corporate Communications’ forecast that totals $19.923

million for Test Year 2015 expenses, an increase of $9.797 million over the 2012 recorded levels

(in 2012 dollars). The increase is primarily due to moving $10.541 million of formerly

shareholder costs for public safety and energy efficiency advertising campaigns into ratepayer

funding. Corporate Communications records to FERC accounts 920/921, 923, and 930.

Chapter II requests Test Year 2015 Corporate Membership Dues & Fees expenses of $2.016

million, which include adjustments made to exclude shareholder expenses. The Test Year

forecast is the same as the 2012 recorded expense (in 2012 dollars). Corporate Membership

Dues & Fees records to FERC Account 930.2.

Chapter III to VI discusses the request from Integrated Planning & Environmental Affairs

(IP&EA) for Test Year 2015 expenses of $21.115 million, an increase of $4.340 million over the

2012 spending levels (in 2012 dollars). The 2015 Test Year forecast increase includes the full

authorized amount ($6.303 million) for the Generation Planning Memorandum Account

(formerly know as the Project Development Division Memorandum Account, or PDDMA).

IP&EA is comprised of Integrated Planning (Chapter IV), Transportation Electrification

(Chapter V) and Environmental Affairs (Chapter VI). IP&EA’s expenses are forecasted in

FERC accounts 557, 549, 588, and 920/921.

Chapter VII discusses Test Year 2015 Regulatory Operations and Regulatory Policy & Affairs’

(RP&A) forecast of $16.461 million, an increase of $1.171 million over the 2012 recorded levels

(in 2012 dollars). The 2015 Test Year forecast includes: (1) the addition of five employees in

new positions required to meet the growth in North American Electric Reliability Corporation

(NERC) regulatory compliance work, (2) the addition of five employees in new positions to meet

the growing regulatory work in the RP&A department, and (3) reductions for amounts associated

with Financial Services’ Operational Excellence initiative. The Regulatory Operations and

RP&A’s O&M expenses are recorded in FERC account 920/921.

Chapter VIII discusses the scope of NERC Critical Infrastructure Protection (CIP) Version 5 and

its impact on Company’s operations. CIP Version 5 is anticipated to become effective on

October 1, 2015.

Chapter IX requests Test Year 2015 Local Public Affairs’ (LPA) labor and non-labor expenses

of $13.542 million, an increase of $0.869 million over 2012 recorded levels (in 2012 dollars).

LPA is requesting increases to fill four vacancies and four new positions. This chapter covers

FERC account 920/921 for Local Public Affairs (LPA), FERC account 408 for Business License

Tax (BLT), and FERC account 927 for Franchise Fees. In Test Year 2015, LPA forecasts that

SCE will pay $0.585 million in BLT. In Test Year 2015, LPA forecasts a Franchise factor of

0.9095 percent.

SCE-09: External Relations

Table Of Contents

Section Page Witness

-i-

I. CORPORATE COMMUNICATIONS ..............................................................1 M. Jordan

A. Introduction ............................................................................................1

B. Summary of Test Year Request .............................................................4

C. Corporate Communications Activities and Non-Utility Credits ....................................................................................................4

D. Description of FERC Accounts 920 and 921 .........................................5

1. Summary of Test Year Request .................................................5

2. Description of Activities ............................................................6

a) Strategy Communications ..............................................7

(1) Strategy Communications ..................................7

(2) Public Education and Communications ................................................8

b) Media Relations .............................................................8

(1) News Bureau ......................................................8

(2) Social Media ......................................................9

(3) Ethnic Media ....................................................10

c) Enterprise Communications .........................................12

(1) Operating Unit Communications .....................12

(2) Enterprise Communications .............................12

(3) Web ..................................................................13

d) Creative Services .........................................................13

3. Analysis of Recorded Expenses ...............................................14

a) Analysis of Recorded Labor Expenses ........................14

b) Analysis of Recorded Non-Labor Expenses ................14


Table Of Contents (Continued)


-ii-

4. Analysis of Forecast Expenses.................................................14

a) Test Year (2015) Forecast Labor Expense ...................14

b) Test Year (2015) Forecast Non-Labor Expense ........................................................................16

E. FERC Account 923 ..............................................................................17

1. Summary of Test Year Request ...............................................17

2. Description of Activities ..........................................................17



F. FERC Account 930 ..............................................................................20

1. Summary of Test Year Request ...............................................20

2. Description of FERC Account 930 ..........................................20

a) Annual Reports ............................................................20

b) SCE’s Public Safety Education Programs ...................20

(1) Materials for At-Risk Workers ........................20

(2) Electrical Safety for 4th and 5th Graders .............................................................21



a) Public Safety Around Electricity Education Campaign .....................................................................23

b) Summer Readiness Energy Conservation Advertising Campaign .................................................28

c) Corporate Responsibility Report ..................................30

II. CORPORATE MEMBERSHIP DUES & FEES .............................................31




-iii-

A. Introduction and Summary of Test Year Request ................................31

B. Description of EEI Activities ...............................................................32

1. Customer Services Committee .................................................33

2. Transmission Committee .........................................................34

3. Accounting Committees...........................................................34

4. Distribution and Metering Committees ...................................36

5. Environment Advisory Committee ..........................................36

6. Security Committee .................................................................38

7. Supplier Diversity Committee .................................................38

8. Mutual Assistance/Emergency Preparedness Committee ................................................................................38

9. Utility Solid Waste Activities Group .......................................39

C. SCE Involvement in Other Organizations that Benefit Customers ............................................................................................39

1. Research Organizations ...........................................................39

a) Georgia Tech National Electric Energy Testing Research and Applications Center ..................39

2. Economic Development Organizations ...................................40

a) Los Angeles County Economic Development Corporation ............................................40

b) Southern California Leadership Council .....................40

3. Business Associations ..............................................................40

a) Conference Board ........................................................40

b) California Utilities Emergency Association ................41

4. Workforce/Labor Associations ................................................41




-iv-

a) Center for Energy Workforce Development ................41

D. Analysis of Recorded Expenses ...........................................................42

E. Analysis of Forecast Expenses.............................................................43

III. INTEGRATED PLANNING AND ENVIRONMENTAL AFFAIRS .........................................................................................................44 M. Nelson

A. Overview of Integrated Planning and Environmental Affairs ..................................................................................................44

B. Summary of Test Year 2015 Request – Integrated Planning and Environmental Affairs Department ...............................................45

IV. INTEGRATED PLANNING ...........................................................................46

A. FERC Account 557: Resource Economics, Generation Regulatory, Strategic Planning, Market Design and Analysis, and Resource Planning .........................................................47

1. Resource Economics ................................................................47

2. Generation Regulatory .............................................................49

3. Strategic Planning ....................................................................49

4. Market Design and Analysis ....................................................50

5. Resource Planning ...................................................................52

B. Analysis of FERC Account 557 ...........................................................54

1. Summary of 2015 Test Year Request ......................................54

2. Description of Account ............................................................55

3. Analysis of Recorded Costs – Labor .......................................55

4. Analysis of Recorded Costs – Non-Labor ...............................56

5. Labor Forecast .........................................................................56

6. Non-Labor Forecast .................................................................57

C. FERC Account 549: Generation Planning ..........................................57




-v-

D. Analysis of FERC Account 549 ...........................................................58





5. Labor Forecast .........................................................................60


V. TRANSPORTATION ELECTRIFICATION ..................................................62 E. Kjaer

A. FERC Account 588: Transportation Electrification ...........................62

1. TE Policy Activities .................................................................63

a) Federal..........................................................................64

b) State..............................................................................64

c) Local/Regional .............................................................65

2. TE Strategy and Planning ........................................................65

3. TE External Coordination ........................................................65

4. TE Internal Coordination .........................................................66

5. PEV Customer Education & Outreach ....................................66

B. Analysis of FERC Account 588 ...........................................................67

1. Summary of 2015 Test Year Estimate .....................................67




5. Labor Forecast .........................................................................69




-vi-


VI. ENVIRONMENTAL AFFAIRS .....................................................................71 M. Nelson

A. FERC Account 920/921 .......................................................................71

1. Agency Engagement ................................................................71

a) Air Quality ...................................................................72

b) Global Climate Change ................................................72

c) Water ............................................................................73

d) Solid and Hazardous Waste .........................................73

e) Coastal Areas ...............................................................74

f) Public Lands.................................................................74

g) Natural and Cultural Resources ...................................75

2. Corporate Responsibility and Sustainability ............................76

B. Analysis of FERC Account 920/921....................................................77





5. Labor Forecast .........................................................................79


VII. REGULATORY OPERATIONS AND REGULATORY POLICY & AFFAIRS .....................................................................................................81 M. Scott-Kakures

A. Overview of the Regulatory Operations and Regulatory Policy & Affairs Departments .............................................................81

1. Regulatory Operations Department .........................................81




-vii-

2. RP&A Department ...................................................................83

B. Summary of Test Year Request ...........................................................84

C. Analysis of Recorded and Forecast Costs (FERC Accounts 920 and 921) ........................................................................................85

1. Regulatory Operations and RP&A’s Recorded Labor Expenses ........................................................................85

2. Regulatory Operations and RP&A’s Test Year 2015 Forecast Labor Expenses .........................................................86

(1) Regulatory Operations: Commission and FERC-Related Rates, Regulation and Tariff work ................................................89

(2) RP&A Department ...........................................90

(3) Regulatory Compliance (Non-NERC) Related Work ......................................92

(4) NERC Compliance Program (NCP) Related Work ...................................................93 J. Pespisa

3. Regulatory Operations and RP&A’s Test Year 2015 Recorded and Forecast Non-Labor Expenses ..........................97 M. Scott-Kakures

VIII. CORPORATE NERC CRITICAL INFRASTRUCTURE PROTECTION (CIP) .......................................................................................98 J. Pespisa

A. Regulatory Background .......................................................................98

B. Impact of NERC CIP Standards Version 5 and Associated Incremental Costs.................................................................................99

C. Implementation of a Compliance Program ........................................100

1. Development Of Compliance Governance Organization And Tools .........................................................101

2. Identification and Management of Applicable Facilities and Systems ............................................................101

3. Development and Implementation of Electronic Security Controls ...................................................................102




-viii-

4. Development and Implementation of Physical Security Controls ...................................................................103

IX. LOCAL PUBLIC AFFAIRS..........................................................................105 V. Gutierrez

A. Overview of Local Public Affairs (LPA) ...........................................105

B. New and Expanded Roles and Responsibilities Since the 2012 GRC ..........................................................................................105

1. Increased Public Education on Electric Equipment Safety .....................................................................................105

2. Increased Coordination and Training for Emergency Preparedness ..........................................................................106

a) National Incident Management System (NIMS) and Incident Command System (ICS) Standards and Training ....................................107

b) Reverse 911 for Emergency Communications to Customers ..................................108

c) Flash Communication Drills with City Managers and Elected Officials .................................108

d) Customer Outreach through Diverse Community-Based Organizations ..............................108

3. LPA’s New and Expanded Roles and Responsibilities Build on Existing Priorities Related to Infrastructure Improvement and Expansion ......................109

a) Community Engagement on New Distribution Construction Activities ..........................109

b) Licensing, Public Involvement, and Construction of New Transmission, Substation, and Generation Projects ..........................110

c) Interconnection of Renewable Energy .......................111

d) Major Transmission Line Relocations .......................112

C. Overview of Local Public Affairs ......................................................112




-ix-

1. Public Involvement & Education ...........................................112

2. Policy & Project Management ...............................................113

3. Region Managers ...................................................................114

4. Strategic Engagement ............................................................115

a) Community Forums ...................................................115

b) SCE Speakers’ Bureau ...............................................116

c) SONGS Open Houses and Nuclear Education ...................................................................117

d) Employee Resource Groups .......................................117

e) Consumer Advisory Panel .........................................118

5. Local Governmental Affairs ..................................................118

D. FERC Account 920/921 – Local Public Affairs ................................119

1. Description of Expenses ........................................................119

2. Analysis of Recorded Expenses .............................................120

3. Test Year Forecast .................................................................121

4. Increase in Labor Forecast to Accommodate LPA Growth Needs for 2013, 2014, and 2015 ...............................122

5. Increase in Non-Labor Forecast to Accommodate LPA Growth Needs for 2013, 2014, and 2015 ......................124

E. FERC Account 408 - Business License Tax ......................................124

1. Description of Account ..........................................................124


3. Analysis of Forecast Expenses...............................................125

F. FERC Account 927 – Franchise Fees ................................................126

1. Description of Account ..........................................................126




-x-


3. Summary of Test Year Request .............................................128

Appendix A Witness Qualifications ................................................................................


List Of Figures

Figure Page

-xi-

Figure I-1 Corporate Communications Recorded and Adjusted 2008-2012/Forecast 2013-

2015 FERC Account 920/921 (Constant 2012 $000) ............................................................................6


2015 FERC 923 (Constant 2012 $000) ................................................................................................19


2015 FERC Account 930, (Constant 2012 $000) ................................................................................22

Figure II-4 Corporate Communications Recorded and Adjusted 2009-2012/Forecast

2013-2015 FERC Account 930.2 (Constant 2012 $000) .....................................................................42

Figure IV-5 Integrated Planning Recorded and Adjusted 2008-2012/Forecasted 2013-

2015 FERC Account 557 (Constant 2012$) ........................................................................................55

Figure IV-6 Generation Planning Recorded and Adjusted 2008-2012/Forecasted 2013-

2015 FERC Account 549 (Constant 2012$) ........................................................................................59

Figure V-7 Forecasted Plug-in Vehicles in SCE's Service Territory .........................................................63

Figure V-8 Transportation Electrification Recorded and Adjusted 2008-2012/Forecasted

2013-2015 FERC Account 588 (Constant 2012$) ...............................................................................68

Figure VI-9 Environmental Affairs Recorded and Adjusted 2008-2012/Forecasted 2013-

2015 FERC Account 920/921 (Constant 2012$) .................................................................................77

Figure VII-10 Regulatory Operations and RP&A Recorded And Adjusted 2008-

2012/Forecast 2013-2015 FERC Accounts 920/921 (Constant 2012 $000) .......................................85

Figure VIII-11 Program Oversight Organization (High Level) ...............................................................100

Figure IX-12 Local Public Affairs Recorded 2008-2012 / Forecast 2013-2015 FERC

Account 920/921 (2012-$000) ...........................................................................................................120

Figure IX-13 Business License Tax History and Estimate (Nominal $000) ...........................................126


List Of Tables

Table Page

-xii-

Table I-1 Corporate Communications Activities Subject to Affiliate Credit ..............................................5

Table I-2 Labor Costs for Public Safety Around Electricity and Summer Readiness

Advertising Campaigns ........................................................................................................................16

Table I-3 Forecast Expense for Public Safety Around Electricity Advertising Campaign

(2012 $) ................................................................................................................................................26

Table II-4 Edison Electric Institute Schedule of Selected [Shareholder] Expenses for

2010, 2011, and 2012 ...........................................................................................................................32

Table VII-5 Regulatory Operations and RP&A Account 920 – 2015 Test Year Labor

Forecast ................................................................................................................................................88

Table IX-6 Local Public Affairs Vacant And New Positions (2013) ......................................................123

Table IX-7 Franchise Types and Conditions ...........................................................................................127

Table IX-8 Franchise Fee Factors (2008-2012)/Projected 2013-2015 ....................................................128

1

I. 1

CORPORATE COMMUNICATIONS 2

A. Introduction 3

Corporate Communications has the primary responsibility to act as Company spokesperson to 4

the news media, and to provide official Company information that it researches and develops to 5

customers and other stakeholders who include public officials, policymakers, the Company’s business 6

suppliers, community organizations, shareholders, its employees and other key groups. Many of these 7

communication efforts made by Corporate Communications support Commission-mandated programs 8

such as emergency information and storm-related energy conservation programs.1 9

Corporate Communications provides communication to SCE’s customers and other stakeholders 10

to help them be well-informed electricity consumers. Residential and business customers benefit when 11

they have clear and consistent information on key issues, such as power reliability, power outages, 12

customer service options, rate changes, energy-saving practices, electric safety, and other consumer 13

education topics. The general public also benefits when they are informed of key issues such as electric 14

safety, infrastructure improvement projects, power emergencies and outages, and energy policy issues. 15

SCE’s service territory covers the second largest media market in the United States. Corporate 16

Communications interacts with approximately 130 daily, local, and ethnic newspapers in English and 17

other languages, six network television affiliates, many independent and cable television stations, 18

dozens of radio stations, and hundreds of ethnic and special interest media outlets of all sizes and levels 19

of sophistication. Social media outlets include: mainstream news media; popular social networking 20

sites such as Twitter, Facebook and YouTube; and many smaller, often special-interest, social media 21

sites, websites, and blogs. 22

Corporate Communications is increasingly more focused on communicating with the multiple 23

consumer audiences that populate the Company’s service territory in the language and through the 24

medium that customers prefer. Specifically, to effectively reach the many ethnicities and cultures that 25

make up Southern California, Corporate Communications is employing a wide variety of technology and 26

1 Corporate Communication’s function is to develop and implement communications to customers and/or the public on

key matters through the use of mass advertising and communication methods, media relations, and public relations. This is distinct from the role of Customer Services’ function, which is to inform and engage customers about relevant rates, products, services and programs through the use of direct communications, such as: direct mail, email, outreach and events, bill messaging, and onserts.

2

channels to enhance customer and public awareness on key information such as safety, rates, outages, 1

and energy efficiency programs. 2

Examples of these channels and technology, include: (1) television, radio, print, out-of-home 3

advertising at bus stops and on billboards; (2) digital content distributed through www.sce.com and 4

other Company websites, an outage app, and numerous social media and networking sites; (3) ongoing 5

media relations including daily communication with local media, press events, news releases, and news 6

postings online; (4) targeted newsletters and other collateral materials; and (5) public education 7

campaigns including those in schools and to agricultural workers, tree trimmers and other target 8

audiences who work around electricity. 9

Corporate Communications’ use of multi-media and diverse communication channels has led to 10

an increase in customer awareness on important issues. For example, Corporate Communications 11

undertook a Summer Readiness public education campaign in the summer of 2012 to increase 12

consumers’ awareness about potential outages due to summer temperatures given the unavailability of 13

SONGS. This campaign is described in detail in Chapter I.F.4.b (FERC Account 930 Forecast) below; 14

however, the key point is that the multilingual, multi-media campaign resulted in 93 percent of 15

residential customers and 89 percent of small business customers strongly agreeing or somewhat 16

agreeing that “it is necessary for everyone to save electricity this summer to prevent outages and rolling 17

blackouts.”2 As a result, on August 8, 2012, SCE customers saved approximately 300 megawatts of 18

electricity.3 19

Additionally, since 2011, Corporate Communications has increased its focus on preparing for 20

and providing communications to the public during potential and actual emergency situations. SCE staff 21

was assigned to emergency communications response teams to keep the public informed as to: 22

SCE’s emergency preparedness to respond to natural disasters in light of the Fukushima 23

disaster in Japan; 24

Events impacting the operation of SONGS, such as the steam generator tube leak identified 25

on January 31, 2012; 26

SCE’s actions and response during the San Gabriel Valley windstorm; and 27

2 See SCE Market Research, SLS1330, November 9, 2012, included in workpapers entitled “2012 Summer Readiness

Campaign Effectiveness Study.”

3 Includes reductions from Demand Bidding Program for commercial customers and Summer Discount Plan for residential customers.

3

The workplace violence that occurred on December 16, 2011 at SCE’s Rivergrade facility. 1

From these experiences, Corporate Communications undertook a comprehensive initiative to 2

increase the Company’s readiness during an emergency. SCE adopted the FEMA-sponsored Incident 3

Command System (ICS) methodology as the basis for emergency response, trained employees in the 4

ICS methods (using training from FEMA), and subsequently practiced the methodology in numerous 5

drills, and utilized the ICS approach during true emergencies. SCE also inventoried and upgraded 6

emergency equipment that Corporate Communications needs in order to continue to provide Company 7

information to stakeholders during an emergency, such as call-in trunk lines and satellite phones. SCE 8

also wrote a new emergency communication plan and developed a field guide which was presented to 9

the Commission during a workshop about crisis communications.4 Corporate Communications 10

completed an After Action Review following crisis management episodes in order to continuously 11

improve its response during these critical times. 12

Through an extensive lessons-learned evaluation, SCE discovered that during the San Gabriel 13

Valley windstorm, many customers used social media sources accessed from their smartphones to 14

receive information and to contact SCE. Corporate Communications accelerated the establishment of an 15

SCE Facebook page in response to customer requests for this mode of communication of information, 16

publishing its Facebook page on December 16, 2011. 17

Internally, Corporate Communications informs SCE employees of: (1) Company plans, goals, 18

issues, operations and significant achievements; (2) corporate values and ethics standards; the 19

importance of maintaining a safe work environment; and (3) how employees’ roles and responsibilities 20

contribute to better customer service and satisfaction. In addition, Corporate Communications provides 21

employees the information they need to be able to answer their family’s, friends’ and neighbors’ 22

questions about rates, SONGS, safety, and other important topics. Internal communications is 23

accomplished through Inside Edison, a monthly online and print magazine; SCE’s intranet (Portal); 24

videos; internal social media; face-to-face meetings with Company officers and executives; 25

communications toolkits provided to managers for use in cascading information to their teams; and 26

various other channels. 27

This chapter describes the roles, responsibilities and core functions of Corporate 28

Communications and how its coordinated efforts benefit SCE’s customers and other key internal and 29

4 CPUC Workshop held on February 7, 2012 regarding “Emergency Response Communications.”

4

external audiences. It also examines the department’s costs of providing its products and services, and 1

addresses the expenses associated with communication-related activities for the utility. The expenses in 2

this department are recorded in three FERC accounts: FERC Account 920/921 in which Corporate 3

Communications’ labor and non-labor expenses are recorded, FERC Account 923 which records non-4

labor expenses for ethnic public relations agencies and communication measurement expenses, and 5

FERC Account 930 which includes non-labor expenses for several public safety programs and the 6

Company annual reports. 7

B. Summary of Test Year Request 8

For Test Year 2015, Corporate Communications forecasts a total of $19.923 million. This 9

forecast includes a reduction from 2012 recorded expenses in FERC 920/921 labor and employee-10

related non-labor as a result of the Company’s Operational Excellence initiative and the permanent 11

shutdown of SONGS. 12

As discussed in detail below, SCE estimates an increase of $10.843 million in FERC Account 13

930 for non-labor expenses of which $10.571 million is related to the Public Safety Around Electricity 14

and Summer Readiness Energy Conservation advertising campaigns, and for the corporate responsibility 15

report. 16

C. Corporate Communications Activities and Non-Utility Credits 17

Several SCE Corporate Communications activities are subject to non-utility credits under SCE’s 18

multifactor rate.5 For example, the total O&M expense for the production of the annual report is 19

included in SCE’s estimates in this application (FERC Account 930). However, SCE records a non-20

utility credit to the account based on a multi-factor rate set by our Controller’s Department. Although 21

the costs of these activities are included in our Test Year estimates, recorded amounts are credited back 22

to customers using this affiliate credit mechanism. Table I-1 below shows Corporate Communications 23

accounts that were assigned non-utility credits in 2012. Corporate Communications expects the same 24

treatment in 2015. 25

5 For a detailed testimony, see Exhibit SCE-10, Vol. 1.

5

Table I-1 Corporate Communications Activities Subject to Affiliate Credit

No. Activity FERC Account 1 Media Relations 920/921 2 Internal Communications 920/921 3 Edison International Annual Report 930 4 Outside Services 923

D. Description of FERC Accounts 920 and 921 1

This account includes labor and non-labor expenses incurred for Corporate Communications’ 2

activities as described in detail below. 3

1. Summary of Test Year Request 4

Corporate Communications forecasts $7.807 million for Test Year 2015 for FERC 5

Account 920/921, which includes $5.978 million for labor and $1.829 million for non-labor as shown in 6

Figure I-1 below. 7

6

Figure I-1 Corporate Communications Recorded and Adjusted

2008-2012/Forecast 2013-2015 FERC Account 920/921 (Constant 2012 $000)

2. Description of Activities 1

Corporate Communications must effectively communicate with an ethnically diverse 2

customer base spanning a large geography. Approximately 47 percent of the residents within SCE’s 3

service territory speak a language other than English at home.6 It is projected that the Asian population 4

segment in SCE’s service territory will grow by 11 percent between 2012 and 2017, and Hispanics 9 5

percent over the same years.7 These statistics show an increasing need for in-language and in-culture 6

communication products and services in order to effectively reach our customers. 7

Customers’ use of new technologies, and their preference to communicate with SCE 8

through them, is increasing. Approximately 143 million Americans have Facebook pages and they 9

check their Facebook accounts an average of four times a day.8 Nationwide, according to J. D. Power, 10

6 Estimate from A.C. Nielsen based on the U.S. Census Bureau's 2007-2011 American Community Survey.

7 Nielsen Popfacts - 2012 Current Year Estimate and 2017 Projections.

8 http://socialhabit.com/secure/wp-content/uploads/2012/07/The-Social-Habit-2012-by-Edison-Research.pdf.

7

utilities in the U.S. are responding to this phenomenon by continuously increasing their adoption of 1

social media every year since 2008. 2

Since the filing of SCE’s 2012 GRC in November 2010, Corporate Communications has 3

reorganized to better meet the communication needs of the Company and our customers and to close the 4

skill gaps created by the need to communicate through different channels. Corporate Communications 5

has increased its focus on both traditional and digital news media, and social media, as well as on the 6

ability to quickly communicate in-language and in-culture in order to better serve our customers. The 7

department also increased its focus on: (1) strategy communications, in order to better track consumer 8

communication preferences over the long-term and to prepare for them; (2) increasing the department’s 9

capabilities in multilingual skills to better work with ethnic news media and audiences; and (3) 10

increasing our capability in video work, as that is a method valued by both customer and internal 11

audiences for receiving information.9 The department was reorganized around these new priorities, and 12

thus some of the work groups and functions described below differ from those described in Corporate 13

Communications’ 2012 GRC testimony. 14

Corporate Communications’ functions are currently divided into three areas: Strategy 15

Communications, Media Relations, and Enterprise (Company-wide) Communications. Each has several 16

subgroups. 17

a) Strategy Communications 18

Through tracking measurement and survey data, Strategy Communications 19

develops long-term communication strategies on how to continuously evolve the Company’s 20

communication efforts in order to most effectively reach customers. The team is tasked with identifying 21

new and effective channels and strategies through which to convey information to key audiences, so that 22

audiences do not have to find and pull the information from the Company. It divides its work into two 23

groups: Strategy Communications, and Public Education and Communications. 24

(1) Strategy Communications 25

As customers’ communication consumption habits change, 26

communication approaches and media also need to change. This group tracks macro customer trends 27

including attitudes, values, and behaviors in order to devise long-term communication engagement 28

strategies with customers and other stakeholders. Communication strategies are designed from research 29

9 SCE has had 184,768 views of videos posted on our web properties as of March 18, 2013.

8

insights, trends, regulatory policies, and demographic and cultural changes. Products are then delivered 1

to reach customers with messages that resonate with their experience, values, attitudes, and behavior, 2

using their preferred communication channels. 3

This group also has taken the lead in improving communication processes 4

in windstorm and other outage emergencies. The group is examining past performance, and 5

recommending and implementing new processes to promote a comprehensive method of communicating 6

with customers, the news media, and local officials during times of emergency outages. Improvements 7

recommended through this work include setting up an information-delivery schedule that meets the 8

news media’s time deadlines, communicating earlier on social media even if detailed outage information 9

is not yet public, and establishing a communication council of representatives of all customer-facing 10

departments at SCE (the Crisis Information Team) to enhance a unified voice in communication during 11

an emergency. 12

(2) Public Education and Communications 13

This group undertakes public education campaigns on public safety topics, 14

such as downed power lines or summer readiness. Messages are delivered in multiple languages to 15

targeted geographical areas and to ethnic and general audiences with increased frequency during 16

historically weather-driven seasons. Media used includes: billboards, bus shelters, newspapers, radio, 17

online, and television. 18

b) Media Relations 19

Corporate Communications’ media relations work is conducted by three groups: 20

News Bureau, Social Media, and Ethnic Media. 21

(1) News Bureau 22

The News Bureau works with the news media to actively reach customers 23

through the production and distribution of news releases, media statements, fact sheets, and question and 24

answer documents. This group provides critical information to the media for the benefit of customers 25

during emergencies and on important issues such as SONGS’ retirement, and coordinates and staffs all 26

interview requests from electronic, print, and interactive general and ethnic markets, and digital media 27

outlets. Inquiries to SCE’s 24-hour media hot line numbered about 2,500 calls in 2012—a 56 percent 28

increase from the 1,600 calls recorded in 2009. The News Bureau handles media inquiries after business 29

hours, 365 days a year. This team also provides safety around electricity training to members of the 30

news media. 31

9

(2) Social Media 1

The Social Media function has been an increasing focus of Corporate 2

Communications since the 2012 General Rate Case was filed in November 2010. Along with other 3

utility companies,10 SCE has recognized the need to increase activity in social media in response to 4

customers’ requests and preferences. 5

This group oversees the strategy and publication of Corporate 6

Communications’ social media properties, and monitors social media outlets such as mainstream news 7

media and many smaller, often special-interest social media sites that references SCE. 8

Different social media channels meet different customer needs. For 9

example, Facebook has evolved as a better channel for communicating about utilities’ products and 10

services, pricing programs, and smart energy offerings. Twitter is often used for outage 11

communications and service interactions. Sites such as YouTube and Flickr support messaging with 12

videos, pictures, and related content. SCE has one or more channels on each of these sites that are used 13

to publish messages on three main areas of focus: safety, education, and outage/crisis/customer services 14

communication. As compared to peer companies, SCE generated 168 percent more likes/posts for 15

January 2013, and 213 percent more likes/posts for February 2013.11 16

For example, on Twitter, on February 25, 2013, SCE tweeted four times 17

about an outage in the city of Whittier. SCE gained 8 to 15 retweets per message, and the number of 18

followers increased by 50. Also in the month of February 2013, 335 people on Twitter had interactions 19

with SCE; 110 of those were for customer service inquiries. SCE has a total of about 10,400 followers 20

on Twitter.12 21

Also in February, 2013, SCE self-issued 39 Facebook posts relating to 22

information that benefits customers, such as public safety and energy conservation. These posts were 23

shared 425 times, received 275 comments, and earned 4,643 “likes.” The total number of views of these 24

SCE-generated posts was 147,693. SCE currently has about 36,000 fans on Facebook.13 25

10 Surveyed investment trend showing that energy and utility companies’ top increase in spending was in social media.

From CEB Communications Executive Council, 2012 Resource Allocation Benchmarks.

11 Those with 100,000 Facebook fans, as measured through eMarketer.com.

12 As of May 10, 2013.

13 As of March 25, 2013.

10

Communications via social media are primarily done in English, but SCE 1

has published in-language tweets in Spanish, Mandarin, and Cantonese in emergency situations such as 2

Flex Alerts, or for other topics. Corporate Communications utilizes a combination of ethnic media 3

partners and in-house staff to conduct social media communications in language, however, the 4

department will continue to grow staff’s in-language social media skills in order to meet this growing 5

customer need. 6

SCE maintains its own YouTube channel that has received 184,768 views 7

of approximately 180 videos.14 Topics presented include: public safety, energy management solutions 8

for residential and business customers, SmartConnect (SCE’s smart meters), and animated cartoons for 9

children on various energy and safety topics. Videos are presented in English, Spanish, Mandarin, and 10

Cantonese. 11

SCE is currently piloting communications programs on additional social 12

media channels including Instagram and Pinterest, among others. 13

(3) Ethnic Media 14

This group provides media relations services to in-culture and in-language 15

newspapers, broadcast (television/radio), social media, key trade publications and more. These services 16

include proactive and reactive media outreach by handling press releases, media interviews, media 17

briefings, advertorials, and editorial briefings, and maintaining contacts with media outlets/journalists 18

for the types of media outlets mentioned above. Recent hiring has emphasized bilingual skills and 19

Corporate Communications now has the capability on staff to conduct media interviews in Spanish and 20

Chinese. Additionally, Corporate Communications has offered media training to employees Company-21

wide who are fluent in Spanish, Chinese, Cambodian (Khmer), Korean, and Vietnamese so that they can 22

act as spokespeople for the Company to various audiences. 23

In 2012, 34 press releases were released in the ethnic news market, which 24

resulted in 182 earned media placements in African-American media, 513 placements in Asian media, 25

and 333 placements in Hispanic media.15 26

14 Ibid.

15 See workpapers entitled “2012 Media Placement in African American Media,” “2012 Asian Media Coverage,” and “2012 Placements in Hispanic Media.”

11

Press releases are usually provided in Spanish, Chinese, Korean, 1

Vietnamese, Cambodian (Khmer), Thai, and Farsi. English materials are provided to the general 2

market, African-American, Japanese, Filipino, and Indian outlets. 3

Topics of interest to ethnic news media included product and services, 4

emergency preparedness, power line safety and National Electrical Safety Month, windstorm responses, 5

power outages, SONGS, and a warning against a payment scam and utility worker imposters. 6

Media briefings were held for ethnic news media on the following topics 7

and in the following languages: 8

Asian-American Pacific-Islander Heritage Month Event was covered 9

in Chinese and Vietnamese (with English placements in Filipino and 10

Indian media), 11

Black History Month Celebration Event was covered by African 12

American outlets, 13

Hispanic Heritage Month Event was covered by Hispanic media in 14

Spanish, 15

Refrigerator Recycling Event was covered in English, Spanish, 16

Chinese, Korean, and Vietnamese (English placements: African-17

American, Filipino, Indian, Pakistani markets), 18

Summer readiness briefings were covered in the following languages: 19

English, Spanish, Chinese, Korean, and Vietnamese (English 20

placements: African-American, Filipino), and 21

SONGS Ethnic Media Briefing was covered in the following 22

languages: English, Spanish, Chinese, Vietnamese, and Thai. 23

In addition, on September 16, 2011, a special media briefing was held 24

with ethnic media to inform them about the General Rate Case process and to present messages on 25

SCE’s request, the CPUC’s role, how the rates support reliability, and a snapshot of rates in coming 26

years. Thirty media outlets attended, representing Asian (19), African American (8), and Hispanic (2) 27

TV and print media, which resulted in publication of about 30 stories. Feedback from journalists 28

indicated that they appreciated the in-depth coverage and access to SCE experts. 29

This group also oversees the non-labor expenses captured in FERC 30

Account 923 for ethnic public relations agencies. 31

12

c) Enterprise Communications 1

Enterprise Communications focuses on Company-wide communications and 2

consists of three groups which primarily, but not exclusively, internal communications. 3

(1) Operating Unit Communications 4

The Operating Unit (OU) Communications group works in partnership 5

with the leadership from the various organizational units within the Company to deliver messages about 6

programs that increase employee effectiveness, maximize efficiencies, and educate them about key 7

business initiatives, updates, or safety information. This team is responsible for designing the 8

communications plans for internal communications at the OU level.16 An important part of this effort is 9

leading the execution of the communications plans tied to operational excellence, change 10

communications, safety, efficiency initiatives, employee engagement, and the retirement of SONGS. 11

Because many SCE employees are also customers, they interact with other customers in their daily lives, 12

making them ambassadors and messengers who can deliver these important messages to their 13

communities. 14

(2) Enterprise Communications 15

The Enterprise Communications group focuses on communication work 16

across the Company that is designed to create an informed and motivated workforce, one in which 17

individual employees and workgroups have a clear understanding of how their roles align with the 18

delivery of electricity to SCE customers. It also conducts communication activities, internally and 19

externally, that support corporate-wide issues such as Company goals and strategies, major initiatives, 20

and crisis communication. 21

This group also oversees writing, design, and production of Inside Edison, 22

which is the monthly online and print magazine. This periodical supports employee engagement, keeps 23

employees informed on company goals and objectives and clarifies issues the company is facing. 24

Corporate Communications is moving toward saving costs by limiting printed Operational-Unit 25

newsletters and driving traffic to the Inside Edison Web site that can accommodate frequently updated 26

information. This transition is underway. 27

This group also writes and produces, with technical help from Creative 28

Services, two series of senior executive videos to update employees on key initiatives such as employee 29

16 “Operating units” are the highest divisions within SCE. They were called “business units” in the 2012 GRC.

13

layoffs, the work environment, security at Company facilities, safety on the job, and Company goals. 1

These 30 videos have had more than 98,000 hits, making them an effective communications tool. 2

(3) Web 3

The Web group plays a vital role in the management and operations of 4

SCE’s internal and external website. The group develops and enforces Company-wide content standards 5

and guidelines so that all SCE websites are customer-centric and effective. They also create, edit, and 6

maintain Company-wide web content. The group designs the user experience for effective delivery of 7

information and online service transactions, develops web-specific content (copy and imagery), 8

administers the system used to update website content, and tracks metrics. 9

For www.sce.com, SCE’s main customer-facing website, the group 10

develops and publishes official company messages, promotes programs of interest to customers, and 11

provides that content is translated into needed languages and is accessible to disabled viewers. The 12

www.sce.com achieved 172 million page views in 2012.17 13

The group also serves as site manager for SCE’s internal website, the 14

Portal, which helps employees do their work. Portal also acts as the starting point for employees to gain 15

access to essential databases and applications. The group also designs, writes, and builds pages on 16

content such as Company strategy and goals, ethics and compliance, human resources topics, news 17

bulletins, and other important information for employees. Portal achieved 37 million page views in 18

2012.18 19

d) Creative Services 20

The Creative Services group is responsible for directing and coordinating 21

photographic, video, and graphic-design services and graphic guidelines for the Company. This 22

includes all forms of graphic needs associated with the Company’s external and internal websites, 23

external media, customers, and various internal communication projects. As SCE emphasized and 24

anticipated in the 2012 GRC, video production has increased substantially. In 2009, this group produced 25

76 videos, and 171 videos in 2012. This increase in number of videos is the result of increasing 26

demands by the customers, news media, and the public who seek information in visual formats, and due 27

to the increasing use of social and electronic media which support video formats. 28

17 See workpaper entitled, “Edison International Web Properties, Web Traffic Report, December 2012.”

18 Ibid.

14

3. Analysis of Recorded Expenses 1

a) Analysis of Recorded Labor Expenses 2

The labor expenses recorded in FERC Account 920 were relatively stable from 3

2008 to 2009. From 2009 to 2010, there was an increase in labor expenses due to filling vacant 4

positions that were approved in the 2009 GRC.19 These employees helped fulfill the role of Corporate 5

Communications in focusing on work in social media, news media, emergency communications and 6

planning, and in-language skills. From 2010-2011, labor expenses were relatively stable. At the end of 7

2011 Corporate Communications transferred several employees to other OUs to be closer to their core 8

functions, resulting in a decrease in labor in 2012. Corporate Communications also maintained a hiring 9

freeze in 2012 in order to complete its Operational Excellence initiatives. 10

b) Analysis of Recorded Non-Labor Expenses 11

Non-labor expenses remained flat from 2008 to 2009. There was a small increase 12

in non-labor expenses in 2010 due to the addition of expenses for contingent workers to support a 13

number of key initiatives. These initiatives included work to increase staffing in the web development 14

team. There was a subsequent decrease in non-labor expenditures from 2011 to 2012 as the projects that 15

were supported by the contingent workers were completed. 16

4. Analysis of Forecast Expenses 17

a) Test Year (2015) Forecast Labor Expense 18

Corporate Communications’ forecast for FERC Account 920 labor is $5.978 19

million. Corporate Communications is using last recorded year’s expenses, or $7.135 million, as the 20

base estimate for forecasting future expenses, reducing this amount by $715,00020 to reflect Operational 21

Excellence savings in Test Year 2015 and by $670,846 to reflect a reduction in labor expenses due to the 22

permanent shutdown of SONGS, and adding incremental labor expenses of $229,000 to support the 23

Public Safety Around Electricity and Summer Readiness Energy Conservation advertising campaigns. 24

As a part of SCE’s Operational Excellence initiative, Corporate Communications 25

examined the communications work within OUs across the Company. The study found that 26

communication groups within OUs were performing similar functions. As a result, in January 2013, 27

these functions were centralized in Corporate Communications and then reduced to eliminate 28

19 D.09-03-025, pp. 166-168.

20 See workpapers entitled “Adjustment for GRC – Test Year 2015” and “Headcount Reduction - SONGS Impact.”

15

duplication. In the first half of 2013, Corporate Communications also hired several new positions 1

needed to fill skill gaps identified through Operational Excellence and to replace several employees who 2

left the company during the 2012 hiring freeze. The net result of the Operational Excellence initiative is 3

a reduction in labor expense of $715,000 in 2015.21 On June 7, 2013, SCE announced the permanent 4

retirement of Units 2 & 3 at SONGS. As a result, SCE will recognize a reduction in SONGS support 5

staff, which includes staff in Corporate Communications that previously supported SONGS’ internal and 6

external communications efforts. We will reduce six positions, reducing our labor expenses by 7

$670,846 for the 2015 Test Year. 8

In addition to the Operational Excellence and SONGS shutdown savings 9

described above, Corporate Communications is requesting an incremental increase in labor expenses 10

from the 2012 base to execute and oversee the Public Safety Around Electricity and Summer Readiness 11

Energy Savings advertising campaigns. These positions were previously funded by shareholders but 12

should be included in rates as discussed in detail below in Chapter I. F.4 (a). The labor expense increase 13

is $229,050 in the test year for 1.5 project managers (100 percent of one position’s time and 50 percent 14

of another) and half of a manager (50 percent of a manager’s time). These positions (outlined in Table 15

I-2) oversee the entire program including the design of the campaigns, approval of the materials 16

produced and the media buys undertaken; and supervise the work of the vendor advertising agencies. 17

The manager position develops overall strategy for both campaigns, develops coordination with 18

Transmission and Distribution to geo-target seasonal campaigns due to weather, and provides 19

supervision to the public safety campaign. One project manager oversees the summer readiness 20

campaign, overseeing the agency and media-buying plans, and conducting evaluations of the program. 21

Another project manager devotes 50 percent of his/her time to oversee agency work on public safety 22

campaign for development and production of creative materials. This position also oversees the media 23

buy for the campaign and measurements of the campaign’s reach. 24

21 Savings are slightly higher in 2013 because staff reductions occurred in the first quarter of the year, and additions

occurred in the second quarter. The net reductions achieved in 2013 are reflected in Test Year 2015. See workpapers entitled “Adjustment for GRC – Test Year 2015.”

16

Table I-2 Labor Costs for Public Safety Around Electricity and Summer Readiness Advertising Campaigns

Job Title Labor Expense

Non-Labor Expense (10.38 percent of Labor)

One Project Manager 1 $108,300 $11,240 .5 Project Manager 1 $54,150 $5,620 .5 Manager 2 $66,600 $6,910 Total Labor $229,050 $23,770

b) Test Year (2015) Non-Labor Expense Forecast 1

Non-labor expenses in FERC Account 921 includes employees’ expenses, 2

expenses for contract or consultant staff, and expenses for the products that Corporate Communications 3

produces. This account has shown a decreasing trend in the last five years, primarily due to the fact that 4

fewer contract personnel have been used. In accordance with D.04-07-022 and D.89-12-057, in which 5

the Commission stated that for those accounts which have trended in a certain direction over three or 6

more years, the last recorded year is an appropriate base estimate. Thus, SCE used last recorded year as 7

a base estimate, or $1.719 million, to forecast its Test Year 2015 non-labor expenses. In addition, 8

Corporate Communications reduced its non-labor forecast by $74,000 to reflect our decreased labor 9

expenses due to the Company’s Operational Excellence initiative and by $69,634 for employee-related 10

non-labor expenses related to the permanent shutdown of SONGS.22 To this base we are adding 11

$230,000 for social media management tools as described in detail below. We are also adding $23,770 12

of non-labor expenses for the positions shown in Table I-2,23 which covers employee-related expenses 13

such as travel, training, and office supplies. The test year forecast for this account is $1.829 million. 14

Over the years since the last rate case, SCE has increased its focus on social 15

media. According to a J. D. Power survey, while the percentage of customers who interact with their 16

utility via social media is low, this is a growing segment of customers and other stakeholders, and 17

22 See workpapers entitled “Adjustment for GRC – Test Year 2015” and “Headcount Reduction – SONGS Impact.”

23 The $23,770 was calculated using 10.38 percent of labor that is associated with Corporate Communications. This non-labor allocation is for employee expenses such as printing, travel, conferences, etc. See workpaper entitled “Non-labor Adjustment Analysis, Cumulative Total 2008-2011.”

17

utilities should prepare for further growth in social channels. It is important for SCE to further develop 1

its social media presence and reach the estimated 90 percent of customers in our service territory who 2

use social media. There are three main areas of focus for social media: safety, education, and 3

outage/crisis/customer service. Corporate Communications needs to be able to deliver this important 4

information using all channels, especially those that customers prefer. 5

Communications via social media are primarily done in English, however, SCE 6

has published in-language tweets (in Spanish, Mandarin, and Cantonese) either in crisis situations (like 7

Flex Alerts) or on an as-needed basis (like with attempts to scam customers in predominantly Hispanic 8

neighborhoods). As the population of SCE’s customer base continues to evolve, Corporate 9

Communications will continue to enhance its in-language communications skill set to meet the 10

customers’ need. 11

In order to grow SCE’s social media presence to reach these customers, SCE 12

proposes spending $55,000 in 2013; $177,500 in 2014; and $230,000 in 2015 on social media 13

management tools.24 These tools will allow SCE to develop rich content and apps, manage content 14

across social media platforms, measure engagement, and pay for placements that expand our reach to 15

customers. 16

E. FERC Account 923 17


Corporate Communications forecasts $847,000 for Test Year 2015 for FERC Account 19

923. This forecast represents no change from 2012 recorded expenses. 20

2. Description of Activities 21

FERC Account 923 includes non-labor expenses and fees for the limited number of 22

communication consultants contracted by Corporate Communications, such as public relations agencies 23

specializing in ethnic media outreach and for communication measurement services. 24

SCE is focused on reaching out to, and effectively serving, its ethnically diverse 25

customers. The public relations agencies provide important strategic guidance regarding cultural and 26

language issues and resonance of messages. These agencies prepare and translate materials for 27

customers in various languages. Their understanding, expertise, and cultural sensitivity are invaluable to 28

Corporate Communications’ effort to reach out and better educate SCE’s diverse customer base. This 29

24 See workpapers entitled “Forecast for Social Media Costs” for a detailed forecast.

18

education helps these customers become more informed electricity consumers, and enhances SCE’s 1

ability to deliver important safety messages and information regarding emergency conditions. 2

These agencies provide in-language and in-culture adaptation and translations of SCE 3

customer information to African-American, Hispanic, and Asian markets via media relations and 4

products such as public notices, booklets and brochures, and multilingual websites. The use of agencies 5

for this work allows SCE to expand and contract the volume of work according to business needs, which 6

would not be the case with full-time employees. 7

This account also includes expenses for communication measurement services that allow 8

Corporate Communications to determine the effectiveness of messaging and its impact on various 9

audiences. Because customers rely on multiple sources of information and often need to hear messages 10

multiple times from multiple sources before taking action, Corporate Communications has adopted a 11

“check and adjust” approach to messaging. This means that communications are measured regularly for 12

effectiveness and adjusted in real time. Through these measurements—such as surveys and trend 13

analyses—SCE can change its messaging, medium, or spokesperson to better resonate with customers, 14

and change or increase the type of delivery channels as needed. This measurement data also enables 15

Corporate Communications to quickly adjust strategy in an emergency in response to the evolving media 16

consumption patterns of SCE customers who increasingly use social media to contact SCE. 17

Since 2009, Corporate Communications has enhanced its communication measurement 18

capabilities, which include message effectiveness and comprehension, traditional and social media 19

monitoring, customer experience and communications benchmarking, U.S. and multicultural surveys, 20

and U.S. consumer trends monitoring. These tools help SCE identify how different segments of its 21

customer base and the general public wish to be reached and how individual messages are resonating, 22

then adjust communications accordingly. This capability proves essential in public safety and 23

emergency messaging. For example, SCE was able to measure an increase in public safety messaging 24

awareness among residential customers (39 percent to 47 percent) from Q4 2011 to Q4 2012.25 This 25

increase was measured through attitude tracking surveys covered by this account. 26

25 See workpaper entitled “2012 Safety Advertising Report.”

19


Figure I-2 Corporate Communications Recorded And Adjusted

2008-2012/Forecast 2013-2015 FERC 923 (Constant 2012 $000)

The expenses in this account have shown a small increase each year reflecting the 2

increase in support Corporate Communications needs in order to provide services in ethic media and 3

increase its capability to measure the effectiveness of outreach to online media and social media. This 4

increase in capability includes a contract for media monitoring and analysis, beginning in 2010, which 5

has allowed Corporate Communications to measure message penetration across varied audiences and 6

then to adjust outreach plans as a result, in order to be more effective. Costs associated with this service 7

increased in 2011 due to increased media coverage surrounding SONGS. 8


SCE’s forecast for FERC 923 is $847,000. In D.04-07-022, the CPUC stated that if 10

recorded expenses in an account have shown a trend, the last recorded year is an appropriate base 11

estimate for forecasting future expenses. As seen in Figure I-2 above, this account has shown steady 12

increase each year from 2008-2012. Therefore, the last recorded year’s expenses, or $847,000, is a 13

20

reasonable base estimate for forecasting future expenses and best represents the expected workload in 1

Test Year 2015. 2

F. FERC Account 930 3


For Test Year 2015, Corporate Communications forecasts a total of $11.269 million in 5

expenses for SCE’s activities in FERC Account 930. This amount is needed primarily to conduct 6

public-safety and energy-savings advertising campaigns, and to fund public safety materials, which have 7

been approved in previous general rate cases. 8

2. Description of FERC Account 930 9

Corporate Communications records expenses to FERC Account 930 for: (1) the 10

publication of the SEC-required annual report; (2) the design, production, and implementation of public 11

safety education programs, including the development of related communications products such as 12

booklets, brochures, fact sheets, pamphlets, speaker presentations and web content, which is provided in 13

multiple languages, requiring the use of in-house and external translators (see FERC Account 923); (3) 14

forecasts for the new Public Safety Around Electricity Education Campaign and the new Summer 15

Readiness Energy Conservation Campaign, which were previously funded by the shareholders; and (4) 16

expenses for the Corporate Responsibility Report. 17

a) Annual Reports 18

Corporate Communications develops the Edison International and SCE’s annual 19

reports in order to inform shareholders and regulators about SCE’s financial and operational status, in 20

accordance with federal and state requirements. 21

b) SCE’s Public Safety Education Programs 22

SCE’s public safety education programs relevant to this account include two 23

programs approved in the 2012 GRC. 24

(1) Materials for At-Risk Workers 25

This is a direct-mail program aimed at professionals who may come in 26

contact with electrical equipment on the job, including construction contractors, tree trimmers, and 27

agricultural workers. This program educates workers to prevent incidents, and materials are distributed 28

in multiple languages. SCE employs a methodology for identifying at-risk contractors and organizations 29

that are most likely to employ individuals who may come into contact with electrical equipment for 30

receipt of program materials. These materials are designed by a vendor with the assistance of utility and 31

21

contractor safety experts, are peer reviewed, and have been proven successful in increasing worker 1

awareness of utility-related hazards.26 2

(2) Electrical Safety for 4th and 5th Graders 3

This program provides for the publication and in-person presentation of 4

general electrical safety materials for 4th and 5th grade teachers and students. In 2012, SCE reached 5

approximately 75,000 students with these materials, or 15 percent of the target population, meeting 6

industry best practice standards. The material is crafted to be age-appropriate and useful to educators in 7

a classroom setting, such that educators might be more encouraged to use these materials. This content 8

is peer reviewed for accuracy by utility safety experts, as well as curriculum specialists, teachers, and 9

students for applicability to a classroom setting. Nationwide testing before and after application of the 10

materials shows an increase of understanding and knowledge by approximately 34 percent after the 11

safety material has been delivered to students by their teachers (2010).27 12

26 See workpaper entitled “Public Safety Outreach Methodology at Southern California Edison.”

27 Ibid.

22


Figure I-3 Corporate Communications Recorded and Adjusted 2008-2012/Forecast 2013-2015 FERC Account 930,

(Constant 2012 $000)

The decrease in recorded non-labor expenses between 2008 and 2009 was due to a 2

vacancy in the position which oversees the public safety materials program and a decrease in the amount 3

of annual reports required by the U.S. Securities and Exchange Commission.28 The increase in expenses 4

from 2009 to 2010 was due to the hiring of a project manager to oversee the work and an increased 5

focus on public education safety programs for at-risk workers and school children. The decrease 6

between 2010 and 2012 was due to the fact that several communication products formerly associated 7

with this account are now being done by Customer Service and further decreases in printing of annual 8

reports as shown in Figure I-3 above. 9

28 Rule 14a-16 of the Securities Exchange Act of 1934 provides for electronic delivery of proxy materials. Section 1501(a)

of the California Corporations Code also permits electronic delivery of the annual report. See http://www.law.uc.edu/CCL/34ActRls/rule14a-16.html; http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=01001-02000&file=1500-1512.

23

Non-utility credits are applicable to expenses for the annual reports.29 1


The recorded amounts in this account fluctuated between 2008 and 2012 primarily due to 3

the varying numbers of public safety materials and annual reports that are produced each year. In D.04-4

07-022 and D.89-12-057, the CPUC stated that for those accounts which have significant fluctuations in 5

recorded expenses from year to year, an average of recorded expenses is appropriate. Because the 6

expenses in this account have fluctuated, a five-year average of those expenses is an appropriate base 7

estimate. To this base of $0.698 million, we are adding incremental expenses of $10.571 million, of 8

which: (a) $8.210 million is for the Public Safety Around Electricity Campaign; (b) $2.331 million is 9

for the Summer Readiness Campaign; and (c) $30,000 for the SCE Corporate Responsibility Report. 10

Detailed descriptions and forecasts for each of the activities are described below. SCE’s total forecast 11

for FERC Account 930 is $11.269 million. 12

a) Public Safety Around Electricity Education Campaign30 13

Since 2008, SCE has been producing Public Safety Around Electricity 14

advertisements as a part of its general advertising activities. Since the majority of the advertisements 15

were related to non-safety related messages during this time period, the campaign was funded by SCE 16

shareholders. In 2011, SCE decided to conduct more focused and year-round safety advertising, but the 17

campaign costs were again funded by the shareholders as it was too late to include those costs in SCE’s 18

2012 GRC. Thus, 2015 GRC is the first time the Public Safety Around Electricity Campaign is being 19

included in SCE’s rate case as the Company is increasing its focus on public safety education and is 20

spending more money on these advertisements that are directed to ratepayers. 21

In 2011, a series of events (including third-party contacts with power lines and 22

high winds) led SCE to focus its efforts on providing effective safety messages to the public as 23

frequently and widely as possible. The Public Safety Around Electricity Campaign’s goal is to educate 24

consumers about what to do to avoid harm in the event of downed power lines. 25

The campaign launched in the first quarter of 2011 on television (using an 26

existing television ad) and continued on radio in the second and third quarters. In the fourth quarter of 27

29 See Chapter I.C, “Corporate Communications Activities And Non-Utility Credits,” of this testimony for a definition of

this Commission-approved practice.

30 The Public Safety Around Electricity Campaign is a separate activity than the safety programs described in Chapter I.F.2.b of this testimony.

24

2011, SCE began airing a new advertising campaign regarding power line safety advertising in English 1

and Spanish. 2

The 2011 Public Safety Around Electricity Campaign reached general market 3

customers in Los Angeles, Orange County, Fresno, San Bernardino, Riverside, Palm Springs, Santa 4

Barbara, Visalia, Tulare, Oxnard, and Ventura. By year end, awareness by SCE residential customer of 5

safety around electricity messaging was 39 percent.31 In 2011, SCE spent $1,974,000 for the Public 6

Safety Around Electricity Campaign which was funded by the shareholders. 7

The Public Safety Around Electricity Campaign was designed to be a 8

comprehensive, mass-market campaign for residential and business customers with attention paid to 9

both general and ethnic audiences. Its purpose was to engage customers with an emotive message and 10

motivate customers to think about power line safety. Because research found that there was an increase 11

in consumer interest in health, well-being, and safety issues32, and that consumers trusted resources such 12

as firefighters33 and the American Red Cross,34 messages and themes in the campaign used these 13

elements in order to better capture customers’ attention. 14

The safety ad campaign ran throughout 2012 in multiple languages (English, 15

Spanish, Chinese, Korean, Cambodian/Khmer, Tagalog, and Vietnamese) through multiple media 16

channels (TV, radio, print, online, and out-of-home/outdoor). The campaign was pulsed (being placed 17

at alternating times in various media) to help build and reinforce audience awareness. 18

New ads were developed using these consumer preferences,35 and included: two 19

television ads in six languages; two radio ads in seven languages; two out-of-home ads (billboards and 20

bus shelters) in English and Spanish; black and white ads for newspapers in seven languages; and online 21

ads in two languages. 22

The campaign also included the following elements: 23


32 From Iconoculture report, 2011.

33 2009 GfK Poll, “92 percent of those participating in the survey considered firefighters the most trustworthy group.”

34 2009 Harris Poll.

35 The ads were “Sunday Drive” which illustrated a healthy family activity, and, upon encountering a down power line, modeling the appropriate safety behavior; and “No Risks”, which featured SCE linemen paired with regional fire officials. In focus groups the ads tested well for being relatable, and 100 percent of focus group participants reported they knew what to do if they saw a downed power line.

25

Channel One, the leading national TV news network for students aged 12-17, 1

achieved 1.3 billion impressions, 2

Television ads in six languages, one of which had localized versions for Los 3

Angeles, San Bernardino, and Ventura counties, 4

Radio ads with two 30-second spots, in seven languages, 5

Two different billboards in English and Spanish, and 6

Newspaper ads with two different messages in seven languages. 7

The 2012 Public Safety Around Electricity Campaign achieved a total of almost 8

2.7 billion impressions.36 It increased residential customer awareness to 47 percent by year-end 2012.37 9

In SCE’s 1974 GRC, the Commission explained its policy toward advertising: 10

“All institutional advertising shall be disallowed for ratemaking purposes. Furthermore, all other 11

advertising, except that which is listed below, shall also be disallowed for ratemaking purposes. (a) 12

Financial advertising. (b) Safety messages…”38 The Commission granted recovery of SCE’s 13

advertisement expenses relating to safety in rates. Thus, rate recovery of safety advertisement expenses, 14

such as the Public Safety Around Electricity Campaign, is appropriate in this case. 15

Expenses for the 2012 Public Safety Around Electricity Campaign, which was 16

funded by the shareholders, totaled $6.641 million. In 2013, we expect to spend $7.392 million and in 17

2014, we expect to spend $9.058 million (due to the need to create new ads as discussed below); and in 18

2015, we expect to spend $8.210 million on Public Safety Around Electricity Campaign. Table I-3 19

below shows a breakdown of expenses.39 20


37 Ibid.

38 See D.86794, page 51 (also included in workpapers)

39 For a detailed breakdown, see workpapers entitled “Forecast for Public Safety Around Electricity Advertising Campaign.”

26

Table I-3 Forecast Expense for Public Safety Around Electricity Advertising Campaign (2012 $)

2012 (actual) 2013 2014 2015 Creative & Production

$1,148,004 $300,000 $1,500,000 $300,000

Research/Focus Groups

$67,085 $99,000 $200,000 $200,000

Media Buys $5,344,808 $6,902,000 $7,247,100 $7,609,455 Procurement Costs

$81,257 $90,532 $110,944 $100,557

TOTAL $6,641,154 $7,391,532 $9,058,044 $8,210,012

A brief description of the cost categories are as follows. A detailed breakdown 1

and description of the costs are in workpapers.40 Creative and production are the expenses needed to 2

develop design and creative strategies, cover creative costs such as photography, video, location fees, 3

actors and crew time; and then produce final versions of the materials for distribution to the media. In 4

2013, we did not produce new ads so the expenses are lower. Creative and production costs increase 5

significantly in 2014 due to the need to produce new ads in order to keep consumers’ attention with 6

fresh information.41 Those ads will continue to be used through 2015, and expenses will then cover only 7

production of materials. SCE intends to create new ads again in 2016, which will run through 2017. 8

The Research/Focus group category includes expenses to pay for existing general 9

consumer research and also to conduct focus groups to test messaging for effectiveness. In 2012, the 10

focus groups included English and Spanish in two geographic areas. In 2013, we tested English and 11

Spanish (two each), and one each in Chinese, Korean, and Vietnamese. In 2014, costs will increase in 12

order to create and test new advertisements, which will run through 2015, with at least two focus groups 13

in each language (English, Spanish, Chinese, Korean and Vietnamese) and in multiple geographic areas. 14

Media buys include the fees paid to media outlets such as TV and radio stations, 15

billboard companies, etc., to place the ads. It also includes planning fees paid to SCE’s ad agency 16

40 See workpaper entitled “Forecast for Public Safety Around Electricity Campaign.”

41 After two years (2012 and 2013) of using the same safety ads, SCE will need to create and produce new safety ads in 2014. The purpose of producing new safety ads is to help educate consumers and reaching them in the most effective

(Continued)

27

vendors. SCE is increasing its media buy in 2013 through 2015 to reach even more consumers with the 1

important power line safety messages. 2

Procurement costs are fees charged by SCE’s Supply Management department to 3

handle purchases orders and other purchasing tasks for this campaign and are estimated at the 4

percentage charged in 2012. 5

For future campaigns, we are increasing our media buy so that we can advertise 6

continuously throughout the year, rather than pulsing (e.g. one week on air, one week off), and expand 7

SCE’s safety advertising to special audiences and more channels, specifically to: 8

Deepen SCE’s ethnic advertising efforts to Hispanic, Asian and African 9

American audiences. For example, Asian in-language billboards were added 10

in 2013, whereas in 2012, the budget limited the work to billboards in English 11

and Spanish. The department would also like to target more specific ethnic 12

audiences, such as South Asian. 13

Expand SCE’s reach to include more rural areas in the service territory. This 14

can be difficult given that there are fewer media outlets and physical billboard 15

locations in rural areas; Corporate Communications will likely need to 16

compete for available advertising space in these limited channels. 17

Enhance Corporate Communications’ ability to reach special populations such 18

as seniors, low-income, and the disabled. 19

Reach more customers through social and mobile advertising. As SCE 20

customers spend more time on smartphones and tablets consuming social 21

media, Corporate Communications will need to use more media channels to 22

reach and interact with customers. 23

The 2012 customer awareness levels achieved significant improvement over 2011 24

(47 percent vs. 34 percent) due primarily to the higher level and continuity of spending. While 47 25

percent customer awareness is progress, we note that more than half of SCE customers are still not 26

Continued from the previous page ways in order to avoid the “wear-out factor” among consumers, the point where the mix of creative, media placement, and spending is no longer effectively reaching consumers, and viewers may even be tuning out the message.

28

aware of downed power line safety messages. SCE plans to continue its advertising on power line safety 1

to increase customer awareness and help the public avoid harm in the event of downed power lines. 2

b) Summer Readiness Energy Conservation Advertising Campaign 3

SCE was concerned about potential energy shortages in the summer of 2012 due 4

to possible shortages of power supply, especially in southern Orange County, and forecasts for a hot 5

summer. The effort was also driven by the long-term goal to change customers’ attitudes and behaviors 6

around energy conservation. This is the first time that the Summer Readiness mass media advertising 7

campaign has been included in SCE’s Rate Case. As with the Public Safety Around Electricity 8

advertising, it was too late to request funds in the 2012 GRC even though this program clearly benefits 9

ratepayers. 10

The Summer Readiness campaign launched in April 2012, targeting residential 11

and business customers. The objective of the campaign was to encourage customers to take steps to 12

conserve electricity and encourage enrollment in demand response programs. SCE conducted an 13

integrated marketing campaign, adding mass media advertising for the first time to the existing 14

ratepayer-funded (through Customer Service) direct mail and digital marketing effort. The shareholder-15

funded mass media advertising campaign—undertaken by Corporate Communications and described 16

below—comprised radio, newspaper, billboards, and bus shelters. 17

The Summer Readiness Campaign offered energy-saving tips for residential and 18

business customers. Specifically, the campaign included messages on how to save energy and the 19

importance of doing so to help prevent emergency outages. The mass media campaign targeted both 20

residential and business customers mostly in southern Orange County. It was delivered to general 21

market, Hispanic, Chinese, Korean, and Vietnamese communities via print, radio, and out-of-home ads. 22

The campaign achieved 447 million advertising impressions in 2012.42 23

As a result of the campaign, nearly 90 percent of residential customers were 24

aware of SCE’s Summer Readiness communications (according to a customer survey)43 and 71 percent 25

of residential and 48 percent of business customers “took action to reduce electricity based on what they 26

saw, heard, or read in SCE’s advertising or communications.”44 In all, customers saved 300 MW of 27

42 See workpaper, “2012 Summer Readiness Campaign, Total Impressions by Market & Medium.”

43 See workpaper, “2012 Summer Readiness Campaign Effectiveness Study.”

44 Ibid.

29

energy during the summer. Much of this behavior was attributed to the advertising campaign because 1

two-thirds of residential customers and half of small business customers said they were aware of the 2

advertising.45 3

In 2012, SCE spent $2.331 million on the Summer Readiness mass media 4

campaign.46 This amount includes expenses for media, creative, production and agency fees. This 5

program was paid by shareholders in 2012, but we are including future expenses in our requested 2015 6

revenue requirement, because the Summer Readiness Campaign is a legitimate cost-of-service and 7

clearly benefits customers. Costs for summer readiness and conservation are recoverable in rates as they 8

are “specific conservation advertising” and “specific, useful information about conservation . . . can be 9

of great use to individual customers and can reduce costs for the system as a whole.”47 Therefore, rate 10

recovery of energy conservation expenses, such as the Summer Readiness Campaign, is appropriate in 11

this case. 12

We foresee the need for our customers to conserve energy during hot summer 13

months through 2015. Therefore, in 2014 and 2015, we request 2012 spending levels for mass media 14

advertising so that summer conservation messaging reaches all audiences in our service territory. This 15

spending level is necessary to affect long-term behavior change so our customers can make saving 16

power a habit during summer months. 17

We forecast $2.331 million through 2015 for Summer Readiness mass media 18

advertising. The forecast is constant from 2013 through 2015 due to the following factors: 19

Unlike our public safety advertising, creative and production costs are 20

incurred on an annual basis so costs do not fluctuate dramatically from year to 21

year, 22

As the geography of energy-conservation needs dictate, we can change our 23

media mix (e.g. newspapers, radio, and out of home) within the existing 24

budget to focus on a particular geographic area or audience segment, 25

45 Ibid.

46 See workpaper entitled “Forecast for Energy Conservation Advertising Campaign, Based on Actual Costs of 2012 Campaign” for a detailed breakdown of these costs.

47 See D.86794, at p. 51, 1976 Cal. PUC Lexis 59, 81 CPUC 49, December 21, 1976.

30

We rely on the ratepayer-funded marketing effort (done by Customer Service) 1

to provide the foundation for our mass media advertising effort, which has 2

greater focus on Hispanic, Asian, African American, and senior audiences. 3

The need to conserve electricity during hot weather is a foreseeable need through 4

2015. Therefore, we anticipate continuing the Summer Readiness mass media advertising program. 5

c) Corporate Responsibility Report 6

We are adding $30,000 for the SCE Corporate Responsibility Report. Reaching 7

out to customers to explain SCE’s actions in areas such as safety, environmental protection, and ethics 8

and compliance enhance customer satisfaction levels. The 2012 J. D. Power Residential customer 9

satisfaction survey indicates that higher awareness of corporate citizenship efforts increases customer 10

satisfaction. Also, the data show that there are opportunities for SCE to improve relative to its peer 11

utilities on awareness of environmental efforts, corporate philanthropy, and employee volunteerism. In 12

addition, the CPUC held an en banc hearing in August 2012 to examine the corporate sustainability 13

programs of the investor-owned utilities and to encourage increased communication and outreach in this 14

area. This report would be responsive to that direction. Cost estimates are based on those of a similar 15

report—the SCE annual report’s non-financial section—for the categories of preproduction graphics, 16

photograpraphy, and file preparation, etc. Printing costs were not included in the estimate as it is likely 17

that the report would be published by posting online. 18

31

II. 1

CORPORATE MEMBERSHIP DUES & FEES 2

A. Introduction and Summary of Test Year Request 3

This chapter presents SCE’s Test Year 2015 expenses associated with Corporate Dues and 4

Membership Fees. These expenses are recorded to FERC Account 930.2 (Miscellaneous General 5

Expenses). 6

SCE and its customers realize multiple benefits through customer-funded dues and memberships, 7

which help SCE stay current on industry trends and best practices. For Test Year 2015, SCE forecasts a 8

total of $2.016 million for this account. SCE’s request primarily represents the annual corporate 9

membership fee to the Edison Electric Institute (EEI), but also includes membership fees to groups such 10

as The Conference Board and various electrical-system research and economic groups. 11

EEI dues are paid in three categories (as shown in the invoices included in workpapers): (1) 12

Regular Activities of Edison Electric Institute; (2) Industry Issues; and (3) Mutual Assistance 13

Program/Restore Power. As stated on EEI’s invoices,48 the last category has no expenses allocable to 14

influencing legislation. But the first two categories of dues contain both above the line and below the 15

line expenses. SCE adjusted out the below the line expenses and is submitting only that portion of the 16

dues paid to EEI that are above the line and ratepayer expenses. 17

In the 2012 GRC decision,49 the Commission expressed a concern that “Spending data from EEI 18

is hard to come by.”50 For this rate case, SCE has asked for, and EEI has provided, a table (Table II-4) 19

that shows the allocation of expenses for the last three years, including those costs that are EEI-defined 20

shareholder charges.51 21

48 See workpapers entitled “EEI Invoice” for 2010-2013.

49 D. 12-11-051, p. 507.

50 Ibid.

51 See Letter from John Schlenker, Treasurer and CFO of EEI, April 30, 2013 included in workpapers, entitled “EEI Letter of April 30, 2013 stating schedule of selected expenses.”

32

Table II-4 Edison Electric Institute Schedule of Selected [Shareholder] Expenses

for 2010, 2011, and 2012

2010 2011 2012 Operating Expense

Member Dues

Issues SFA

Member Dues

Issues SFA

Member Dues

Issues SFA

Lobbying 23.4% 46.3% 21.3% 29.1% 17.9% 75.4%Public and Media Relations

2.2% 0 1.6% 0 2.0% 14.2%

Advertising 1.9% 0 1.8% 0 1.3% 0Marketing 0 0 0 0 0 0Total 27.5% 46.3% 24.7% 29.1% 21.2% 89.6%

Table II-4 above shows that in 2012, 21.2 percent of Member Dues and 89.6 percent of Industry 1

Issues dues should be considered below the line and therefore have been removed from our base for 2

forecasting purposes. Charges for lobbying, advertising, public relations, and marketing expenses are 3

also specified by EEI for each dues category for each year shown. Using this chart, SCE has removed 4

from historical costs the EEI-defined shareholder charges.52 5

In addition, EEI states in its letter53 that it adheres to the methodology recommended by the 6

National Association of Regulatory Utility Commissioners (NARUC), whose categories for shareholder-7

funded activities include Lobbying, Public and Media Relations, Advertising, and Marketing. EEI bases 8

its “Lobbying” percentages on Section 6033 (b)(8) of the Internal Revenue Code, which covers contacts 9

with federal, state, and local officials.54 SCE has adjusted historical costs based on EEI’s definitions, 10

and believes its Test Year request for EEI expense is reasonable and appropriate. 11

B. Description of EEI Activities 12

EEI is an association of U.S. investor-owned electric companies, international affiliates, and 13

industry associates (firms that provide goods and services, but are not involved in the generation, 14

52 Removal of these expenses is done in two steps. First, when EEI submits its invoice, it estimates non-allowable costs

and SCE pays the allowable costs from this account and the non-allowable expenses through a shareholder account. Second, in early spring, EEI audits its accounts for the previous year and provides actual costs for nonallowable expenses through a letter to member companies. (Those letters are in Workpapers). SCE has done an adjustment to this account for the audited amounts, see workpapers entitled, “EEI Membership Dues—Adjustments to Invoices for Actual Costs for Shareholder Expenses.”

53 See workpaper entitled “EEI Letter of April 30, 2013 stating schedule of selected expenses.”

54 See workpaper entitled “EEI Audit Definitions of Accounts used for NARUC Reporting Requirements.”

33

transmission, or distribution of electricity) worldwide. The U.S. members serve more than 98 percent of 1

all customers served by the investor-owned segment of the industry. EEI’s membership currently 2

includes more than 70 international affiliates in 36 countries and approximately 250 associate members. 3

SCE and its customers realize multiple benefits through EEI membership including: 4

Participation in meetings, seminars, online workrooms, and conferences that provide the 5

Company access to important information on new products and services, technologies, 6

business practices, emerging regulations, pending and potential legislation, and key industry 7

developments; 8

Access to important resources such as industry-wide research studies, surveys, publications, 9

online services, and consulting expertise; and 10

Participation in the formative stages of the development of work products that benefit the 11

industry. 12

In general, participation in EEI brings SCE employees together with representatives of other 13

companies in business and industry to perform collective activities that are not regularly performed by 14

the individual companies on a full-time basis, such as benchmarking studies, industry surveys, and best 15

practices. This collective approach reduces the need for expensive customized research and studies, 16

consultants and experts, database development and maintenance, publication development, and 17

specialized training. 18

EEI operates through a committee structure and SCE employees are actively involved in 19

numerous EEI committees. The following are examples of committees in which SCE employees 20

participate. 21

1. Customer Services Committee 22

The mission of this Committee is to study, discuss, and analyze challenges and policies 23

pertaining to customer service operations. The areas addressed include accounting, collections, credit, 24

smart meters, billing, call center operations, customer information systems, training of customer services 25

representatives, mailing operations, and customer relations. The Committee brings together industry 26

representatives with common customer service interests and provides a forum to discuss issues candidly 27

and share solutions. The Committee is also focused on members sharing industry best practices on 28

engagement efforts related to customer programs and services. SCE also actively participates in the 29

Customer and Energy Services Committee’s activities. This participation allows SCE to continually 30

evaluate its customer service operations and make service improvements. EEI membership offers an 31

34

opportunity to build strong partnerships that help foster best practices. Additionally, it enables SCE to 1

participate in forums about utility strategies, and regulatory and legal impacts on the industry and to 2

obtain a national perspective on customer service. 3

SCE has benefited from online surveys, studies, and benchmarking efforts that are 4

conducted for EEI members. These are done on an ad-hoc basis throughout the year and provide 5

information on how to improve productivity and customer service. Members have opportunities to 6

exchange ideas by participating in EEI’s annual conference and annual benchmarking forum. 7

2. Transmission Committee 8

The mission of this Committee is to provide an open forum for technical and regulatory 9

information discussions, focusing on transmission and substation design, planning, operations and 10

construction, with the intent to ensure EEI member companies remain well-informed on those issues 11

currently impacting the electric utility industry. Key areas of focus include emerging issues, best 12

practices, transmission planning, system operations, new technology, engineering design and 13

maintenance of transmission lines and substations, system performance, and various regulatory issues. 14

The Committee also serves as a forum for sharing industry performance on regulatory 15

issues such as the North American Electric Reliability Corporation (NERC) Facilities Rating Alert, and 16

for educating the industry on emerging issues such as Geomagnetic Disturbances, Federal Energy 17

Regulatory Commission (FERC) Order 754 – Single Point of Failure and others impacting electric 18

transmission. These meetings and discussions routinely include active participation by regulators such 19

as NERC and WECC who help to ensure improved regulatory awareness broadly. 20

At recent conferences in which SCE participated, discussions were held which addressed 21

NERC’s approved Reliability Standards and how proposed changes would impact requirements to 22

achieve reliable operation and compliance with the standards. 23

3. Accounting Committees 24

The mission of the Accounting Committees is to provide leadership on accounting issues 25

affecting member companies. These include Executive Accounting Committee, Accounting Standards 26

Committee, and Property Accounting and Valuation. 27

To illustrate, the Accounting Standards Committee identifies, reviews, and researches 28

emerging accounting and reporting issues that may impact member companies in the future. The 29

committee, through task forces, prepares industry comments and responses to accounting proposals by 30

35

the Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), the 1

FERC, and the American Institute of Certified Public Accountants. 2

In the past few years, EEI has developed comment letters on accounting proposals from 3

FASB. These comment letters were developed with SCE input and review, and have included 4

comments on accounting and reporting requirements for leases, revenue recognition, and financial 5

instruments. These accounting standards are being jointly developed by the FASB and International 6

Accounting Standards Board (IASB), and have the potential to make significant changes in the 7

accounting for many fundamental areas affecting SCE, including power purchase agreements and 8

revenue from contracts. Through EEI, the industry was able to meet with, and provide input directly to, 9

members of these boards, as well as their technical staffs, assuring that concerns identified by its 10

members were communicated clearly and timely to those developing new accounting standards. 11

Comment letters also have been prepared on several proposals by the IASB with SCE 12

input and review. These proposals included the Accounting for Rate-Regulated Activities proposal that 13

would create a statement similar to the U.S. GAAP. EEI has actively participated in the development of 14

U.S. utility industry-wide positions on proposed standards that would significantly impact U.S. utilities 15

if required to report under International Financial Reporting Standards (IFRS). For example, EEI 16

chaired multiple strategies and working sessions with member utilities from across the U.S. to develop a 17

comment letter on the IASB’s proposed standard for rate-regulated activities. As part of this process, 18

EEI had education sessions with the Board’s staff to ensure that the staff was aware of U.S. utility 19

positions on the standard, as well as utilities’ recommendations to improve the standard and lessen its 20

impact on their industry. Just this year, EEI has nominated a candidate to directly represent the interests 21

of its members on a working group that the IASB is assembling in order to move this project forward. 22

By actively participating in the standard process, EEI is instrumental in developing and 23

delivering quality and consistent feedback from the utility industry to standard-setting bodies (such as 24

the IASB), and thus, output from the EEI is thoroughly considered by these bodies. 25

Finally, the Accounting Standards Committee also coordinates task forces to assist 26

member companies in the implementation of new accounting rules. This will be especially important in 27

the future because the standard-setters are moving toward a more principles-based approach in which 28

there is less specific guidance provided as to how to apply their rules. In this environment, EEI provides 29

a valuable resource by enabling member companies to share best practices, identify potential issues in a 30

timely fashion, and more efficiently resolve matters that have common application across the industry. 31

36

SCE has sent a number of attendees to EEI accounting meetings where valuable 1

information has been received through updates and coverage of technical accounting issues. These 2

include meetings of the EEI-American Gas Association (EEI-AGA) Accounting Leadership Conference, 3

Accounting Standards Committee, and Property Accounting & Valuation Committee. 4

SCE also participated in the EEI-AGA Liaison Meetings with the FASB. There have 5

been a number of SCE attendees at the training programs jointly sponsored by EEI and the American 6

Gas Association, including Introduction to Public Utility Accounting, Advanced Public Utility 7

Accounting, Accounting for Energy Derivatives, and IFRS – from Preparedness to Conversion. Over 8

the past several years, SCE has also received benefits by using EEI Accounting forums and surveys for 9

specific accounting issues. 10

4. Distribution and Metering Committees 11

The mission of these committees is to provide a forum for technical information 12

exchanges regarding safe and economic planning, design and construction, as well as the reliable 13

operation of the electrical distribution system and accurate measurement of power and energy delivered. 14

These committees focus on addressing legislative and regulatory issues related to distribution and 15

metering systems, and guide the advancement of codes and standards for the benefit of the industry and 16

its customers. 17

The Metering Committee is also actively involved in maintaining The Handbook for 18

Electricity Metering which is periodically updated as necessary and made available to the industry, 19

guiding consistency in revenue metering across the U.S. This general reference book, acknowledged in 20

the industry as the definitive text on electricity revenue metering, includes chapters on mathematics, 21

electrical theory, and basic electronics as an introduction to the operation and practical application of 22

metering devices. For the advanced user, the book discusses such subjects as compensation metering 23

and telemarketing to address the problems of the design and maintenance of complex metering 24

installations. 25

5. Environment Advisory Committee 26

The mission of this Committee is to identify and respond to environmental issues that 27

affect, or have the ability to affect, the electric utility industry. Additionally, it serves to advise 28

members on strategic environmental matters and compliance requirements associated with 29

environmental laws and regulations. 30

37

The Committee is responsible for providing forums that inform EEI members about 1

environmental issues. Specific benefits of membership include up-to-date information on federal, state, 2

and industry environmental policy directives; regulatory initiatives; implementation of final rules, 3

litigation, and federal, state, and local initiatives in the areas of air and water quality; global climate 4

change; solid waste; natural resource management; electric magnetic fields; environmental health and 5

safety auditing; pollution prevention; community right-to-know; and environmental excellence, among 6

others. 7

Customers benefit from SCE’s participation in the Environment Advisory Committee 8

because it is an efficient way for the Company to stay informed on the wide range of environmental 9

issues arising within Congress, the federal regulatory agencies, the courts, and with other environmental 10

stakeholders as they pertain to the utility business. The exchange of policy and technical information on 11

environmental problems reduces the time and expense that SCE’s staff would otherwise need to expend 12

to stay current and effectively manage the business. 13

Examples include: (1) efforts by the U.S. Environmental Protection Agency (EPA) to 14

regulate greenhouse gas (GHG) emissions under the Clean Air Act from new and existing power plants; 15

(2) efforts by EPA to address cooling water intake structures under 316(b) of the Clean Water Act, and 16

to update the steam electric effluent guidelines limitation rulemaking; (3) Congressional and regulatory 17

effort to expand the jurisdiction of the Clean Water Act; (4) EPA power plant air pollutant emission 18

rules; (5) the ability to partner in collaborative efforts to address and understand the most up-to-date 19

techniques for spill clean-ups and other contamination remediation issues affecting SCE operations; (6) 20

vegetation management practices along distribution and transmission rights-of-way to comply with 21

federal reliability standards; (7) habitat conservation planning; (8) best practices for siting and 22

permitting transmission infrastructure; updates on the Clean Water Act Section 404 regulations affecting 23

transmission and distribution operations and maintenance, and new construction; (9) benchmarking of 24

environmental practices for effective environmental management, reduction of liabilities, and overall 25

cost-reduction; (10) avian protection management programs for distribution and transmission facilities; 26

(11) implementation of state and regional GHG trading programs, such as A.B. 32 and the Regional 27

Greenhouse Gas Initiative; (12) training and access to studies on managing risk of toxic release 28

inventory; and (13) sharing industry best practices related to environmental health and safety auditing. 29

38

6. Security Committee 1

The mission of this Committee is to provide a forum for electric utilities to identify and 2

share threat alert information, exchange operational information, share lessons learned, and develop 3

common practices with the objective of improving the overall security of the industry’s assets. This 4

includes evolving strategies and lessons learned for protecting physical assets, as well as security issues 5

associated with electronic systems, including SCADA, EMS, and corporate IT systems. 6

The Security Committee serves as a liaison with government agencies, including DHS, 7

DOE, and FERC on security-related policy matters. The Committee also serves as a liaison with other 8

EEI committees on policy matters affecting the security of utility assets. 9

Customers benefit from SCE’s participation in this Committee because it helps the 10

Company stay informed on emerging physical and cyber security topics. The exchange of policy and 11

technical information on security threats reduces the time and expense that SCE’s staff would need to 12

invest in order to stay current and effectively address these issues. 13

7. Supplier Diversity Committee 14

The mission of this Committee is to provide guidance and leadership to members 15

managing a myriad of needs in a changing environment. The Committee reviews trends, provides 16

resources, tools and practices to enhance member experiences, provides meaningful outreach programs 17

to stakeholders, and develops and provides relevant metrics for both internal and external program 18

accountability of supplier diversity results and processes. 19

EEI and its members aim to establish long-term relationships with diverse suppliers who 20

provide products and services that help our industry succeed in a highly competitive environment. By 21

building close alliances with diverse suppliers, our member companies support their growth. And, these 22

expanded business relationships today, impact the success of our business development tomorrow. 23

8. Mutual Assistance/Emergency Preparedness Committee 24

The mission of this Committee is to identify and promote best practices among member 25

utilities through benchmark efforts. It also serves to encourage consistent procedures for preparedness 26

and response in areas such as safety of employees, customers, and the public; emerging regulatory issues 27

and industry change; Federal regulatory rulemaking and industry concerns; coordination with other EEI 28

committees on operational topics; coordination with Regional Mutual Assistance Groups on Federal 29

regulatory rulemaking and resource sharing; and maintaining a strong customer focus while advocating 30

for emergency preparedness and effective response. 31

39

SCE participation on the Mutual Assistance/Emergency Preparedness Committee is 1

beneficial and important to the Committee’s geographic diversity and understanding of types of 2

emergency preparedness and response events (e.g., earthquakes, fires) specific to Southern California. 3

SCE’s participation enables effective coordination and collaboration during emergency response events 4

where resources are shared among member utilities to support an effective and timely restoration. 5

9. Utility Solid Waste Activities Group 6

Utility Solid Waste Activities Group (USWAG) is responsible for addressing solid and 7

hazardous waste, chemical management, and toxic substance issues on behalf of the electric utility 8

industry. USWAG members help establish and implement industry policy regarding these issues. 9

In general, the benefits that SCE derives from membership in USWAG are similar to 10

those provided by EEI membership as it relates to the Environment Advisory Committee, including up-11

to-date information on environmental policy formulations, regulatory initiatives, final rules 12

implementation, litigation, and federal, state, and local initiatives. In addition to regulatory and some 13

legislative advocacy, USWAG provides members with regulatory analysis and compliance assistance 14

including training and individual member counseling on issues related to environmental regulations. 15

USWAG is currently engaged in the following major issues: regulation of coal 16

combustion residues; polychlorinated biphenyls (PCBs) and oil-filled and PCB-contaminated electrical 17

equipment; treated wood pole use and disposal, hazardous materials transportation regulations; oil spill 18

cleanup; contaminated site remediation; solid and hazardous waste recycling; and underground and 19

above-ground storage tanks. 20

C. SCE Involvement in Other Organizations that Benefit Customers 21

1. Research Organizations 22

a) Georgia Tech National Electric Energy Testing Research and Applications 23

Center 24

SCE is a member of the Georgia Tech National Electric Energy Testing Research 25

and Applications Center (NEETRAC). NEETRAC is a certified electric energy engineering, 26

development, testing and research center that provides services related to hardware and equipment 27

testing, new technology research, reliability and system analysis. Specifically, NEETRAC provides 28

cable and cable accessory assessment, connector evaluation, failure analysis and management, 29

grounding and surge protection services, high power and high-voltage testing services, and overhead 30

40

conductor and hardware analysis. SCE utilizes the expertise at NEETRAC to improve the quality of its 1

transmission and distribution systems. 2

SCE participates with other member utilities and suppliers in the development of 3

various projects, including the development of project scope and interpretation of project results. Recent 4

projects have directly influenced SCE’s ability to operate and maintain the electrical system in a safe, 5

reliable, and cost-effective manner. 6

2. Economic Development Organizations 7

a) Los Angeles County Economic Development Corporation 8

The Los Angeles County Economic Development Corporation (LAEDC) is one of 9

the largest and most influential economic development organizations in the state of California. SCE 10

customers benefit when we take advantage of LAEDC’s knowledge via strategic advisory committees in 11

the areas of green economy, land use, workforce development, and infrastructure. SCE partners with 12

LAEDC in the greater Los Angeles region to provide complementary programs and processes related to 13

economic development. 14

b) Southern California Leadership Council 15

The Southern California Leadership Council (SCLC) is a private sector business 16

roundtable that addresses workforce development, global warming, greenhouse gases and goods 17

movement. Being a member of this organization enables SCE to continue to be informed of business 18

issues affecting Southern California. It also provides regional guidance that serves as a benefit to our 19

customers. 20

3. Business Associations 21

a) Conference Board 22

The Conference Board is an organization that provides an array of services to 23

SCE and is dedicated to helping companies achieve efficiencies in business practices and strategies in 24

areas such as human capital, high-performing organizations, corporate governance, and 25

information/knowledge architecture. The organization offers primary and secondary research, along 26

with conferences and seminars that Conference Board members, such as SCE, attend to obtain 27

information and knowledge designed to enhance corporate performance. SCE employees sit on 28

numerous committees to gain up-to-date information and obtain corporate best practices. These 29

committees include: Chief Legal Officer Council, Corporate Governance Council, Supplier Diversity 30

41

Council, Strategic Risk Council, Chief Audit Council, and Chief Environmental Health & Safety 1

Council. 2

The Conference Board provides additional services including management 3

research, economic forecasting and analysis, human capital forums, and programs in corporate 4

governance. For example, SCE is able to access data on current, critical workforce issues that provide 5

SCE with the ability to accurately and appropriately plan future workforce needs through recruitment, 6

retention, and training. 7

b) California Utilities Emergency Association 8

The California Utilities Emergency Association (CUEA) was originally created in 9

1952 as a part of California’s Civil Defense Plan. The CUEA provides structure for efficient 10

communications and coordination among government agencies and public and private utilities 11

throughout the state. The mission is to provide emergency operations support for gas, electric, 12

water/wastewater, telecommunications (including wireless), and petroleum pipeline utilities. This 13

support is to ensure the preservation of lives and property, as well as the protection of California’s 14

economic infrastructure. Membership in this organization provides SCE with support during 15

emergencies. 16

Additionally, membership in CUEA provides SCE with compliance with the 17

CPUC General Order No. 166: Standards for Operations, Reliability and Safety as it relates to entering 18

into mutual assistance agreements with other utilities: “The utility shall enter into mutual assistance 19

agreement(s) such as those facilitated by the California Utilities Emergency Association, to the extent 20

that such agreements are practical and would improve emergency response. The utility shall submit the 21

agreements annually to the CPUC designated staff as part of the report required by Standard 11.”55 22

CUEA also staffs and operates the Utility Operations Center (UOC), wholly 23

contained in the State Operations Center (SOC), as the single point of utility contact for Cal EMA and 24

all state and federal agencies through an MOU with Cal EMA and the Governor’s office. 25

4. Workforce/Labor Associations 26

a) Center for Energy Workforce Development 27

The Center for Energy Workforce Development (CEWD) is an organization 28

whose purpose is to help create solutions to address the need for a qualified, diverse workforce for the 29

55 See CPUC General Order No. 166 at p. 8.

42

utility industry. SCE is one of the consortiums of utilities that are members of the CEWD. Resources 1

available to SCE representatives include a yearly summit with representatives from other gas, nuclear 2

and electric utilities that focuses on the need to build a skilled workforce pipeline to meet the current and 3

future needs of the industry. 4

D. Analysis of Recorded Expenses 5

Figure II-4 Corporate Communications Recorded And Adjusted 2009-2012/Forecast 2013-2015 FERC Account 930.2


Expenses for dues and memberships remained relatively stable as shown in Figure II-4 above 6

with slight variations because of changes in fees, and the mix of organizations to which SCE belongs. In 7

2011, ratepayer costs were slightly higher due to higher membership fees in EEI’s regular activities and 8

industry issues categories, and actual costs to shareholders that were lower than in 2010 in the Industry 9

Issues dues category.56 10

56 See workpapers for a chart showing corrections made for shareholder vs. ratepayer dollars in EEI dues, entitled “EEI

Membership Dues—Adjustments to Invoices for Actual Costs for Shareholder Expenses.”

43

E. Analysis of Forecast Expenses 1

The Commission stated in SCE’s 2012 GRC that “it is SCE’s burden to establish that requested 2

funds are eligible for rate recovery.”57 To meet this burden, SCE has included: (1) the EEI-provided 3

information shown in Table II-4, (2) the adjustments to the account in workpapers58 to remove 4

nonallowable expenses, and (3) the proof of payment shown in EEI invoices in workpapers. In addition, 5

the expenses for two organizations not allowed in the 2012 GRC have been removed from this account 6

in the amount of $51,000, via an adjustment in workpapers.59 7

Expenses for this account have been forecast according to the Commission’s guidance in 8

D.04-07-022 and D.89-12-057, in which the Commission has stated that if recorded expenses in an 9

account have been relatively stable for three or more years, the last recorded year is an appropriate base 10

estimate. Because the historical costs have been relatively stable, the forecast is based on recorded 2012 11

expenses, which is $2.016 million.12

57 D.12-11-051, p. 507.

58 See adjustment in FERC account 930 workpaper entitled “A&G ER-LMM-OU-NONREQUESTEDCOSTS” and the detailed calculation in the workpaper entitled “EEI Membership Dues – Adjustments to Invoices for Actual Costs for Shareholder Expenses.”

59 See adjustment in FERC account 930 workpaper entitled “A&G ER-LMM-OU-ONE TIME ADJ 930.”

44

III. 1

INTEGRATED PLANNING AND ENVIRONMENTAL AFFAIRS 2

A. Overview of Integrated Planning and Environmental Affairs 3

SCE’s Integrated Planning and Environmental Affairs (IP&EA) department was formed in 2012 4

to further the Company’s commitment to the development of a more reliable and sustainable electricity 5

infrastructure in California. This new department integrates SCE’s long-term resource planning with 6

environmental strategy and environmental policy functions. 7

The electric industry, particularly in California, is undergoing great change as emerging 8

technologies, such as distributed generation, smart grid, energy storage, electric transportation and 9

micro-grids play increasingly significant roles in energy production, delivery and consumption. This 10

change in the electric industry is also driven by environmental policies aimed at improving air quality, 11

protecting water and land resources, addressing global climate change and encouraging the development 12

of energy efficiency and alternative sources of energy. Some key environmental policies at the federal, 13

state and local levels include the following: 14

Federal policies: Clean Air Act, Clean Water Act, Energy Independence and Security Act 15

and Energy Policy Act of 2005. 16

State policies: California Clean Air Act, Assembly Bill (AB) 32, the Energy Action Plan II, 17

the Zero-Emission Vehicle regulation, Senate Bill (SB) 1368 and SB 626. 18

Local policies: South Coast Air Quality Management District rules on power plants and air 19

quality plans to implement the US and California Clean Air Acts, the Port of Long Beach’s 20

long-term plan, and transportation and regional planning by various county and regional 21

agencies. 22

These policies are moving our industry towards a more reliable and technologically advanced 23

electricity infrastructure. SCE expects that these policies will remain key drivers of change in California 24

for utilities, customers and the region as they evolve and will have significant ramifications on how SCE 25

procures and distributes power and manages the grid. 26

IP&EA is comprised of Integrated Planning, Transportation Electrification and Environmental 27

Affairs, each encompassing a number of related functions. IP&EA integrates these divisions under one 28

department to address the dynamic policy changes in the industry by facilitating the coordination of 29

activities, effective management of resources and the connection between corporate strategy, planning 30

and policy development. 31

45

B. Summary of Test Year 2015 Request – Integrated Planning and Environmental Affairs 1

Department 2

IP&EA is estimating $10.654 million for labor expenses and $10.461 million for non-labor 3

expenses in 2015. The department records expenses to the following FERC accounts: 557, 549, 588 and 4

920/921. Detailed descriptions and expenses recorded in these accounts are provided in the remainder 5

of this testimony. 6

46

IV. 1

INTEGRATED PLANNING 2

Integrated Planning (IP) provides analysis, planning and strategy development to effectively plan 3

and integrate generation, transmission and distribution assets necessary to provide safe and reliable 4

power to SCE’s five million customers. Much of this work involves participating in a myriad of 5

mandated regulatory proceedings as detailed below. 6

California has a hybrid electricity market in which power procurement takes place in a 7

competitive wholesale environment. Decisions to invest in new generation and transmission assets are 8

made through an integrated resource planning process that is driven by California’s ‘loading order’ for 9

preferred resources and are guided by state and federal environmental and energy policies. To 10

effectively manage planning in this environment, IP brings together individual groups with expertise in 11

wholesale market functions, integrated resource planning and system modeling, generation-related 12

regulatory engagement, market monitoring and design, generation siting and development and 13

enterprise-wide strategic project management. These groups work together closely, reflecting their 14

individual areas of expertise, on a wide variety of issues affecting SCE’s customers. 15

The functions performed by these groups, as outlined below, enable SCE to comply with federal 16

and state regulations while maintaining the reliability of the electricity infrastructure. 17

IP conducts analysis, modeling and scenario simulation to support SCE’s filings related to the 18

CPUC’s biennial Long Term Procurement Planning (LTPP) proceeding to fully reflect renewable 19

resource and greenhouse gas (GHG) reduction goals, such as those expressed in California’s AB32. In 20

past LTPP proceedings, analysis has been limited to system generation resources and no attempt was 21

made to integrate this analysis with transmission considerations. However, in the 2012 LTPP, the 22

CPUC encouraged the California Independent System Operator (CAISO) to introduce local capacity 23

requirement (LCR) analysis. LCR studies, which rely on traditional transmission power flow models, 24

are typically used to identify transmission upgrades, but they also are being used to seek generation 25

solutions, including demand side management, in the context of the 2012 LTPP. The introduction of 26

LCR analysis into the LTPP proceeding and increased LTPP focus on local areas necessitate a more 27

integrated approach to resource planning. This integrated approach addresses grid reliability through 28

detailed and simultaneous study of the impacts of new generation resources, transmission upgrades and 29

demand side management. IP expects future LTPP proceedings to focus on reliability needs for both 30

47

systems and local areas, requiring improved internal coordination and increasingly granular and 1

complex modeling techniques to accommodate this approach. 2

IP helps SCE maintain grid reliability by conducting studies and modeling scenarios to identify 3

the potential impacts of increasing levels of renewable generation in the resource mix, issues associated 4

with their integration into the SCE grid and possible solutions. In addition, IP undertakes activities 5

related to both short and long-term grid reliability planning, and develops plans and strategies to address 6

the potential system impacts of emerging technologies such as energy storage and transportation 7

electrification.60 IP also identifies potential sites for new generation based on SCE’s reliability needs. 8

IP conducts market monitoring and market design activities to protect customers from market 9

manipulation and flaws. By developing strategies to mitigate market manipulation and participating in 10

regulatory and legal actions, IP safeguards customers’ costs and helps maintain the integrity of the 11

energy and emissions markets. 12

IP expenses are recorded in FERC Accounts 557 and 549. For forecasting purposes, the 13

Generation Regulatory expenses recorded in FERC Account 549 have been included in FERC Account 14

557 ‘Integrated Planning,’ as similar types of generation-related expenses are recorded into these FERC 15

Accounts. Expenses recorded in Account 557 are for Resource Economics, Generation Regulatory, 16

Strategic Planning, Market Design and Analysis and Resource Planning. FERC Account 549 is for the 17

Generation Planning group, formerly known as the Project Development Division and its Memorandum 18

Account (PDDMA). 19

The groups that perform the IP function are described in Chapters II.A through II.D below. 20

A. FERC Account 557: Resource Economics, Generation Regulatory, Strategic Planning, 21

Market Design and Analysis, and Resource Planning 22

1. Resource Economics 23

The Resource Economics (RE) group’s core responsibility is to develop and implement 24

long-term strategic approaches to address the many integrated resource planning challenges that 25

California faces. The RE group also manages implementation of policy initiatives in areas involving the 26

60 As discussed in Chapter V, the Transportation Electrification (TE) division is responsible for coordinating all critical

activities related to transportation electrification. IP and TE work closely together to execute targeted transportation electrification related analyses and evaluations. Through this collaboration, SCE optimizes resource skills and avoids duplication of efforts. Specifically, IP provides project management and analytical support to TE, and integrates TE’s forecasted transportation loads into the loads and resources of SCE.

48

selection of, and trade-offs between, various generation, transmission and demand-side resources. The 1

group applies economic principles (e.g., economic efficiency and cost minimization methods) and 2

analytical techniques, including model building, to develop an understanding of complex issues (e.g. the 3

technical potential of various preferred resources, the effects of air quality constraints on generation 4

siting) and guide the efforts of interdisciplinary project teams. 5

An example of RE activities is leading SCE’s engagement with the CPUC in reaching 6

substantial consensus on protocols to evaluate the cost effectiveness of demand response programs and 7

performing a similar role in a CPUC-adopted settlement with the CAISO to integrate event-triggered 8

demand response programs into CAISO-managed markets through a new Reliability-Based Demand 9

Response Product tariff mechanism. 10

RE provides support for ‘avoided cost’ estimation (for short-run and long-run measures) 11

for internal decision-making and in external forums such as demand side management program 12

evaluation. RE is responsible for assessing reliability metrics for procurement purposes related to 13

planning reserve margin studies and for cost allocation purposes related to loss of load expectation 14

(LOLE) studies. RE also provides marginal generation cost forecasts and a LOLE study for Phase 2 15

General Rate Case proceedings and supports this information with expert witness testimony. 16

In 2013, RE has been engaged in two major initiatives. First, RE has developed 17

techniques in the LTPP proceeding to apply stochastic modeling to evaluate the flexibility needs of a 18

generation system with a 33 percent renewable power mix, based on 30 years of weather history. 19

Working with Resource Planning, these methods have been implemented to assess the amount of 20

flexible resources needed to reliably operate the electrical grid with the expected build-out of renewable 21

power over the next decade. Second, RE has led SCE efforts to understand the implications of the State 22

Water Resources Control Board’s (SWRCB) once-through cooling (OTC) policy on, as well as local 23

capacity requirements for, Southern California grid reliability. This work has involved extensive 24

coordination with SCE’s Transmission Planning and Generation Planning units to understand locational 25

generation-transmission tradeoffs, costs, permitting/construction timelines and regulatory requirements 26

associated with project approvals. 27

CPUC policy objectives seek a more integrated approach to overall generation planning 28

which explicitly considers the cost and reliability tradeoffs inherent in making choices between 29

49

conventional and alternative resources.61 RE is modifying the focus of integrated resource planning to 1

consider such tradeoffs. 2

2. Generation Regulatory 3

The Generation Regulatory (GR) unit provides regulatory and technical support for all of 4

SCE’s generation related functions. The group interacts with state regulatory agencies and regularly 5

prepares and coordinates responses to requests for information concerning generation assets in CPUC 6

and California Energy Commission (CEC) proceedings as well as for the SWRCB, the California 7

Coastal Commission (CCC) and elected officials. GR also provides subject matter expertise to various 8

efforts across SCE such as generation facility siting studies, generation technology cost studies, and 9

regulatory requirements associated with San Onofre Nuclear Generating Station (SONGS). 10

GR evaluates Requests for Offers solicited by SCE’s Power Supply organization from a 11

technical perspective to assess the ability of the bidders to produce energy, or other services, as 12

expected. In addition, executed power contracts require field testing to assure power plant conformance 13

with power purchase agreement (PPA) terms. GR performs this field testing by deploying ‘boots on the 14

ground’ to evaluate and confirm each power producer’s ability to perform as expected based on the 15

terms of its PPA with SCE.62 In this way, GR helps identify possible threats to system reliability from 16

producer under-performance. 17

GR continues to monitor the progress of activities required by the Nuclear Regulatory 18

Commission in response to the Fukushima earthquake and tsunami, in addition to the permanent closure 19

of SONGS. Employees routinely interface with CPUC’s Energy Division representatives to provide 20

updates on progress of the activities. The unit’s Project Managers prepare responses based on their 21

technical knowledge of nuclear plant activities and industry positions and manage the preparation of 22

responses by technical experts at SONGS. 23

3. Strategic Planning 24

The Strategic Planning (SP) unit serves three main functions: (1) facilitate SCE’s mid- 25

and long-term corporate strategic planning regarding the electric system, (2) assess emerging issues with 26

Company-wide impact and coordinate the development of SCE’s position on these issues and (3) 27

provide strategy and analytic support to other SCE organizations on projects. 28

61 See 2010 LTPP proceeding, R.10-05-006, issued on December 03, 2010, pp. 1-5.

62 GR tests maximum capacity, ramp rates, and other technical power plant features.

50

SP often leads efforts to develop SCE’s positions on emerging issues impacting the 1

electric system that require enterprise-wide consistency and coordination. As new technologies (e.g., 2

distributed generation, smart grid, energy storage and micro-grids) change the electric power industry, 3

significant analysis will be necessary to understand fully how these new technologies, and the potential 4

new regulations associated with them, will impact public safety, grid reliability and customer costs. The 5

unit tracks changes in the industry to gauge their potential impacts on SCE and develop strategies to 6

help SCE comply with related new regulations. For example, SP is leading a Company-wide effort to 7

identify the challenges associated with integration of increasing amounts of intermittent renewable 8

generation into SCE’s grid. SP is developing a detailed overview of internal activities that are related to 9

the integration of renewable generation resources. This allows for greater oversight by pinpointing areas 10

that need improvement and coordination and providing recommendations to address these issues. 11

Another representative SP project is the assessment of a policy initiative related to 12

Distributed Generation. Specifically, SP manages SCE’s effort to assess the impact of Governor 13

Brown’s Clean Energy Jobs Plan and the associated goal of 12,000 MW of ‘Localized Energy 14

Resources’ by 2020. SP has coordinated development of SCE’s policy positions related to distributed 15

generation, identified needed analysis and coordinated the sharing of information and collaboration with 16

the Governor’s Office and the CEC. 17

SP provides SCE organizations with project management and analytical support. An 18

example is a project where SP assessed the internal business model of Power Production’s Engineering 19

and Technical Services division and developed recommendations to mitigate knowledge transfer risks 20

associated with pending retirements of key personnel. 21

4. Market Design and Analysis 22

Market Design and Analysis (MD&A) is tasked with protecting the interests of, and 23

providing benefits to, SCE’s customers by monitoring developments in power and associated markets 24

and engaging in regulatory processes related to market rules, structures and participant behavior. 25

MD&A continues to actively participate in ongoing refund activities and settlements 26

related to the 2000-2001 California energy crisis, playing a crucial role in the recovery of approximately 27

$600 million in refunds for SCE’s customers to date. MD&A staff members interact regularly with 28

many stakeholders in California and within SCE’s customer base in an attempt to reach settlements with 29

various parties that SCE contends still owe California and its own customers significant funds related to 30

the energy crisis. MD&A will continue to actively participate in SCE’s efforts to obtain those refunds. 31

51

The CPUC has recently stated that, contingent on favorable regulatory and legal outcomes, nearly $3 1

billion in overcharges may flow back to California customers.63 Based on historic regulatory, legal and 2

settlement actions, it is likely that pursuit and collection of such refunds will take the remainder of this 3

decade. These refund proceedings64 often require substantial efforts by staff and management from 4

MD&A in the development of testimony, analysis to support that testimony and other litigation support 5

activities. 6

MD&A also develops strategies to mitigate the manipulation of power markets, 7

advocates for efficient market structures and participates in regulatory and legal actions related to 8

market rules and participant behavior. The group is responsible for evaluating the effectiveness of the 9

electricity, ancillary services, congestion and demand response markets, and for developing and 10

evaluating market structures related to capacity, renewable power and carbon/GHG. MD&A monitors 11

market performance, investigates anomalies and identifies market flaws and potentially abusive behavior 12

by participants. If such flaws and abuses are identified, MD&A alerts SCE management and engages 13

with other entities, including the CPUC, CAISO and FERC, when appropriate.65 14

Annual transactions through the CAISO can reach close to $9 billion.66 A poor market 15

design can lead to millions of dollars of inefficient costs, literally overnight. For example, in part 16

because of the efforts of MD&A, the CAISO recently suspended virtual bidding on the interties because 17

it was creating roughly $10 million per month in uplift that California customers were forced to bear. 18

MD&A will continue to help CAISO, FERC and California Air Resources Board (CARB) discover and 19

stop market abuse before it takes hold, prevent the implementation of poor and costly market designs 20

63 CPUC Press Release, April 3, 2013.

http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M063/K786/63786860.PDF.

64 For example, the primary refund case FERC Order on Remand, San Diego Gas & Elec. Co. v. Sellers, 129 FERC ¶ 61,147 (2009) Docket No. EL00-95-248; FERC Order on Remand, Puget Sound Energy, Inc. v. All Jurisdictional Sellers, 137 FERC ¶ 61,001 (2011). FERC Docket No. EL01-10-026; The People of the State of California et. al. v. The United States, United States Court of Claims, Case No. 07-184C (April 2, 2013) and The People of the State of California et. al. v. The Unites States, United States Court of Claims, Case No. 07—157C and 07-167C related to Bonneville Power Administration refund obligations.

65 For example, SCE intervened in three recent CAISO emergency filings at FERC (Dockets ER11-3149, ER11-3856, ER12-2539, as well as Dockets related to JP Morgan’s market based rate suspension including ER13-872 and ER13- 830. SCE worked to identify market flaws and participated in, for example, dockets to suspend virtual bidding at the inter-tier (ER11-4580) and market changes to address excessive price spikes (ER13-1060).

66 2010 CAISO Market Issues & Performance Annual Report, http://www.caiso.com/Documents/2010AnnualReportonMarketIssuesandPerformance.pdf, (p. 2).

52

and seek the rapid identification and remedy to market problems to prevent imposition of fraudulent or 1

unreasonable costs on SCE customers. 2

The integration of a significant amount of renewable energy is resulting in additional 3

complexity and will have a material impact on market design rules and price outcomes. For example, 4

the MD&A group currently tracks prices and price trends in energy, ancillary services, congestion, 5

Congestion Revenue Rights and GHG markets in order to identify market structure issues and track 6

performance. In addition, MD&A examines bidding behavior of market participants to identify 7

potentially abusive behavior or strategies aimed at exploiting market rules or software implementation. 8

Because of complexities faced by the entire Western Electricity Coordinating Council 9

(WECC) in integrating renewable energy, MD&A expects the CAISO market to become increasingly 10

integrated with other regions. This integration will result in even more market complexity. For 11

example, the CAISO is currently working with PacifiCorp to create an Energy Imbalance Market which 12

will have the effect of expanding the CAISO’s real-time market well beyond the borders of California. 13

While such integration, if done properly, promises tens of millions of dollars of annual benefits to 14

California, an improper implementation creates the risk of inefficiencies and abuse to California and the 15

region at large. 16

Consistent with this expansion, MD&A has become increasingly involved in market 17

design activities outside of the CAISO – particularly in the Bonneville Power Administration, given that 18

SCE has contractual rights to approximately 845MW of renewable generation in that balancing 19

authority. As the footprint of the CAISO evolves, MD&A will also have the responsibility of ensuring 20

the implementation of efficient market designs, and monitoring this new structure for performance 21

issues and potential manipulative behavior. In addition, MD&A will remain engaged in other regional 22

market design activities which may have a material impact on SCE’s customers and resources. 23

5. Resource Planning 24

The Resource Planning (RP) group uses production simulation modeling tools to develop 25

‘least cost, best fit’ long-term resource plans so that there are enough resources to keep the lights on for 26

customers. RP conducts economic and other analyses to validate that the electric grid – as projected to 27

be built out – will meet all planning requirements, such as planning reserve margin and import 28

limitations, and will not face shortages of energy or reserves. 29

RP forecasts the prices in CAISO day-ahead electricity and GHG emissions markets, 30

tests the effect of intermittent renewable operations with other resources in the generation portfolio, 31

53

calculates resource deficiencies that may exist in SCE’s service territory or other areas of California and 1

analyzes other pertinent future planning and operating criteria. 2

The RP group assesses the cost-effectiveness of major generation and transmission 3

projects and renewable solicitations, and performs scenario planning activities, renewable penetration 4

and operability studies as required by the CPUC. RP also assists the CEC and CAISO in renewable 5

integration and other studies and helps regulators understand the operational cost and customer 6

implications of various policies. 7

Resource Planning also conducts analyses to support SCE’s filings in the CPUC’s LTPP, 8

Resource Adequacy, Distributed Generation and Energy Storage proceedings, as well as the CEC’s 9

biennial Integrated Energy Policy Report proceeding. This and similar projects are expected to continue 10

as the grid is modified to incorporate increased deliveries of intermittent renewable energy resources, 11

retirement of OTC facilities and modification of the transmission grid. RP personnel have developed 12

strong expertise in this type of modeling and must also have expertise in load shape development, types 13

of generation resources and the operating characteristics of over 2,000 generating units in the WECC 14

footprint. 15

The RP team performs production cost simulations for various SCE projects and 16

programs. These simulations assess the economics, reliability impact and overall fit of the projects and 17

programs within SCE’s resource portfolio and are designed to balance cost, reliability and 18

environmental goals. Examples of projects that Resource Planning has recently evaluated include the 19

sale of SCE’s share of the Four Corners power plant, various transportation electrification technologies, 20

cost impacts of various penetration levels of localized energy resources and economic impacts of 21

conventional resources (nuclear, hydro, and natural gas). Activities that RP expects to undertake over 22

the next few years include assessment of energy storage technology, preferred resource valuations 23

(particularly with regard to energy efficiency and demand response) and evaluation of the capabilities of 24

new, more efficient natural gas turbines to enable integration of increasing levels of renewables. 25

RP is also responsible for using long-term production simulation modeling capabilities to 26

support SCE’s scenario planning initiatives. These initiatives are intended to provide an understanding 27

of what the California electricity grid might look like under very different future market conditions and 28

how these conditions might impact customers. Some of the efforts that may be undertaken over the next 29

few years include assessing the impact of the following scenarios: 30

renewable energy penetrations beyond current the 33 percent RPS policy, 31

54

dramatically reduced availability of emissions allowances in California, 1

heavy adoption of demand response and energy efficiency, and 2

large-scale adoption of electric transportation, including commercial and industrial 3

technologies. 4

RP staff is responsible for understanding these scenarios in terms of availability of 5

generation resources, effect of GHG and other criteria air pollutants, cost to customers and impacts on 6

grid reliability, and also for informing SCE policies and strategies based on study findings. 7

B. Analysis of FERC Account 557 8

1. Summary of 2015 Test Year Request 9

For Test Year 2015, SCE estimates a total of $6.227 million for groups in IP&EA that 10

record labor and non-labor expenses to FERC Account 557. Of the $6.227 million estimated, $5.244 11

million is for labor and $983,000 is for employee-related non-labor expenses, such as business travel, 12

office supplies and outside consulting expenses. Figure IV-5 below details labor and non-labor recorded 13

expenses from 2008 to 2012 and includes forecast expenses through Test Year 2015. 14

55

Figure IV-5 Integrated Planning Recorded and Adjusted

2008-2012/Forecasted 2013-2015 FERC Account 557 (Constant 2012$)

2. Description of Account 1

As described in detail in Chapter IV.A above, IP&EA performs long-term resource 2

planning activities that guide decision-making and SCE policy regarding commitments to a variety of 3

resources, including conventional generation, renewable resources, distributed and self-generation, 4

demand-side resources and transmission. In Test Year 2015, these groups will continue to record costs 5

for labor, employee-related non-labor expenses and consulting services to FERC Account 557. 6

3. Analysis of Recorded Costs – Labor 7

From 2008 to 2010, labor-related expenses recorded to FERC Account 557 remained 8

relatively flat at about $4.8 million. From 2010 to 2011, labor expenses increased by about $700,000 9

largely due to hiring of: (a) one additional Project Manager in the Resource Economics group dedicated 10

to ongoing activities related to the CPUC’s LTPP proceeding; (b) one additional Project Manager in 11

Strategic Planning to coordinate analytical studies across SCE related to integration of renewable 12

resources and distributed generation; (c) one additional Project Manager in the Strategic Planning group 13

to establish SCE’s position and coordinate internal studies relating to the CPUC’s Storage Order 14

56

Instituting Rulemaking (OIR)67; and (d) two additional Project Managers in the Generation Regulatory 1

group to assist with increasing support for nuclear regulatory and SONGS-related issues. 2

Recorded costs were relatively flat from 2011 to 2012, with a slight decrease in 2012 due 3

to routine staff turnover. The 2012 staffing level was appropriate as much of the labor resources being 4

devoted to the renewables integration work associated with the 2010 LTPP proceeding68 was re-focused 5

on work related to local reliability assessments covered within the 2012 LTPP proceeding69 as well as 6

ongoing analysis related to local area reliability in the Western LA Basin and broader Southern 7

California areas in the context of the 2012 SONGS outages. 8

4. Analysis of Recorded Costs – Non-Labor 9

From 2008 to 2010, recorded non-labor expenses remained relatively flat. In 2011, 10

recorded non-labor expenses increased by about $250,000. This increase was primarily due to increased 11

consulting services paid by SCE for work done on Track I of the 2010 LTPP. These consulting services 12

are routine expenses incurred by SCE for various projects, and IP expects to use similar consulting 13

service work in future LTPPs or other regulatory proceedings. In 2012, recorded non-labor expenses 14

decreased by nearly $700,000. Approximately $400,000 of the decrease was caused by reductions in 15

the 2010 LTPP consulting services as the project was being completed, while the rest was the result of 16

other lower project-related expenses for that year, including less travel and fewer expenses related to 17

GR’s work on nuclear issues. 18

5. Labor Forecast 19

Labor expenses related to the Integrated Planning functions mentioned in Chapter IV.A 20

have been stable for the most part and more importantly, we expect that the functions and activities 21

performed by the RE, GR, SP, MD&A and RP units will remain at or above the level performed in 22

2012. Therefore, the last recorded year, or $5.244 million, is a reasonable base estimate for forecasting 23

2015 labor expenses for the existing functions performed within Integrated Planning. 24

67 Electric Energy Storage proceeding is a large multiyear proceeding.

http://www.cpuc.ca.gov/PUC/energy/electric/storage.htm

68 The Long-Term Procurement Plan proceeding is an umbrella proceeding that establishes procurement policies and review system needs. http://www.cpuc.ca.gov/PUC/energy/Procurement/LTPP/ltpp_history.htm

69 The Long-Term Procurement Plan proceeding is an umbrella proceeding that establishes procurement policies and review system needs. http://www.cpuc.ca.gov/PUC/energy/Procurement/LTPP/ltpp_history.htm

57

6. Non-Labor Forecast 1

As described above, variations in non-labor expenses in some years are primarily caused 2

by variations in the amount of employee-related travel and project-specific expenses like consulting 3

services for the LTPP. These expenses are often project-specific and are difficult to predict, so a five 4

year average of those expenses, or $983,000, is reasonable for estimating Test Year 2015 non-labor 5

expenses in this account. 6

C. FERC Account 549: Generation Planning 7

Generation Planning (GP), which was previously referred to as the Project Development 8

Division (PDD), was authorized in D.06-05-016 to carry out activities in the following categories: 9

identification of locations for new generation, evaluation of generation technologies, tracking of 10

regulatory – and legislative – related initiatives, and development of the Best Option Outside 11

Negotiation (BOON)70 for future generation needs.71 These activities benefit SCE’s customers by 12

identifying types and costs of future generation available and the potential locations for that future 13

generation to supply electricity reliably to customers at a reasonable cost. By knowing about generation 14

technology and technology costs, and thereby making options available for utility purchase or 15

ownership, GP serves customers by providing realistic utility cost-of-service options to compare against 16

market offers. 17

GP will be engaging in a number of future activities, which are driven by the changing electricity 18

market and the need to comply with new environmental and energy policies. These activities include: 19

studies of generation needs to assist with meeting renewable portfolio standard goals, advanced natural 20

gas technologies, generation needs associated with potential shutdown of OTC plants, carbon capture 21

technologies used with fossil fuels, technologies that provide inertia and voltage support, storage and 22

possible locations for new generation. 23

70 Per D.06-05-016, p. 50: “As a by-product of its project development role, the PDD will also provide service to

customers with utility cost-of-service options that represent the BOON for new generation and supply options. The mere presence of the BOON will discipline the market from runaway RFOs by providing an alternative to the exercise of market power by generators, such as was observed during the energy crises. Furthermore, “the BOON, or more appropriately the family of BOON options will be a useful input and evaluation tool to RFOs, allowing for more precise crafting of requirements.” BOON will consist of a family of technologies and supply options, including but not limited to repowers, new development, and acquisitions with a variety of fuels and technologies.”

71 Per D.06-05-016, p. 53: “We will however allow rate recovery of costs that support new generation and that are not associated with proposed projects.”

58

D. Analysis of FERC Account 549 1


Generation Planning estimates $6.303 million72 for Test Year 2015 to fund currently-3

authorized Generation Planning activities. This is the same amount authorized by the Commission in 4

the 2009 and 2012 GRCs. Of the $6.303 million requested, $1.320 million will be used to fund labor 5

expenses, and $4.983 million will fund employee-related non-labor expenses as well as any consulting 6

services and studies contracted by Generation Planning as shown in Figure IV-6 below. 7

In this GRC, SCE proposes to include GP labor expenses in Test Year 2015 revenue 8

requirement. However, to eliminate forecast uncertainties, SCE proposes to continue recording non-9

labor PDD support costs in the PDDMA. While labor expenses have been relatively stable, non-labor 10

expenses can vary depending on the number and types of studies undertaken. The PDDMA will enable 11

annual reasonableness review of non-labor expenses in SCE’s Energy Resource Recovery Account 12

(ERRA) proceedings.73 Further discussion on SCE’s GP ratemaking proposal can be found in Exhibit 13

SCE-10, sponsored by Mr. Snow. 14

72 $6.303 million is equivalent to $5.8 million in 2009$ authorized in 2012 GRC proceeding escalated to 2012 year dollars.

See workpaper entitled “2015 GRC Forecasting Method for Generation Planning Memorandum Account (FERC Account 549)” for escalation details.

73 See Douglas Snow’s Testimony in Exhibit SCE-10, Vol. 1.

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Figure IV-6 Generation Planning Recorded and Adjusted

2008-2012/Forecasted 2013-2015 FERC Account 549 (Constant 2012$)


The purpose of Generation Planning is to analyze, develop, and propose for 2

Commission’s approval of cost-effective, utility-owned generation resources consistent with SCE's Long 3

Term Resource Plan. In Test Year 2015, Generation Planning will record costs for labor, employee-4

related non-labor expenses, and consulting services in FERC Account 549. 5


Labor expenses recorded in FERC Account 549 have remained relatively flat at about 7

$1.5 million from 2008 through 2012. In 2012, there was a decrease in labor expenses of about 8

$200,000 caused by the retirement of a Senior Director-level employee, and a Project Manager within 9

Generation Planning was hired to fill that vacant position. 10


Recorded non-labor expenses for GP remained flat from 2008 to 2009. From 2009 to 12

2010, non-labor expenses decreased by $600,000. This decrease was caused by the completion in 2010 13

of an Integrated Gasification and Combined Cycle technology study, in conjunction with a Clean 14

60

Hydrogen Power Generation project, performed jointly with the Electric Power Research Institute 1

(EPRI). 2

From 2010 to 2011, non-labor expenses decreased by about $1.3 million. This decrease 3

was caused by a number of factors, including: (a) $150,000 reduction in expenses for contingent 4

workers; (b) $300,000 reduction caused by the termination of site suitability studies for potential solar 5

projects; (c) $300,000 reduction caused by $150,000 in accidental charges to the GP memo account in 6

2010 (these expenses were not included in 2011, and the $150,000 was deducted from the 2011 7

expenses recovered through ERRA); (d) $150,000 of reduced EPRI program costs and (e) $250,000 in 8

reduced consulting expenses related to generation technology studies and associated study updates. 9


Labor expenses recorded in FERC Account 549 during the 2008 to 2012 period have 11

remained relatively flat, as described in Chapter IV.D.3 above. In D.89-12-057, the Commission has 12

stated that when recorded expenses in an account have been relatively stable for three or more years, the 13

last year’s recorded expenses is a reasonable base estimate for forecasting future expenses. Generation 14

Planning labor expenses have remained relatively stable, and, as Generation Planning does not forecast 15

any change to this trend, 2012 recorded costs, or $1.320 million, are a reasonable estimate for 16

forecasting 2015 labor expenses. As stated above, SCE requests that the labor expense for Generation 17

Planning be removed from the PDDMA and included in base rates starting in 2015. 18


For 2015 non-labor expenses, GP is requesting $4.983 million, which is the difference 20

between the 2012 authorized amount for the total PDDMA, or $6.303 million (in 2012$), and the 21

estimated labor expenses of $1.320 million. As mentioned in Chapter IV.D.1 above, non-labor expenses 22

would remain in the PDDMA and would be subject to annual reasonableness review in ERRA. 23

While non-labor expenses decreased in 2011 and 2012 due to the completion of several 24

studies, as explained above, GP anticipates an increasing number of studies in the 2015 GRC rate cycle 25

that require the flexibility to continue operate within the 2012 authorized amount. This approach is 26

consistent with SCE’s requests and the CPUC’s decisions for both the 2009 and 2012 GRCs. Non-labor 27

related expenses, as discussed in Chapter IV.D.4, are primarily dependent on the generation-related 28

studies undertaken by GP or contracted to a third party. These studies require varying levels of 29

consulting services and employee-related travel expenses and can be difficult to predict from year to 30

year. The studies completed by GP could include: new plant construction, repowering, joint-ventures, 31

61

purchasing shares in new or existing facilities, or other commercial arrangements. GP plans to 1

undertake projects to address the following areas: 2

Generation needs associated with the planned shutdown of OTC plants 3

Generation needs to assist with meeting renewable portfolio standard goals 4

Clean-burning gas technologies such as oxyfuels capable of producing relatively low 5

emissions 6

Carbon capture technologies used in combination with fossil fuel technologies 7

Technologies that provide inertia and voltage support to the grid 8

Storage technologies that can be integrated with generation technologies 9

Possible locations for new generation as needed 10

Regulatory impacts for all of the above will also need to be analyzed. 11

As indicated in Chapter IV.C, the Commission in D.06-05-016 authorized SCE to create 12

Generation Planning (formerly called PDD). The decision reads, “PDD’s primary function is to analyze, 13

develop, and propose for Commission approval, cost-effective, utility-owned generation opportunities 14

consistent with SCE’s long-term procurement plan.” Given the ongoing need for reliable generation 15

service in compliance with applicable laws and regulations, GP will continue to provide an important 16

role in the identification of types, costs, and potential locations for future generation either for third-17

party or utility ownership. 18

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V. 1

TRANSPORTATION ELECTRIFICATION 2

A. FERC Account 588: Transportation Electrification 3

The Transportation Electrification (TE) division (formerly the PEV-Readiness core team) is a 4

dedicated team that performs cross-functional planning and coordination of transportation electrification 5

activities for SCE (including light/medium/heavy duty plug-in electric vehicles (PEVs); fleet 6

electrification; electrified ports, forklifts, transit and other goods movement). Such activities include 7

development of transportation electrification-specific policies, strategy and plans, external and internal 8

coordination and customer education and outreach efforts. The division also facilitates an integrated, 9

Company-wide strategy and approach to transportation electrification implementation activities 10

conducted by other organizational units within SCE, including infrastructure and customer service 11

operations. 12

Market and policy forces continue to accelerate the connection of different transportation 13

technologies to the electrical grid and the use of electricity as a transportation fuel. For example, since 14

the launch of the plug-in electric vehicle market, Californians have adopted PEVs at more than twice the 15

national rate,74 as they did with hybrid electric vehicles in the last decade. Unlike the first few years of 16

the hybrid market, when only two models were available to consumers, today at least 17 PEV models 17

have been produced, with at least another 20 planned for launch through 2015.75 As a result, PEVs are 18

selling locally at more than three times the rate of hybrid vehicles at this comparable stage.76 Based on 19

this early experience and the projection of eight independent studies,77 SCE expects approximately 20

150,000 PEVs in its service territory by December 201778 (See Figure V-7 below). 21

74 See workpaper entitled “California Adoption Rate of PEVs Compared to U.S.”

75 See workpaper entitled “Produced and Planned PEV Models as of June 7, 2013.”

76 See workpaper entitled “Ratio of PEV Sales to Hybrid Sales in SCE Service Territory.”

77 See workpaper entitled “PEV Sales Forecast” for references to these studies and for the calculation of the amounts shown in Figure V-7.

78 There is also the potential for substantial growth for electric goods movement and rail. This includes existing technologies such as, but not limited to, shore power for ships at berth, electric light rail, electric truck refrigeration units, electric truck idle reduction, and electric material handling equipment such as forklifts and baggage tractors. It also includes emerging applications in California such as medium and heavy duty PEVs, high speed rail, dual-mode electrified trucks powered with overhead catenaries and electric rubber tire gantry cranes at the port.

63

The use of electricity as a transportation fuel is also receiving significant advancement from 1

policies at the federal, state and local levels focused on reducing dependence on petroleum, reducing 2

GHG emissions and improving air quality. As an alternative fuel provider, SCE must keep pace with 3

this dynamic landscape, partner to shape policies that are transforming the transportation sector and 4

maintain stewardship of customer interests. This process will also enable SCE to prepare its 5

infrastructure and operations for the ensuing load and mitigate negative impacts. 6

Figure V-7 Forecasted Plug-in Vehicles in SCE's Service Territory

1. TE Policy Activities 7

As noted above, there is significant policymaking underway at the federal, state and local 8

levels seeking to advance the use of electricity as a transportation fuel. The TE division monitors and 9

engages in current and future transportation electrification policy initiatives, and develops the 10

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appropriate Company actions and responses. Such policy initiatives include regulations, grants, tax 1

incentives and plans that either directly or indirectly affect TE. Examples of these include:79 2

a) Federal 3

EPA and the Department of Transportation’s new light duty vehicle fuel 4

economy standard, which nearly doubles fuel economy by 2025.80 5

Over $4 billion in Department of Energy grants and loans through the 6

American Reinvestment and Recovery Act for national PEV infrastructure, 7

research and development and U.S. manufacturing of PEVs to jump start the 8

PEV industry. 9

Internal Revenue Service tax credits for PEVs and PEV infrastructure. 10

b) State 11

Governor Brown’s Zero-Emission Vehicles (ZEV) Executive Order and 12

Interagency Working Group on Zero-Emission Vehicles (February 2013). 13

CARB regulations such as the ZEV mandate for light duty vehicles, Shore 14

Power requirements (port electrification), and the Low Carbon Fuel Standard. 15

CARB grant programs for clean air transportation including goods movement 16

(typically with air districts). 17

CPUC efforts to support adoption of alternative fuel vehicles, such as the 18

current Alternative Fuel Vehicle OIR,81 and in SCE’s previous GRC 19

Decisions.82 20

Agency plans such as the planned CARB Sustainable Freight strategy, and the 21

State Alternative Fuels Plan. 22

79 See workpaper entitled “TE Policy Initiative Examples” for further examples on policy initiatives.

80 See workpaper entitled “President Obama Announces Historic 54.5 mpg Fuel Efficiency Standard” for the July 29, 2011 White House Press Release. Automakers will meet these requirements with a combination of technologies, including light weight technologies, advances in internal combustion efficiency and increasing adoption of electro-drive systems.

81 See workpaper entitled “R.09-08-009, pages 1-4.” In addition, Commission staff have indicated to the TE division in informal discussions that a new proceeding is forthcoming that will likely cover issues pertaining to the broad transportation electrification segment.

82 See workpaper entitled “D.12-11-051, pages 1 and 848” as an illustration of the Commission’s support for advancing transportation electrification in SCE’s 2012 GRC Decision: “SCE’s proposed PEV activities are consistent with Commission policy as articulated in the Alternative Fuel Vehicle Rulemaking” (D.12-11-051, p. 848).

65

c) Local/Regional 1

South Coast Air Quality Management District 2012 Air Quality Management 2

Plan and other air district grant programs that encourage zero and near-zero 3

emission transportation. 4

2. TE Strategy and Planning 5

TE maintains, in coordination with other IP & EA and Environmental divisions,83 a 6

consistent, common understanding of emerging transportation electrification markets, foundational 7

assumptions, strategies and tools supporting SCE's transportation electrification planning activities. 8

These efforts facilitate reducing barriers to transportation electrification adoption, as well as preparing 9

the Company’s infrastructure and operations. For example, by incorporating data regarding where PEVs 10

are being purchased, including the types of vehicles, charging methods and rates chosen, together with 11

feedback from customer surveys, the TE division can analyze the reasons behind customer decisions and 12

investigate opportunities to reduce barriers to adoption of PEVs. Likewise, this same data informs the 13

planning needs for SCE’s distribution infrastructure and customer service operations areas, as well as 14

the design of new customer rates. 15

3. TE External Coordination 16

The TE division conducts proactive engagement with a broad set of stakeholders, 17

including federal, state and local government agencies, industry stakeholders (e.g., technology 18

providers, original equipment manufacturers) and other public/private organizations (e.g., California 19

PEV Collaborative, California Transportation Electrification Coalition, Electric Drive Transportation 20

Association, Edison Electric Institute CEO Transportation Task Force). Through these collaborations, 21

SCE leverages knowledge and expertise, minimizes the duplication of efforts and increases the 22

effectiveness of its TE activities.84 23

83 The TE division is now part of the IP& EA department. Positioning the transportation electrification effort within this

department enables a more efficient sharing of information and resources related to transportation electrification policy, strategy and planning issues. For example, TE works with IP&EA staff to assist with assessing the resource implications of increasing electricity consumption related to transportation electrification.

84 For example, the TE division has collaborated separately with the California PEV Collaborative and the Los Angeles Department of Water and Power on education and outreach materials related to multi-family dwellings and information for local area auto dealerships.

66

4. TE Internal Coordination 1

The TE division coordinates critical transportation electrification activities conducted 2

within the Company. It bridges the policy, strategy, planning and external engagement efforts with the 3

operational and implementation work of various internal organizations, illuminating dependencies, 4

promoting efficient information sharing and avoiding organizational silos and the duplication of work. 5

For example, as PEV adoption grows and anticipated trends related to higher PEV 6

charging levels and workplace and multi-family charging are realized, scaling challenges may likely 7

arise for customer-facing processes such as increased site visits by distribution planners, customer rate 8

analyses and rate changes, and customer calls to the phone center. Also, the clustering of vehicles or 9

other transportation electrification technologies could present localized distribution infrastructure issues 10

on both residential and commercial circuits. The TE division worked with SCE’s Transmission and 11

Distribution and Customer Service operating units to facilitate their assessments of transportation 12

electrification impacts on their operations and to estimate the investments required85 to respond to these 13

new loads. 14

The division also facilitates the aggregation and reporting of key performance measures 15

associated with transportation electrification (e.g., total PEV installation duration time, customer 16

satisfaction, etc.) and the implementation of continuous improvements to the relevant end-to-end 17

processes and customer experiences. These activities will continue to be important as new technology 18

solutions become available and as customer adoption increases. Additionally, as detailed above, TE and 19

Integrated Planning work together closely to execute targeted transportation electrification related 20

analyses and evaluations for the benefit of both divisions. Through this collaboration, SCE optimizes 21

resource skills and avoids the duplication of efforts. 22

5. PEV Customer Education & Outreach 23

In the Alternative Fuel Vehicle Phase 1 Decision, the Commission stated: “As the 24

Electric Vehicle market develops, utilities in collaboration with other stakeholders will need to provide 25

proactive and targeted customer education on certain charging equipment issues, including load 26

management and Electric Vehicle rate options.”86 27

85 Additional details on these investments required to support PEVs are included in Exhibit SCE-03, Vol. 3 and Vol. 5 and

Exhibit SCE-05, Vol. 2, Pt. 1.

86 See workpaper entitled “D.11-07-029, pages 1 and 65.”

67

Consistent with that decision, SCE’s education and outreach for PEV customers targets 1

early adopters and is focused on creating awareness of utility-related fueling options, rate options, 2

equipment installation considerations and the environmental and societal benefits of connecting to 3

SCE’s grid. In 2012, these efforts included messaging through digital ads, search engine marketing, 4

SCE’s PEV microsite, social media, and printed materials. In addition, SCE provided utility-specific 5

education materials to PEV dealerships.87 This education and outreach is critical to achieving a positive 6

customer experience and establishing responsible long-term charging behaviors from the outset.88 7

B. Analysis of FERC Account 588 8

1. Summary of 2015 Test Year Estimate 9

As explained in detail below, the TE division estimates its activity level to be the same as 10

it was in 2012 and thus, the total forecast to FERC Account 588 in Test Year 2015 will be the same as 11

total expenses recorded in 2012, or $5.595 million. 12

87 Additional details on general customer service education and outreach efforts are described in Exhibit SCE-04, Vol. 2.

However, O&M expenses associated with PEV education and outreach efforts are recorded only in FERC Account 588 and forecast in this testimony.

88 SCE maximizes the effectiveness of its education and outreach messages through active media relations and partnerships with outside stakeholders, such as the Electric Drive Transportation Association, Edison Electric Institute and the California PEV Collaborative. Consistent with the Commission’s decision in the AFV OIR, these outreach efforts by SCE are utility-specific, targeted to customers with an interest in PEVs (i.e., not mass marketing), and adhere to the guidelines outlined in that decision regarding the appropriate information to include in such communications.

68

Figure V-8 Transportation Electrification Recorded and Adjusted 2008-2012/Forecasted 2013-2015 FERC Account 588

(Constant 2012$)


Account 588 records expenses related to the TE division to conduct policy activities, 2

strategy and planning, external and internal coordination, and customer education and outreach related 3

to transportation electrification as described in detail above.89 4


The Transportation Electrification division did not exist prior to late 2009, so there were 6

no recorded costs in 2008. Recorded labor costs increased from 2009 to 201090 and again from 2010 to 7

89 In SCE’s 2012 GRC Application, SCE described and supported these functions in three areas of our testimony: Exhibit

SCE-03, Vol. 2, Chapter I; SCE-04, Vol. 3, Chapters III and IV; SCE-07, Vol. 3, Chapter III. The costs associated with these PEV related functions over the 2010 to 2012 period were subsequently recorded exclusively in FERC Account 588. To be consistent, these functions are aggregated here in SCE’s 2015 test year forecast. In the 2012 GRC Decision, the Commission stated “SCE reasonably expects to incur more work as the number of PEVs in its service territory increases and SCE’s proposed PEV activities are consistent with Commission policy as articulated in the Alternative-Fueled Vehicle Rulemaking.” (D. 12-11-051, p. 848).

90 The PEV-Readiness core team, the predecessor to the TE division, was established in September of 2009.

69

2011 as the PEV-Readiness effort was established over this two-year period.91 From 2011 to 2012, there 1

was a decrease in recorded labor expenses as the group elected not to backfill three positions that 2

became vacant due to staff turnover.92 3


Recorded non-labor expenses for the last four months of 2009 were $2.398 million, and 5

in 2009-2010, non-labor increased by $3.900 million, predominantly due to contract work to perform 6

studies and analyses and to assist with developing new processes and procedures. Additionally, utility 7

specific customer education and outreach efforts were conducted through targeted digitally-based 8

communications, development of an ongoing support for a PEV customer education microsite on 9

SCE.com and educational videos.93 Recorded non-labor expenses remained relatively flat from 2010 to 10

2011. Recorded non-labor costs decreased by $2.851 million from 2011 to 2012 primarily due to the 11

completion of contract work related to early market process and procedure development and a reduction 12

in education and outreach expenditures.94 13


TE estimates that labor expenses in Test Year 2015 will be about the same as the 2012 15

recorded labor expenses, or $2.250 million, predominantly to conduct the transportation electrification 16

policy and internal and external engagement activities described in Chapter V.A. The emerging 17

transportation electrification markets and significant policymaking and stakeholder engagement drivers 18

discussed in the previous section require SCE to sustain a coordinated, focused effort on these activities. 19

As a result, TE is using last year recorded expenses, or $2.250 million, as a base estimate for forecasting 20

Test Year 2015 labor expenses. 21

91 In SCE’s 2012 GRC Application, SCE described the functions that would be performed by this new organization, and

indicated that the related labor expense would continue to increase from 2009 to 2012 as this core team was established. See Exhibit SCE-03, Vol. 2, PP. 2-3, Ex. SCE 04, Vol. 3, pp. 25-141 and Ex. SCE-07, Vol. 3, pp. 5-15 of SCE’s 2012 GRC Application for further details.

92 The outcome of the 2012 GRC decision was not known until late 2012. Given this uncertainty, the organization took steps during 2012 to reduce costs where possible.

93 In SCE’s 2012 GRC Application, Exhibit SCE-04, Vol. 3, pp. 33-41, SCE described and supported these PEV-related customer education and outreach functions. During the 2010 to 2012 period these activities were subsequently recorded exclusively in FERC Account 588.

94 Education and outreach expenditures were reduced in 2012 to align with the delayed launch of the initial PEV market, and due to the uncertainty of the 2012 GRC decision.

70


TE estimates that non-labor expenses in Test Year 2015 will be the same as the recorded 2

2012 non-labor expenses, or $3.345 million, predominantly to conduct the transportation electrification 3

strategy and planning and PEV customer education and outreach activities described in Chapter V.A. 4

To the extent that the growth of the transportation electrification market continues to put upward 5

pressure on these activities,95 the group continues to mitigate such pressure by leveraging available 6

external and internal resources.96 As a result, the effort associated with TE non-labor expenses in 2015 7

are expected to be similar to that in 2012.8

95 As stated earlier, in SCE’s 2012 GRC Decision, the Commission states that “SCE reasonably expects to incur more work

as the number of PEVs in its service territory increases” (D. 12-11-051, p. 848). This logic should extend to the anticipated transportation electrification growth associated with electric goods movement and rail. The TE division continues, however, to seek tactics for mitigating this upward pressure on costs.

96 See our discussion regarding partnerships with outside stakeholders in PEV Customer Education & Outreach Chapter V.A.5 above, as well as the collaborative efforts described in TE External Coordination and TE Internal Coordination Chapter V.A.3-4 above. Those collaborations permit SCE to maximize the resources expended on these activities.

71

VI. 1

ENVIRONMENTAL AFFAIRS 2

Environmental Affairs (EA) is tasked with providing direction and leading all of SCE’s activities 3

and programs that pertain to, or are associated with, environmental policy and regulatory issues. 4

Examples of EA’s activities include, but are not limited to: interactions with policymakers, regulators 5

and stakeholders on environmental matters, including SCE use of federal and state lands and corporate 6

environmental stewardship. Labor and non-labor expenses for these groups are recorded in FERC 7

Account 920/921. 8

A. FERC Account 920/921 9

1. Agency Engagement 10

SCE owns and operates generation, telecommunication, transmission and distribution 11

infrastructure and related facilities that must be permitted, constructed, operated and maintained in a 12

manner that is consistent with federal, state, regional and local jurisdictions’ environmental 13

requirements. Agency environmental requirements can come in the form of laws, regulations, policies, 14

initiatives, procedures, guidelines or other means. These environmental requirements address air and 15

water quality, climate change, habitat protection, endangered species protection and management of 16

public lands. EA employees educate regulators, Non-Governmental Organizations (NGOs) and other 17

stakeholders about SCE’s electrical system and the environmental impacts that specific policies will 18

have on the Company’s operations and cost structure. SCE believes that a well-informed regulatory 19

environment will lead to more thoughtful and balanced regulatory decisions. 20

EA works with regulators on proposed and existing regulatory requirements to effectuate 21

compliance in a cost-effective manner that supports our mission to safely deliver reliable power to our 22

customers. Additionally, to assist SCE in assuring adequate resources and in maintaining grid 23

reliability, EA has the responsibility to understand how existing and proposed environmental regulations 24

may affect not only the operation of the existing grid infrastructure and generation resources, but also 25

the future development of new facilities or modification of existing facilities. 26

When a new requirement is proposed that may affect SCE operations or grid reliability, 27

EA works with the relevant agency to understand the intent of the new requirement and the reasons why 28

the agency has chosen a particular course of action to achieve its intent. In addition to its own expertise, 29

EA coordinates with Corporate Environmental Health & Safety, the potentially affected SCE 30

organizations, and other SCE organizations to understand the impact of the proposed requirement on 31

72

SCE’s ability to construct, operate and maintain its facilities. When EA determines that compliance 1

with a proposed environmental policy may have impacts that compromise SCE’s ability to comply with 2

other existing regulations or unreasonably increase the cost of electric service or impact reliability, EA 3

engages the relevant agency in a discussion on ways to lessen those impacts. Examples of EA’s 4

activities regarding seven environmental issues are described below. 5

a) Air Quality 6

In addition to the United States Environmental Protection Agency (EPA) and the 7

CARB, SCE must interact and comply with the regulatory requirements of ten local air quality 8

agencies.97 SCE’s operating units must know, and comply with, existing regulations and evaluate 9

proposed regulations to determine the system impacts. In addition to the local regulatory efforts, other 10

major initiatives in the air quality arena require focused policy oversight. For example, the ability to site 11

new generation in the Southern California Basin is governed by New Source Review provisions of the 12

federal Clean Air Act, which require that all emissions from new sources must be offset. Policy changes 13

to the Clean Air Act, both at the federal and state levels, are necessary to address the need for adequate 14

Emission Reduction Credits to enable the construction of new generation facilities. Another related 15

major policy area is transportation electrification. EA works closely with the Transportation 16

Electrification division to encourage electrification of the transportation sector, as it is critical to 17

attaining the goals of the National Ambient Air Quality Standards. Additionally, transportation 18

electrification will increase electric load and the need for additional generation capacity. Thus, SCE is 19

working closely with state and local air quality agencies on major transportation electrification 20

initiatives and evaluating the potential impacts on load growth. See Section III for a detailed discussion 21

of the activities of SCE’s Transportation Electrification division and its collaboration with EA and IP. 22

b) Global Climate Change98 23

California implemented a landmark climate law, the California Global Warming 24

Solutions Act of 2006, (AB-32). This law is having a transformative effect in all areas of the economy, 25

including the electric utility sector. The CARB is charged with developing and implementing 26

97 Agencies that EA works with relating to air quality include: United States EPA, CARB, South Coast Air Quality

Management District (SCAQMD), San Diego Air Pollution Control District (APCD), Ventura County APCD, Santa Barbara County APCD, Eastern Kern APCD, San Joaquin Valley APCD, Great Basin Unified APCD, Mojave Desert AQMD, Antelope Valley AQMD, and Clark County Environmental Services.

98 The primary agency that EA works with relating to global climate policy is CARB.

73

regulations to achieve the State's emission goals established by AB-32. These regulations require 1

reduction and reporting of GHG emissions and create an emissions cap-and-trade program. EA works to 2

inform CARB of the effects of its regulations on the operations and economics of the electricity sector 3

and to shape the final requirements. For example, EA worked with CARB to develop an allowance 4

allocation methodology that provided a free allocation of GHG emission allowances to electric utilities 5

on behalf of utility customers while maintaining the environmental integrity of the regulation. 6

In addition to California's AB-32, the U.S. EPA is developing GHG emissions 7

standards for power plants. The CARB is working to establish AB-32 as an equivalent regulation under 8

the Clean Air Act, thus reducing duplicative regulation in the climate arena. EA is working with the 9

CARB to evaluate the California rule and identify the best approach for establishing regulatory 10

equivalence under the EPA regulation. This ongoing work requires significant technical expertise from 11

EA staff. 12

c) Water99 13

EA is responsible for representing the Company on policy and regulatory 14

processes that are developed at the California State Water Resources Control Board. EA analyzes 15

policies proposed by the SWRCB, coordinates with internal technical experts to determine any policy 16

impacts and develop policy positions, and educates SWRCB executive staff and board members on any 17

impacts to SCE operations. SWRCB policy issues include water impacts during project construction 18

and ongoing operation and maintenance, water impacts from SCE owned generation sources, and 19

reliability issues surrounding the SWRCB once-through cooling policy. 20

d) Solid and Hazardous Waste 21

EA analyzes impacts of new or changing solid and hazardous waste laws, policies 22

and legislation. For example, legislation100 gave the California Department of Toxic Substances Control 23

(DTSC) the authority to identify and prioritize chemicals of concern, evaluate the use of alternatives to 24

chemicals of concern in products, and specify regulatory responses for chemicals of concern when found 25

99 The agencies that EA works with relating to water are the State Water Resources Control Board, the San Diego Regional

Water Quality Control Board (RWQCB), the Santa Ana RWQCB, the Los Angeles RWQCB, the Central Valley RWQCB and the Lahontan RWQCB.

100 The California Green Chemistry Initiative (CGCI) is a six-part initiative to reduce public and environmental exposure to toxins through improved knowledge and regulation of chemicals. Two parts became law in 2008 while the other four parts were not passed, but are still on the agenda of DTSC's green ribbon science panel discussions. Implementation of the CGCI has been delayed indefinitely.

74

in products.101 DTSC regulations have the potential to eliminate critical electrical contact cleaning 1

chemicals from commerce, thus affecting system maintenance and electric system reliability. EA 2

provided input to the regulators by commenting through industry advocacy groups and through direct 3

communication with other utility and industry stakeholders. 4

e) Coastal Areas 5

The California Coastal Commission plans and regulates development within the 6

coastal zone. Development activities are broadly defined by the Coastal Act to include, among others, 7

construction of buildings, divisions of land, and activities that change the intensity of use of land or 8

public access to coastal waters. These activities generally require a coastal development permit from 9

either the CCC or the local government. Development activities at the SONGS location or in the SCE 10

service territory that extends to the coastal zone, where a local government has not prepared an approved 11

Local Coastal Plan, require interaction with the CCC staff and commissioners. EA is the strategy owner 12

and primary SCE organization responsible for interaction with the CCC senior staff and commissioners. 13

f) Public Lands102 14

SCE has over 6,000 miles of transmission and distribution lines and at least four 15

substations on over 50,000 acres of rights-of-way located on federal and state lands. SCE’s ability to 16

construct, operate and maintain these facilities in a cost effective and timely manner provides value to 17

SCE customers through greater reliability and reduced cost. EA is the SCE organization responsible for 18

interaction with the leadership and key staff of the public lands agencies. For example, the U.S. Forest 19

Service has recently begun a multi-year process to update its land and resource management plans for 20

the Inyo, Sequoia and Sierra National Forests. SCE has significant infrastructure facilities 21

(transmission, distribution, hydro generation, and telecommunication) located within these three forests 22

and participation in the Forest Service planning process is important to avoid changes to the forest plans 23

that may adversely impact SCE facilities and operations. Additionally, EA is coordinating with other 24

SCE operating units on the development of an Operations and Maintenance Plan that will be presented 25

to the U.S. Forest Service and Bureau of Land Management (BLM). Currently, Forest Service and BLM 26

101 Division 4.5, Title 22, California Code of Regulations, Chapter 55, p. 17. Safer Consumer Products http://dtsc.ca.gov/LawsRegsPolicies/Regs/upload/2-SCP-REVISED-Proposed-Regulations_APA-MARKUP-April-2013.pdf

102 The agencies responsible for public lands with which EA interacts include the U.S. Forest Service, U.S. Department of Agriculture, U.S. Bureau of Land Management, National Park Service, U.S. Department of the Interior, U.S. Army Corps of Engineers, California State Lands Commission, Arizona State Lands Department, California Department of Parks and Recreation and California Department of Fire and Forestry.

75

review and approval of SCE maintenance activities can be slow, resulting in a backlog of requested 1

approvals. EA is creating a strategy for SCE and the agencies to follow that should significantly reduce 2

review and approval time periods. 3

EA also participated in a four-year effort with the U.S. Department of the Interior 4

and the U.S Department of Energy to ensure inclusion of transmission planning in these departments’ 5

Programmatic Environmental Impact Statement (PEIS) for solar energy development in six 6

southwestern states. The inclusion of transmission into the solar PEIS should reduce the time and cost 7

of siting and licensing transmission lines in the solar energy zones, helping to minimize costs to 8

customers. Other examples of collaboration with state and federal land management agencies are the 9

planning discussions occurring to make the land management agencies aware of the Company’s 10

Deteriorated Pole Replacement Program and the Pole Loading Program, which will require agency staff 11

to provide timely approvals for SCE activities to implement these programs on federal and state lands. 12

The programs are necessary to replace poles that could adversely impact reliable customer service. 13

g) Natural and Cultural Resources 14

The construction of new infrastructure and the operation and maintenance of 15

existing infrastructure can cause impacts to natural and cultural resources. These activities are highly 16

regulated by state and federal natural and cultural resource agencies.103 Conversations with the U.S. 17

Fish and Wildlife Service (USFWS) led to a recently signed cost reimbursement agreement to have 18

USFWS staff work on SCE’s Cross Valley Transmission Project and complete approval of a Habitat 19

Conservation Plan and the accompanying environmental review document in a timely fashion. EA staff 20

is working with the California Department of Fish and Wildlife to implement new legislation or 21

regulations regarding SCE activities that affect bird nests. 22

Recently, SCE provided comments to the California Office of Historic 23

Preservation (OHP) regarding the proposed adoption of a fee schedule for the use of Resource 24

Information Centers that provide information about the presence of historical and cultural resources in 25

areas where SCE proposes to perform work. SCE uses this information prior to performing ground 26

disturbing work to evaluate potential project impacts. SCE will be working with the OHP to encourage 27

103 The agencies responsible for natural resources with which EA interacts include the California Department of Fish and

Wildlife, Nevada Department of Wildlife, U.S. Fish and Wildlife Service, and State Office of Historic Preservation. Additionally, the agencies mentioned in footnote 107 above also work on various natural resource issues.

76

the agency to centralize its information onto an on-line Geospatial Information System database that will 1

provide information in a quicker and less expensive fashion. 2

2. Corporate Responsibility and Sustainability 3

EA manages SCE’s Corporate Responsibility and Sustainability efforts. These efforts 4

were begun to demonstrate SCE’s leadership in corporate sustainability and later to develop a 5

sustainability roadmap leveraging a triple bottom line104 approach to reduce operational costs and 6

environmental impacts. The sustainability roadmap captured programs in SCE’s business operations 7

that contribute to SCE's sustainability efforts. These programs include, but are not limited to: the green 8

fleet program, which utilizes on-board technology to monitor driver behavior and fuel usage; the green 9

buildings program which helped establish standards around building remodeling and new construction to 10

LEED design standards; the development of SCE sustainable supply chain and partnership program, 11

which enhanced SCE’s award-winning recycling program and helped develop an SCE green chemistry 12

team, as well as an initiative to promote energy efficiency and demand response programs to suppliers in 13

SCE’s service territory. 14

SCE’s corporate responsibility initiative was later launched in response to the CPUC’s 15

increasing interest in California investor-owned utilities’ (IOU) efforts to improve corporate 16

responsibility and sustainability practices. The CPUC held its inaugural Sustainable Utilities En Banc’ 17

on August 21, 2012 to educate Commissioners and interested parties on corporate responsibility and 18

sustainability as it applies to California IOUs. The California Utility Sustainability Partnership (CUSP) 19

was developed by SCE, Pacific Gas & Electric, San Diego Gas & Electric and the Southern California 20

Gas Company to coordinate utility corporate responsibility and sustainability programs and identify 21

strategies and best practices for addressing priority corporate responsibility and sustainability issues. 22

EA works closely with SCE operating units and CUSP to develop best practices for SCE’s 23

corporate responsibility and sustainability program, and, in doing so, has identified the following SCE 24

corporate responsibility and sustainability priorities: public and employee safety, system reliability, 25

economic vitality and environmental impact (e.g., global climate change, water impact and habitat 26

protection). 27

104 The triple bottom line is a framework to measure corporate performance in the following areas: economic, social and the

environment.

77

These efforts and additional corporate responsibility and sustainability programs and 1

initiatives are outlined and reported in SCE's annual Corporate Responsibility Report, which is 2

developed in coordination with Corporate Communications and SCE Operating Units. 3

B. Analysis of FERC Account 920/921 4


For Test Year 2015, SCE requests a total of $2.990 million be authorized for EA units in 6

IP&EA that record labor and non-labor expenses to FERC Account 920/921. Of the $2.990 million 7

requested, $1.840 million will be allocated towards labor and $1.150 million will be allocated towards 8

employee-related non-labor expenses, such as business travel, office supplies, SCE membership dues, 9

and outside consulting expenses. The below Figure VI-9 details labor and non-labor recorded expenses 10

from 2008 to 2012 and includes forecasted costs through Test Year 2015. 11

Figure VI-9 Environmental Affairs Recorded and Adjusted

2008-2012/Forecasted 2013-2015 FERC Account 920/921 (Constant 2012$)


EA provides direction and leads all of SCE’s activities and programs that are related to 13

environmental policy and regulatory issues as described in detail above. EA records costs for labor and 14

78

employee-related non-labor expenses, including and business travel and consulting services, in FERC 1

Account 920/921. 2


Labor expenses recorded to FERC Account 920/921 increased by about $350,000 4

between 2008 and 2009. This increase was due to: (a) creation of the corporate responsibility and 5

sustainability function in EA to create and execute on a plan, which was initially staffed by one Senior 6

Director in 2009, to make Company operations more efficient and environmentally conscious; (b) by 7

hiring a Manager to dedicate half of his time to engagement activities with public lands/natural resource 8

agencies; and (c) the hiring of a Project Manager in mid-2009 to coordinate SCE’s positions on 9

proposed global climate change-related policies. 10

Recorded labor costs increased by $300,000 from 2009 to 2010. This increase was due to 11

the further dedication of labor resources to the public lands and natural resources areas and the hiring of 12

two additional Senior Project Manager-level staff for agency engagement activities related to air quality 13

and coastal areas. 14

In 2011 recorded labor expenses increased by about $200,000. This was due to the hiring 15

of two full-time Project Managers and two full-time Junior Analysts in the fourth quarter of 2011. The 16

two Project Managers and one Analyst perform functions related to public lands and natural resources, 17

while the other assists with issues related to air quality, waste policy, and the California Coastal 18

Commission. 19

In 2012 recorded labor expenses increased by about $350,000. The Project Managers 20

and Analysts hired in 2011 worked the full year in 2012, which resulted in an increase in labor expenses. 21

The manager stopped dividing time between engagement with natural resource/public lands agencies 22

and other activities and became fully devoted to public land and natural resource management activities. 23

EA also added one Project Manager-level employee to support SCE’s corporate responsibility and 24

sustainability program and to implement a formal governance structure to improve on regulatory and 25

business interactions with lead agencies while addressing policy and procedural issues that impact 26

business operations. 27


Non-labor expenses recorded to FERC Account 920/921 stayed relatively flat from 2008 29

to 2009 but increased from 2009 to 2010 by about $1.4 million. This increase was primarily driven by 30

the use of consulting services to expand SCE’s environmental efforts including: (a) creation of SCE’s 31

79

Sustainability Roadmap that is now being acted upon, (b) development of sustainability metrics tied to 1

corporate goals and (c) analysis of SCE’s vehicle fleet to capture GHG measures by vehicle type. Also, 2

a significant amount of employee-related travel expenses were recorded for trips to and from the CARB 3

during the development of the CARB’s GHG allowance trading program. 4

In 2011, recorded non-labor expenses decreased by about $700,000. This was caused 5

primarily by the completion of the Sustainability Roadmap in the first half of 2011, as only $350,000 6

was expended in 2011 for the plan’s completion. 7

In 2012, recorded non-labor expenses decreased by about $900,000 as consulting services 8

and other work were reduced due to the delay of the 2012 GRC decision. The EA division was hesitant 9

to expend funds on new work or projects with the potential uncertainty associated with the pending GRC 10

decision, which had the potential to significantly decrease available funding and staffing. However, EA 11

now anticipates higher non-labor expenses in the future than those incurred in 2012, in order to 12

accommodate the continued ramp-up of its environmental efforts to help SCE comply with regulations 13

and achieve environmental policy objectives designed to reduce overall costs. 14


As discussed in Chapter VI.B.3, recorded labor expenses have been increasing each year 16

over the 2008 to 2012 period, reflecting the adoption of various Environmental Affairs functions as well 17

as the increasing work load performed by the EA groups described in Chapter VI.A. In D. 04-07-022 18

and D.89-12-057, the Commission has stated that where the recorded costs trended in one direction for 19

three or more years, the last recorded year is a reasonable estimate for future expenses. Because the 20

recorded costs in this account have shown a trend over the past five years, the last recorded year, or 21

$1.840 million, is an appropriate base for estimating test year 2015. Additionally, the level of work 22

performed by EA will be about the same as in 2012, if not more, as a large number of regulations and 23

policies related to environmental issues continue to impact SCE’s operations. 24


Non-labor recorded expenses in FERC Account 902/921 have varied over the 2008 to 26

2012 period, which was expected. As discussed in Chapter VI.B.4, these variances have been primarily 27

associated with agency requirements or project-specific expenses, consulting expenses and variations in 28

employee-related travel. These expenses are often specific to a particular project or agency 29

requirement/proposal and are difficult to forecast. Depending on legislative and regulatory agency 30

initiatives proposed and implemented each year, the required level of work effort can vary. Moreover, 31

80

as noted above, EA anticipates increasing its efforts to educate external stakeholders, like regulators and 1

NGOs, about SCE’s electrical system and the impacts that specific environmental policies will have on 2

the Company’s operations and infrastructure planning. In D.89-12-057, the Commission has stated that 3

where the recorded costs have fluctuated from year to year, an average of recorded expenses is 4

reasonable. Because these non-labor expenses have varied from year to year over the period from 2008 5

to 2012, a five year average of those expenses is reasonable, and therefore IP&EA is estimating 2015 6

expenses based on the 5-year average of recorded 2008-2012 non-labor expenses for EA functions, or 7

$1.150 million.8

81

VII. 1

REGULATORY OPERATIONS AND REGULATORY POLICY & AFFAIRS 2

A. Overview of the Regulatory Operations and Regulatory Policy & Affairs Departments 3

As a regulated utility, SCE is subject to oversight by various state, federal and local agencies 4

including the Commission, the CEC and FERC. The Regulatory Operations and RP&A departments 5

have the primary responsibility for managing and directing all of SCE’s regulatory activities before 6

these agencies. These activities include serving as the Company's interface with the Commission and 7

FERC in developing and supporting tariffs that appropriately recover the Company's overall costs of 8

providing utility service. Both departments are also responsible for maintaining liaisons and 9

coordinating Company contacts with these regulatory agencies, as well as managing Company responses 10

to their investigations and rulemakings related to broad issues of regulatory policy. In addition, 11

Regulatory Operations directs the Company’s regulatory compliance activities and manages a large 12

number of related compliance filings. 13

Regulatory Operations and RP&A personnel are assigned to virtually every energy-related 14

proceeding before the Commission and provide expert testimony, case management, policy 15

recommendations, technical support, and witness support in these proceedings. In conjunction with 16

SCE’s Law Department, Regulatory Operations and RP&A advise SCE’s management and other SCE 17

departments on compliance with decisions and regulations issued by the regulatory agencies. 18

Additionally, Regulatory Operations and RP&A interface with many other regulatory agencies to 19

obtain regulatory, legislative, and environmental approvals. Such agencies include the California 20

Independent System Operator (CAISO), the California Air Resources Board, the California 21

Environmental Protection Agency, and the U.S. Department of Energy, plus many other governmental 22

and non-governmental organizations. 23

1. Regulatory Operations Department 24

Regulatory Operations’ primary focus is to provide reasonable assurance that SCE 25

collects the full revenue requirements authorized by the Commission and FERC through cost-based rates 26

that meet customer needs and comply with federal, state and local government public policy 27

requirements. In addition, Regulatory Operations directs the Company’s regulatory compliance 28

activities and manages a large number of related compliance filings. 29

Regulatory Operations consists of the following six functional groups: 30

82

(1) The CPUC Revenue Requirements and Tariffs group’s responsibilities include the 1

development and administration of Commission-related revenue requirements and corresponding 2

ratemaking mechanisms, and providing cost and revenue requirement forecasts for internal decision 3

making purposes. This group supports the GRC forecasts and Energy Resources Recovery Account 4

(ERRA) proceedings and establishes and maintains balancing and memorandum accounts in compliance 5

with Commission orders. This group is also responsible for the administration of SCE tariffs (including 6

rules, pricing schedules, and contracts), tariff-related portions of regulatory proceedings and other 7

compliance activities, services including tariff interpretations for internal and external parties, and 8

formal and informal customer complaint cases. In addition, this group is responsible for the preparation 9

and filing of Advice Letters. 10

(2) The Pricing Design & Research group’s primary responsibility is to design rates that 11

equitably recover SCE’s authorized revenue requirements from our customers, subject to the policy 12

directives of the Commission. This group conducts cost and load studies and various revenue allocation 13

analyses across customer rate groups, and incorporating those results into rate designs. Combining these 14

rate designs with customer specific usage data allows for support of effective customer energy 15

communication and planning. In addition, this group provides rate group load analyses used in the 16

forecasting and settlement processes with the CAISO. This group is also responsible for the Corporate 17

Revenue Reporting Information System which provides SCE and Department of Water Resources billed 18

revenue and consumption information for financial and regulatory reporting. 19

(3) The CPUC GRC Case Management group is responsible for the development and 20

management of SCE's general rate cases before the Commission. This group’s primary goal is to 21

confirm that testimony and workpapers comply with the Commission’s rate case plan, and that SCE’s 22

rate case request accurately reflects the cost of providing safe and reliable service while complying with 23

all appropriate laws and regulations. Efforts across the entire Company must be scheduled and 24

coordinated leading up to the NOI and later the filing of the Application. After the GRC Application is 25

accepted, the CPUC GRC group is responsible for providing timely responses to data requests and 26

coordinating efforts for rebuttal testimony, hearings, and briefs. 27

(4) The FERC Rates and Regulation (FR&R) group is responsible for the development 28

and management of transmission rate and tariff filings at FERC, including SCE’s transmission rate case 29

and formula rate filings. This group also provides regulatory support to other departments on issues 30

relating to the CAISO markets and transmission services, SCE’s existing transmission contracts, 31

83

wholesale distribution service, generator interconnection policies and contracts, and compliance with 1

federal reporting requirements. 2

(5) The Regulatory Compliance group is responsible for managing: (a) the Energy 3

Regulation Compliance Program (ERCP), including Company-wide governance of SCE’s compliance 4

with applicable CPUC, FERC, CEC, and Commodities Futures Trading Commission (CFTC) regulatory 5

requirements; (b) Company-wide compliance with the FERC Standards of Conduct (SOC) and Affiliate 6

Restrictions and the Commission Affiliate Transaction Rules (ATR);105 and (c) SCE’s efforts in 7

response to Commission and FERC-mandated regulatory audits and investigations. 8

(6) The NERC Compliance Program (NCP) group is responsible for Company-wide 9

governance of SCE’s compliance with all mandatory Western Electricity Coordinating Council (WECC) 10

and NERC Reliability Standards (including Critical Infrastructure Protection (CIP) Standards) approved 11

by FERC. The NCP establishes the framework and performance standards by which the corporation, 12

through the actions of its organizational units, demonstrates compliance. That governance framework 13

includes the following: (a) guiding principles for NERC compliance, (b) core compliance components 14

such as compliance operations, strategy, and quality assurance, and (c) communication and awareness of 15

mandatory reliability standards across SCE. 16

2. RP&A Department 17

RP&A’s primary focus is to coordinate and manage all of SCE’s regulatory policy 18

development and represent SCE before state agencies, including the Commission, CAISO and CEC. 19

RP&A consists of the following three functional groups: 20

(1) The Regulatory Affairs group, with personnel located in San Francisco, Rosemead 21

and Sacramento, is the interface between SCE’s operating units and California’s regulatory and 22

administrative bodies addressing regulatory issues, including cost recovery of SCE’s prudent energy 23

procurement activities and equal treatment of all market participants, environmental and climate change 24

issues, and cost recovery of SCE’s transmission, distribution and generation investments. This group 25

also manages Exempt Projects, Permits to Construct (PTC) and Certificate of Public Convenience and 26

Necessity (CPCN) applications for new transmission or subtransmission facilities. 27

105 As discussed later in this testimony, SCE is not seeking cost recovery of employee time performing ATR-related work in

the 2015 Test Year and the recorded/adjusted and forecast labor expenses have been adjusted accordingly.

84

(2) The Regulatory Issue Management (RIM) group is responsible for coordinating 1

regulatory-related activities across the Company by monitoring, prioritizing, and assisting in resolution 2

of regulatory issues that will ultimately come before the Commission, CEC, CAISO, and FERC. The 3

group keeps appropriate senior management, executive teams, and regulatory decision forums abreast of 4

key issues by preparing forum agendas and providing ongoing regulatory and legislative 5

communications, information management, and document control. RIM coordinates the Company’s 6

involvement in energy-related proceedings before the CPUC, including the Tehachapi Renewable 7

Transmission Project (TRTP), ERRA, transmission licensing, energy efficiency, the Storage Order 8

Instituting Rulemaking (OIR), Southern California Reliability, rate reform, and Long Term Procurement 9

Planning (LTPP). 10

(3) The Business Planning & Financial Management (BPFM) group provides support for 11

departmental procurement and invoice processing, corporate, department, and division goals, facilities, 12

financial analysis, budgeting and accounting, and portal support. 13

B. Summary of Test Year Request 14

For the Test Year 2015, SCE’s Regulatory Operations and RP&A departments forecast a total of 15

$16.461 million of expenses. Figure VII-10 below shows recorded expenses for the years 2008 through 16

2012, plus our forecast expenses for the years 2013 through 2015. As discussed in this testimony, the 17

projected increase in 2015 is due to increased staffing required: (1) to meet the growth in NERC 18

regulatory compliance activities and (2) to meet the growth of regulatory activities in RP&A. 19

85

Figure VII-10 Regulatory Operations and RP&A Recorded And Adjusted 2008-2012/Forecast 2013-2015 FERC Accounts 920/921


C. Analysis of Recorded and Forecast Costs (FERC Accounts 920 and 921) 1

Figure VII-10 above shows Regulatory Operations and RP&A’s recorded administrative and 2

general expenses in Accounts 920 (labor expense) and 921 (non-labor expense) over the period 2008 3

through 2012 and the 2013 through 2015 forecast. 4

1. Regulatory Operations and RP&A’s Recorded Labor Expenses 5

As shown in Figure VII-10, labor expenses between 2008 and 2009 were flat, and then 6

2010 labor expenses increased by $2.4 million, or 22 percent over 2009 recorded levels. This increase 7

was primarily due to expanded responsibilities of the Regulatory Compliance group initiated in 2009 in 8

response to FERC’s policy directions related to its expectations on effective compliance programs106 and 9

106 See FERC’s Policy Statement on Compliance, issued on October 16, 2008, 125 FERC ¶ 61,058 (2008), available at

http://www.ferc.gov/whats-new/comm-meet/2008/101608/M-3.pdf; Revised Policy Statement on Enforcement, issued on May 15, 2008, 123 FERC ¶ 61,156 (2008), available at http://www.ferc.gov/whats-new/comm-meet/2008/051508/M-1.pdf; Policy Statement on Penalty Guidelines, issued on March 18, 2010, 130 FERC ¶ 61,220 (2010), available at http://www.ferc.gov/whats-new/comm-meet/2010/031810/M-1.pdf.

86

creation of SCE’s ERCP. Regulatory Compliance reassessed its regulatory compliance activities and 1

designed a comprehensive program to provide Company-wide compliance governance for all 2

Commission, FERC, CEC, and CFTC compliance activities. As a result, Regulatory Operations 3

increased the number of staff performing regulatory compliance work in 2010.107 The ERCP was a 4

significant expansion of responsibilities from Regulatory Compliance’s previous tracking of only 5

Commission regulatory requirements. The new positions added in 2010 also reflected Regulatory 6

Compliance’s new responsibilities associated with providing Company-wide governance of SCE’s 7

compliance with the NERC Reliability Standards (including CIP standards). Version 1 of the NERC 8

CIP standards became effective on July 1, 2009, followed by Version 2 in October 2009 and Version 3 9

in October 2010. Regulatory Operations had to hire additional staff to manage compliance related tasks 10

such as governance, evidence reviews, analysis of changing regulations, and enforcement of mandatory 11

controls across SCE’s NERC registered entities. 12

Regulatory Operations and RP&A’s recorded labor expenses in 2011 and 2012 remained 13

relatively flat from the 2010 recorded level. 14

2. Regulatory Operations and RP&A’s Test Year 2015 Forecast Labor Expenses 15

With the on-going workload in regulatory activities, coupled with growth in Regulatory 16

Operations’ NERC regulatory compliance activities and growth in regulatory and legislative activities, 17

as described in detail below, Regulatory Operations and RP&A forecast the addition of ten employees 18

over the recorded 2012 levels. In D.89-12-057, the Commission stated that if recorded expenses in an 19

account have been relatively stable for three or more years, the last recorded year is an appropriate base 20

estimate. Regulatory Operations and RP&A’s recorded labor expenses have been relatively stable over 21

the last three year recorded period, so 2012 is the appropriate base estimate. To this base estimate, 22

Regulatory Operations and RP&A added future year adjustments for increased labor expenses associated 23

with additional Regulatory Operations and RP&A employees.108 24

As described below in Sections (1) and (3), work related to Commission and FERC rates, 25

regulation, and tariffs and regulatory compliance is expected to remain near 2012 recorded levels. 26

107 This increase was for three managers, four project managers, two project analysts and an administrative aide. Also, as

discussed earlier in this testimony, SCE is not seeking cost recovery of employee time performing ATR-related work in the 2015 Test Year and the recorded/adjusted and forecast labor expenses have been adjusted accordingly.

108 See workpaper entitled “Analysis of Forecasting Methods” for a discussion of other estimating methodologies considered for FERC Accounts 920 and 921.

87

Regulatory Operations and RP&A’s estimated 2015 Test Year labor expenses will increase by $1.047 1

million as a result of the addition of five employees in new positions required to meet the growth in 2

NERC regulatory compliance work as described in Section (4) below and the addition of five employees 3

in new positions to meet the growing regulatory and legislative work in the RP&A department as 4

described in Section (2) below. 5

In addition, Regulatory Operations and RP&A’s 2015 Test Year labor expenses have 6

been reduced by $0.247 million associated with Financial Services’ Operational Excellence initiative as 7

described in Exhibit SCE-08, Vol. 1, Part 1.109 In 2012, as part of the Company’s Operational 8

Excellence effort, portions of RP&A’s BPFM group were consolidated into the Financial and 9

Operational Services Operating Unit. While the internal reporting structure has changed for the 10

impacted employees, the associated labor and non-labor expenses will continue to record to the RP&A 11

cost center as the activities continue to support RP&A. Therefore, these RP&A recorded expenses for 12

the historical period as well as the 2015 Test Year forecast are included in Regulatory Operations and 13

RP&A’s labor amounts. 14

The 2015 Test Year labor expense forecast for Regulatory Operations and RP&A of 15

$14.3 million reflects a 5.9 percent increase ($1.047 million increase less $0.247 million reduction, for a 16

total $0.800 million increase) over 2012 recorded/adjusted levels as shown in Table VII-5 below. 17

109 See workpapers entitled “Adjustment for GRC – Test Year 2015” for further details on this adjustment.

88

Table VII-5 Regulatory Operations and RP&A

Account 920 – 2015 Test Year Labor Forecast

Regulatory Operations & RP&A Number of Positions

Yearly Salary @

MRP Total Labor Group

2012 Year-end Rec'd/Adj. -

13,500,000

New Positions in 2013

Manager 2 1

133,200

133,200 RegOps - NERC Compliance

Manager - Project/Product 2 1

123,900



108,300


Analyst - Program/Project 3 2

87,000


Director 1/ 1

200,000

130,000 RP&A - State Regulatory Affairs

Manager - Project/Product 2 1/ 1

123,900



108,300

216,600 RP&A - Reg. Policy Strategy

2013 Total New Positions 9

966,535

Less: Operational Excellence Initiative

(167,000)

2013 Net Labor Increase over 2012 - -

799,535

New Positions in 2014 - - -

Manager - Project/Product 2 1/ 1

123,900



(63,000)

2014 Net Labor Increase over 2013

17,535

New Positions in 2015 - - -


(17,000)

2015 Net Labor Decrease over 2014

(17,000)

Total 2015 Increase over 2012 Rec'd/Adj. 10

800,070

2015 Test Year Labor Forecast

14,300,070

1/ Total Labor amounts reduced for portion to be funded by shareholders.

Regulatory Operations and RP&A’s 2015 labor expense forecast of $14.3 million is 1

necessary to support the regulatory work in the Regulatory Operations and RP&A departments as 2

described in the following sections of this testimony. 3

89

(1) Regulatory Operations: Commission and FERC-Related Rates, 1

Regulation and Tariff work 2

Regulatory Operations’ 2015 Test Year labor forecast maintains the labor 3

expenses for Regulatory Operations’ employees performing Commission and FERC-related rates, 4

regulation and tariff work at the 2012 recorded level. This labor expenses forecast is necessary to 5

support the on-going and anticipated workload in Regulatory Operations related to Commission and 6

FERC regulatory proceedings and legislative activity involving Commission and FERC matters. The 7

groups in Regulatory Operations performing Commission-related work include the CPUC Revenue 8

Requirements and Tariffs group, the Pricing Design and Research group, and the CPUC GRC Case 9

Management group. The FR&R group performs the FERC-related rates, regulation and tariff work. 10

Numerous Commission proceedings over the 2015 – 2017 GRC period 11

will result in on-going economic analyses, development of revenue requirements and ratemaking 12

mechanisms (balancing or memorandum accounts), revenue allocation and rate design, advice letters, 13

and tariffs. SCE’s advice letter filings implementing various Commission decisions and making other 14

modifications to SCE’s tariffs increased from 157 in 2008 to 205 in 2012. 15

The number of Commission-related filings is expected to continue at 16

current levels over the 2015 GRC period. Relevant Commission proceedings include, or are associated 17

with, both the 2015 GRC and 2018 GRC proceedings, annual ERRA Review and Forecast proceedings, 18

Dynamic Pricing (e.g., Critical Peak Pricing, Real Time Pricing, Peak Time Rebate), Demand Response 19

programs (both direct load control and price response programs), Greenhouse Gas (GHG) Revenue 20

Allocation, the California Solar Initiative, Direct Access, SmartGrid, Residential Rate OIR, CARE Low 21

Income Needs Assessment, Net Energy Metering (NEM), Direct Access, Smart Grid, and SONGS-22

related filings. 23

New and on-going environmental initiatives and programs, including 24

implementation of the Alternative Fuel Vehicle OIR and Renewable Portfolio Standards (RPS) and 25

NEM customer bill impacts, will necessitate rate design activity in the Pricing Design and Research 26

group. In addition, legislation related to Commission-jurisdictional matters, including renewable 27

generation (e.g., Assembly Bill (AB) 1969), the on-going issues surrounding AB1X/Senate Bill (SB) 28

695, the California Solar Initiative, and Residential Rate Design (SB 743) will also impact the 29

Commission-related workload in Regulatory Operations. Furthermore, as these legislated programs are 30

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implemented, there will be a need for continuous program refinement which will necessitate tariff 1

revisions and on-going customer bill impact assessments and customer requests for tariff interpretations. 2

The FERC-related regulatory work in the FR&R group associated with 3

Transmission Owner and Wholesale Distribution Access Tariff interconnections and services has 4

significantly increased in the past several years and is expected to continue to remain at a high level in 5

the future.110 FR&R employees are involved in the review, negotiation, and filing with FERC of 6

interconnection arrangements with renewable generators, the development of tariff language, 7

cost-of-service pricing, and regulatory analysis on a variety of issues involving the interconnection of 8

renewables. They also represent the Company’s positions on recovery at the Commission and FERC of 9

the transmission costs incurred by SCE to accommodate the new generation. 10

Another major element of work for the FR&R group involves the 11

increasing frequency of rate filings at FERC, most of which are related to fulfilling California’s 12

renewable generation targets. In June 2011, SCE filed to implement a formula rate at FERC to replace 13

its traditional rate case filings. Pursuant to the formula rate tariff, SCE is required to file annually to 14

determine its transmission revenue requirement. In addition, the FR&R group is involved in regulatory 15

work surrounding interconnecting new generators and filings at FERC requesting transmission 16

incentives. The Energy Policy Act of 2005 directed FERC to develop incentive-based rate treatments 17

for transmission of electric energy in interstate commerce. The rule implemented this new statutory 18

directive through incentive-based rate treatments including incentive rates of return on equity for new 19

investment, full recovery of prudently incurred construction work in progress, accelerated depreciation, 20

and full recovery of incurred costs of abandoned facilities. Given the state’s renewable goals, and the 21

large amount of queued generators, it is likely that additional FERC incentive filings will be necessary 22

over the GRC period. 23

(2) RP&A Department 24

RP&A’s 2015 Test Year labor forecast includes the addition of five 25

employees over the recorded 2012 level: one director, two senior project managers and two project 26

110 As discussed in Exhibit SCE-10, Volume 1, Administrative and General (A&G) expenses, which include Regulatory

Operations’ O&M expenses, are allocated between Commission jurisdictional revenue requirements and FERC jurisdictional revenue requirements on the basis of labor cost ratios.

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managers.111 This forecast level of employees is necessary to support the on-going and anticipated 1

workload in RP&A related to Commission regulatory proceedings and environmental initiatives with 2

impacts on SCE. Issues where SCE faces increasing focus in the Test Year period are transmission, 3

revenue requirements, energy efficiency, energy procurement, system reliability and rate reform. These 4

issues are a result of increased regulatory involvement and litigation in these and other areas, as well as 5

very specific state policies and issues including the retirement of once-through cooling plants and 6

continuing issues related to SONGS. 7

The additional director in SCE’s San Francisco office will be responsible 8

for working with all levels of employees at the Commission and interested stakeholders to secure their 9

in-depth understanding of the regulatory positions taken by SCE on issues being considered by the 10

Commission in various forums. This director will be specifically responsible for communicating key 11

information in the areas of safety, transmission and distribution (including CPCNs), operations, 12

permitting, and generator interconnection. As California considers how to increase system reliability 13

with the absence of SONGS and in the face of uncertainties, including plants that may retire due to 14

once-through cooling regulations, this director will be responsible for communications and planning 15

with the Commission. In addition, with the Commission and SCE’s increased focus on safety, this 16

director will focus on the regulatory issues around safety and will educate decision makers, policy 17

makers, and stakeholders on adoption of safety policies, taking into consideration all impacts to SCE’s 18

customers. 19

The four project managers will assist with the development and 20

implementation of overall policy directives while integrating, coordinating, and developing strategies for 21

regulatory policies across SCE. The project managers will develop project schedules, strategies, and 22

processes for internal case and issue teams, and assist with the preparation and verification of materials 23

from other operating units. Working in partnership with the Integrated Planning & Environmental 24

Affairs department, they will provide a regulatory perspective on emerging issues that have broad cross-25

functional impacts on SCE such as the CEC Integrated Energy Policy Report (IEPR), the Electric 26

Program Investment Charge (EPIC) application, Commission Energy Storage Rulemaking, FERC 27

Energy Storage Policy, Electric Transportation OIR, and Distributed Generation. Furthermore, two of 28

111 Consistent with SCE’s past GRCs, portions of labor expenses for RP&A’s employees located in the San Francisco and

Sacramento offices are charged to shareholders and therefore are not reflected in the recorded or forecast expenses in this testimony. This also applies to one RP&A employee in the Washington D.C. office.

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the four positions will be rotational every two years, providing employees an opportunity to learn the 1

Commission’s regulatory landscape and processes, providing the San Francisco office with additional 2

staffing to attend Commission-related regulatory events and proceedings, and assisting consumer groups 3

in understanding SCE’s role in the regulatory arena. 4

(3) Regulatory Compliance (Non-NERC) Related Work 5

Regulatory Operations’ 2015 Test Year labor forecast for employees 6

performing regulatory compliance work (not related to NERC) is maintained at the 2012 recorded level. 7

Under the SCE Compliance Management Program, the Regulatory Compliance group is the Company-8

wide compliance area lead for all energy regulation compliance associated with CPUC, FERC, CEC, 9

and CFTC regulations. 10

In this role, Regulatory Compliance administers the ERCP. The ERCP 11

governance structure provides Company-wide oversight to the efforts of SCE’s operating units and 12

support organizations in providing reasonable assurance that SCE’s operations conform to applicable 13

regulatory requirements, in addition to providing that the overall ERCP is managed independently of the 14

operating units responsible for operational compliance. Specifically, in administering ERCP, the 15

Regulatory Compliance group: 16

Oversees the intake of decisions and rulings from CPUC, FERC, CEC, 17

and CFTC to interpret and identify new or revised regulatory 18

requirements that affect SCE operations. 19

Maintains a comprehensive catalog of compliance requirements, 20

organizations accountable for compliance with the requirements, and 21

the control activities implemented to establish compliance with the 22

associated requirements. 23

Consults on the development of controls and documentation associated 24

with energy regulation compliance requirements to promote 25

consistency across the Company. 26

Provides periodic reporting of energy regulation compliance activities 27

to SCE senior management. 28

In addition, the Regulatory Compliance group manages SCE’s response to 29

regulatory audits by the Commission and FERC. In 2012, Regulatory Compliance managed SCE’s 30

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response to ten regulatory audits mandated by the Commission and FERC.112 SCE anticipates that it 1

will be required to respond to a similar annual number of regulatory audits in the 2015 GRC period since 2

many of these audits are performed on a regular, repeating basis. 3

Regulatory Compliance also provides coordination and oversight of SCE’s 4

compliance with FERC Standards Of Conduct (SOC).113 The FERC SOC is intended to protect the 5

integrity and operations of wholesale electricity markets and establish rules that restrict interactions 6

between different sets of employees within the utility.114 Specifically, the FERC SOC require SCE’s 7

electricity marketing functions to be operated independently of its transmission functions, and require 8

the implementation of controls to prevent SCE’s marketing function employees engaged in the day-to-9

day sales of electricity from obtaining preferential access to SCE’s day-to-day transmission system 10

operating information. 11

(4) NERC Compliance Program (NCP) Related Work 12

Regulatory Operations’ 2015 Test Year labor forecast increases the 13

number of employees performing NERC compliance program work by five employees over the recorded 14

2012 level: one manager, one senior project manager, one project manager, and two analysts. An 15

increase in NERC regulatory compliance support and enforcement activities is due to two major changes 16

in the regulatory environment. First, NERC has proposed the Reliability Assurance Initiative (RAI) as a 17

new compliance enforcement methodology, which shifts significant enforcement responsibilities from 18

NERC to SCE. Second, revisions to existing NERC CIP Standards are expected to become effective on 19

October 1, 2015 and will significantly increase the scope as well as the breadth of applicability of the 20

standards.115 Two of the additional new positions (one manager and one analyst) are required in the 21

NCP Operations group and the remaining three new positions (one senior project manager, one project 22

112 See workpaper entitled “Regulatory Compliance Group: Audits Performed in 2012.”

113 This group also provides coordination and oversight of SCE’s compliance with the CPUC’s ATRs. In SCE’s previous three GRC proceedings, intervenors have argued for exclusion of CPUC ATR compliance costs from SCE’s GRC revenue requirement request, and the CPUC has agreed. SCE is not seeking cost recovery of employee time performing ATR-related work in the 2015 Test Year and the recorded/adjusted and forecast labor expenses have been adjusted accordingly. See workpapers to this exhibit entitled “RegOps Labor Costs Associated with CPUC Affiliate Rule Compliance” for the ATR labor adjustments made.

114 The FERC SOC also applies to interactions between SCE’s transmission function employees and any marketing function employees of its affiliates.

115 Refer to Chapter VIII, of the testimony below.

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manager, and one analyst) are required in the Quality Assurance group to meet the growth in NERC 1

regulatory compliance activities as discussed below. 2

SCE’s NERC Compliance Program116 was initially formed as a governing 3

body for NERC Compliance across SCE’s four registered entities for all the NERC Reliability 4

Standards.117 The enforcement of the NERC CIP Standards in 2009 resulted in a significant increase in 5

workload for the group due to the shift in the nature of these standards that are inherently different from 6

the NERC reliability standards that existed since 2008. The NCP is currently comprised of an 7

Operations group and a Quality Assurance group, both of which have separate duties, yet 8

complementary responsibilities. This alignment of staff is in preparation for the RAI and the new 9

NERC-CIP standards. The organizational structure and responsibilities of these groups provide 10

reasonable assurance that the overall corporate NCP is managed independently of the operating units 11

responsible for operational compliance with the NERC Reliability Standards, as outlined in FERC’s 12

policy statement of the structure of internal compliance programs.118 FERC recommends that 13

companies like SCE develop an independent compliance program with: (1) a formal structure and the 14

support of senior management, (2) mechanisms in place to review and modify the compliance program, 15

(3) methods to audit and review compliance, and (4) the capability to enforce internal controls 16

appropriately. 17

The current NERC regulatory enforcement framework is based on a “zero 18

defect” model applied to the set of standards established in 2007. Complying with the “zero defect” 19

model requires SCE to investigate, report and remediate any infraction of the standards, whether or not 20

the infraction has caused an adverse impact to reliability. The NCP Quality Assurance group was 21

formed in 2012 following an internal audit and the issuance of new FERC guidelines, which identified 22

116 See workpapers entitled “Description of NERC Compliance Program” for a description of tasks performed by the NERC

Compliance Program Group.

117 Registered Entities are the owners, operators, and users of the bulk power system required to register and comply with the approved Reliability Standards. SCE is registered as four separate entities. SCE’s Trading and Energy Operations department is registered as a Load-Serving Entity, Purchasing-Selling Entity, Generation Operator, and Resource Planner. SCE’s Power Production department is registered as a Generation Owner. SCE’s San Onofre Nuclear Generating Station is registered as a Generation Owner. SCE’s Transmission & Distribution operating unit is registered as a Transmission Owner, Transmission Operator (Joint Registration Organization with the California Independent System Operator), Distribution Provider and Transmission Planner.

118 See workpapers entitled “FERC Policy Statement on Enforcement, 113 FERC 61,068, Docket No. PL06-1-000”, issued, October 20, 2005,” which contain relevant excerpts.

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the need for a separate group to sustain compliance with the “zero defect” model or the proposed 1

reliability assurance initiative model119 as the scope of NERC reliability standards expand substantially 2

with CIP Version 5. The group is responsible for building and maintaining a cross-departmental NERC 3

reliability compliance program and measuring program effectiveness to demonstrate compliance in an 4

audit. Additional responsibilities for the Quality Assurance group include development of new internal 5

standards, procedures, and administrative duties to be performed by the NCP Operations group to 6

support internal enforcement of controls. 7

To staff the Quality Assurance group, one manager and one analyst were 8

hired in our 2012 base year. As requested in our incremental test year forecast, one additional senior 9

project manager and one project manager was hired in 2013 to meet the increased workload relating to 10

compliance governance activities due to the zero defect120 requirement of the NERC reliability standards 11

and to prepare for NERC’s Reliability Assurance Initiative when implemented. Under the zero defect 12

model, these new positions will coordinate quality assurance reviews and recommendations to ensure 13

compliance, and develop and implement activities such as standardization of evidence and the 14

development of a body of knowledge to enable effective compliance. 15

NERC’s RAI121 is anticipated to provide a shift in NERC’s compliance 16

philosophy that will lay out guidelines for NERC registered entities based on concepts of risk 17

management and continuous improvement. The burden of compliance enforcement is expected to shift 18

from Regional Entities such as WECC to SCE, including continuous monitoring, discovery, 19

remediation, and tracking of mitigation measures. SCE began to experience NERC’s transition to the 20

RAI framework through its recent enforcement actions and, as a result, can anticipate the increased 21

workload from the transition from zero defect to this new framework. The NCP Quality Assurance 22

group currently performs some of these functions and, with the incremental staff that were hired in 2013, 23

they will be prepared to assume additional responsibilities as changes in the larger NERC regulatory 24

environment, including the RAI, when ratified by FERC. 25

119 Responsibilities of the NCP Quality Assurance group are expected to increase under Version 5 whether the new

standards are zero defect, or if they are aligned with the reliability assurance initiative.

120 NERC reliability standards are “zero defect” standards, which means that every instance of non-compliance with standards requires the Company to make regulatory self-reporting, mandatory mitigation plans, and make full remediation. The infraction does not have to have any impact on reliability and could simply be a documentation error, which has to be treated with the same rigor as a larger event with tangible adverse impact on reliability.

121 See workpapers entitled “Reliability Assurance Initiative.”

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The CIP standards impact SCE organizations that are directly involved in 1

operations for electrical reliability, such as SCE’s Grid Operations, as well as support organizations not 2

involved in day-to-day electrical reliability, such as Information Technology. Therefore, the NERC 3

Compliance Program, as a governance organization with the breadth of responsibility to perform 4

compliance support functions, continues to grow in order to assist the Company in responding to 5

increasing mandatory regulatory filings,122 tracking of standards development,123 and conducting 6

internal reviews of NERC compliance evidence. 7

As discussed in Chapter VIII of this testimony, SCE expects Version 5124 8

of the NERC CIP Standards to become effective by October 1, 2015 by which time all assets identified 9

to be in scope have to be compliant with the entire body of NERC CIP standards. As a result of these 10

NERC CIP standards, over 100 facilities currently not in scope for the standards currently in effect will 11

be subject to compliance enforcement, such as transmission substations. In addition to this significant 12

increase in scope, two new standards that require governance of change management and the protection 13

of information artifacts will also come into effect. 14

Although the increase in SCE facilities subject to NERC CIP Version 5 15

requirements will be handled by the operating units, incremental employees in the NERC Compliance 16

program are required to build and sustain the compliance program and assist in project management 17

activities to so that SCE can demonstrate compliance by the effective date as required by NERC. The 18

additional manager and analyst positions are necessary to meet this increase in the workload of the NCP 19

Operations group. These two positions were hired in early 2013 to meet increased workload due to new 20

or modified NERC standards, support program management of the company-wide NERC CIP Version 5 21

implementation, tracking and reporting on progress towards operational compliance for the SCE NERC 22

Executive Steering Team. As the scope and breath of NERC reliability and CIP compliance continues 23

122 SCE is required to self-certify compliance with all mandatory NERC requirements on an annual basis as set forth by

WECC.

123 NERC’s Reliability Standards Development Plan released in 2010 for the years 2011-2013 identified 17 high priority projects for standards development and an equal number of additional projects to be initiated. NERC Compliance Program staff coordinates SCE’s participation in the standards development process. In particular, the NERC CIP Standards were revised numerous times after significant industry comment and were subject to multiple industry ballots prior to being accepted.

124 See Chapter VIII – Policy, of this testimony for further discussion on Version 5 of the NERC CIP Standards.

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to grow, these two positions will also coordinate and develop SCE’s positions on FERC Notices of 1

Proposed Rulemaking (NOPRs), NERC Reliability Standards, and WECC Reliability Standards. 2

3. Regulatory Operations and RP&A’s Test Year 2015 Recorded and Forecast Non-3

Labor Expenses 4

In D.89-12-057, the Commission stated that for those accounts that have significant 5

fluctuations in recorded expenses from year to year, an average of recorded expenses is appropriate. As 6

shown in Table VII-5 above, Regulatory Operations and RP&A’s non-labor expenses varied from 7

year-to-year during 2008 through 2012, so the five-year average of the recorded expenses is an 8

appropriate base amount for forecasting non-labor expenses in this account. The variances are due to a 9

number of factors, including costs incurred for routine office expenses, special studies, and consultants. 10

Our expectation is that Regulatory Operations and RP&A will continue to incur expenses for these same 11

types of activities in the 2015 Test Year. To this base amount of $2.052 million, $0.109 million forecast 12

non-labor expenses were added associated with the new incremental employees as described in this 13

testimony.125 This results in a Regulatory Operations and RP&A’s Test Year 2015 non-labor forecast of 14

$2.161 million, an increase of $0.371 million over the recorded/adjusted 2012 amount. 15

125 See workpaper to this exhibit entitled “RegOps and RP&A Labor and Non-labor Forecast Increases Over 2012

Recorded” for the development of the non-labor incremental amount.

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VIII. 1

CORPORATE NERC CRITICAL INFRASTRUCTURE PROTECTION (CIP) 2

This section covers the scope of the NERC CIP standards and its operational impacts on the 3

Company. 2015 Test Year O&M and capital requests related to NERC Reliability CIP standards are 4

covered by each of the Operating Units and departments absorbing those activities, as described below. 5

A. Regulatory Background 6

The Energy Policy Act of 2005 (EPAct) granted FERC authority to oversee the development and 7

approval of mandatory reliability standards governing the nation’s electricity grid. FERC certified 8

NERC as the Electric Reliability Organization (ERO) in 2006. On June 18, 2007, compliance with 9

NERC-approved Reliability Standards became mandatory and the standards became enforceable. At the 10

present, NERC has developed five versions of CIP standards. The later versions have built upon earlier 11

versions and have added to or revised the previous CIP standards. Implementation timeframes for 12

Versions 1, 2, and 3 have already been reached. On April 18, 2013, FERC issued a NOPR proposing to 13

approve the CIP Version 5 Reliability Standards with several modifications. SCE and the industry have 14

until June 24, 2013 to file comments on the NOPR at FERC. Once FERC has reviewed the comments 15

on the NOPR, it is anticipated that FERC will issue a Final Rule on the CIP Version 5 Reliability 16

Standards with an effective date of October 1, 2015. 17

On April 19, 2012, FERC approved CIP Version 4 to be implemented by April 1, 2014.126 18

However, in the NOPR issued by FERC on April 18, 2013, FERC has proposed to skip the 19

implementation of CIP Version 4, so that utilities can focus on complying with CIP Version 5.127 We 20

estimate that CIP Version 5 Reliability Standards will be in effect by October 1, 2015. This is a 21

reasonable estimate based on: (1) FERC’s recently issued NOPR on CIP Version 5, (2) FERC’s plan to 22

skip the implementation of CIP Version 4, and (3) Congressional and White House pressure for 23

improvement to the cybersecurity standards and protections for national critical infrastructure, such as 24

the electric grid. 25

The NERC CIP standards that are anticipated to be in effect until October 1, 2015, when it is 26

anticipated that the NERC CIP Version 5 Reliability Standards will go into effect, are the NERC CIP 27

Version 3 Reliability Standards. These standards require the identification of Critical Assets (CAs), 28

126 FERC Order 761 can be found at this web address: http://www.ferc.gov/industries/electric/indus-act/reliability.asp

127 See workpapers to this exhibit entitled “Implementation Plan for Version 5 CIP Cyber Security Standards.”

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Critical Cyber Assets (CCAs) through the CIP-002-3 scoping standard, and the implementation of 1

compliance controls mandated in standards CIP-003-3 through CIP-009-3. The CIP Version 5 2

Reliability Standards include language requiring the implementation of a Continuous Improvement 3

concept.128 According to FERC staff, the latter means “that there must not only be security, but also 4

mechanisms in place to ensure that security be maintained over time.”129 To sustain security over time, 5

processes and other mechanisms will be needed for continuous security performance monitoring, which 6

requires: detecting, analyzing, and reporting deficiencies; planning and implementing effective 7

remedies; and auditing the effectiveness of the remedies or corrections. Because CIP Version 5 strives 8

to address the balance of FERC Order 706 directives, the expansion in scope driven by Version 5 will be 9

broad and deep, with additional processes and controls.130 The number of facilities and assets in-scope 10

for compliance will be at least nine times greater than under CIP Version 3. 11

B. Impact of NERC CIP Standards Version 5 and Associated Incremental Costs 12

We expect the CIP Version 5 Reliability Standards to be a true “game-changer” in their 13

application to approximately nine-to-ten times the current number of facilities and systems covered by 14

the CIP Version 3 Reliability Standards. Cyber assets and cyber systems essential to SCE’s bulk electric 15

system will be categorized as High, Medium, or Low Impact assets based on the guidelines in CIP-002-16

5, with different levels of controls required based on the applicable classification. SCE will require 17

additional capital funding to meet and sustain compliance with the increasing scope of NERC CIP 18

regulations and mandates. SCE expects significant structural programmatic changes, increased resource 19

needs, and dramatic technical changes to the existing compliance program in order to be compliant with 20

the CIP Version 5 Reliability Standards. SCE will have to overhaul existing access management 21

controls to accommodate compliance requirements for a significantly larger workforce comprised of 22

128 See workpapers to this exhibit entitled “Industry Webinar (1 of 2) for Version 5 CIP Standards: A Focus on ‘Correcting

Deficiencies.”

129 See workpapers to this exhibit entitled “Self-Correcting Cyber Policies: Pathway to Convergence of Compliance and Security?” by Stephen Flanagan, FERC staff.

130 See FERC Order 706, Mandatory Reliability Standards for Critical Infrastructure Protection, 122 FERC ¶ 61,040, order on reh’g, Order No. 706-A, 123 FERC ¶ 61,174, order on clarification, Order No. 706-B, 126 FERC ¶ 61,229 (2009), order on clarification, Order No. 706-C, 127 FERC ¶ 61,273 (2009); Version 4 Critical Infrastructure Protection Reliability Standards, Order No. 761, 77 FR 24594 (April 25, 2012), 139 FERC ¶ 61,058 (2012), order denying reh’g, 140 ¶ 61,109 (2012); 16 U.S.C. 8240, Order No. 693, 72 FR 16598 (April 4, 2007), System Personnel Training Reliability Standards, Order No. 742, 133 FERC ¶ 61,159, Revisions to Electric Reliability Organization Definition of Bulk Electric System and Rules of Procedure (Final Rule), Order No. 773, 141 FERC ¶61,236, Order on reh’g and clarification, Order No. 773-A, 143 FERC ¶ 61,053.

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employees as well as third-party personnel who will be impacted by Version 5 because of their 1

electronic or physical access to facilities and systems or to information artifacts that will be in scope. 2

The CIP Version 5 Reliability Standards will increase the number of facilities, systems, and personnel in 3

scope, as well as the depth and breadth of mandatory applicable controls. 4

Figure VIII-11 Program Oversight Organization

(High Level)

CIP V5 Executive SponsorsRegulatory Operations, T&D, Corporate Security, Information Technology, Law

CIP V5 Program ManagementRegulatory Operations, T&D, Information Technology

T&D CIP V5

MAPECMS SOC CCURE 9000

Subject Matter Experts

NCPSCE

Registration

CIPv5 Compliance Management

CIP‐011

IT CIP V5

AAC & FIMPhysical Security

access (e.g., doors) – all badges

Alarm systems, video

monitoring, command center, for physical security

Access management for NERC CIP‐ Approval

‐ Revocation,‐ Delegation

tracking

Requirements/ Controls catalog for enterprise

Infrastructure technologies to enable access for

projects such as MAP and

Ccure

ES&M/PPD/ CSBU

CIP V5

C. Implementation of a Compliance Program 5

We anticipate, based on past approval timelines of CIP Version 3 and Version 4, that CIP 6

Version 5 will become enforceable by October 1, 2015. However, given the increased focus of the 7

White House, Congress, and state governments on cybersecurity, we anticipate there may be additional 8

mandates from FERC beyond what is already submitted in CIP Version 5. 9

The implementation of a program to comply with CIP Version 5 will require a coordinated effort 10

to develop policies, processes and procedures that build on SCE’s experience with the previous and 11

current versions of the NERC CIP standards. The complexity introduced by CIP Version 5 due to 12

scope, scale and multifaceted controls based on types of facilities and systems will demand a 13

standardized implementation across SCE's impacted operating units. 14

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1. Development Of Compliance Governance Organization And Tools 1

CIP-003-5 “Security Management Controls” requires SCE to specify consistent and 2

sustainable security management controls that establish responsibility and accountability to protect BES 3

Cyber Systems against compromise that could lead to misoperation or instability in the BES. CIP-004-5 4

“Personnel & Training” requires SCE to minimize the risk against compromise that could lead to 5

misoperation or instability in the BES from individuals accessing BES Cyber Systems by requiring an 6

appropriate level of personnel risk assessment, training, and security awareness in support of protecting 7

BES Cyber Systems. 8

Regulatory Operations will lead a multiple operational unit team, including Information 9

Technology, Corporate Security, Ethics & Compliance, Power Supply, Power Production, and 10

Transmission & Distribution in order to meet the SCE corporate goal of complying with the CIP Version 11

5 Reliability Standards. 12

In order to comply with the CIP-003-5 and CIP-004-5 reliability standards, Regulatory 13

Operations, Information Technology, and Ethics & Compliance are working together to implement the 14

Enterprise Compliance Management System (ECMS) and Master Access Project (MAP). ECMS is a 15

software solution that will provide a standardized compliance management system across SCE. ECMS 16

will be based off of SAP, which will limit the amount of customization over existing compliance areas. 17

The existing manual processes and ad-hoc compliance systems will be replaced with automated 18

compliance controls through leveraging SCE’s investment in its existing SAP platform. 19

MAP will develop a centralized technology tool to handle governance aspects of 20

authorized access controls to electronic and physical assets. MAP will replace several manual processes 21

by automatically tracking, maintaining, updating, and notifying personnel of access, required training, 22

violations, and employment status. MAP will address personnel access authorization, management, 23

tracking, and enforcement. 24

The capital requests for ECMS and MAP are located in Exhibit SCE-05, Volume 2, Part 25

1. 26

2. Identification and Management of Applicable Facilities and Systems 27

CIP-002-5 “BES Cyber System Categorization” requires SCE to identify and categorize 28

BES Cyber Systems and their associated BES Cyber Assets for the application of cyber security 29

requirements commensurate with the adverse impact that loss, compromise, or misuse of those BES 30

Cyber Systems could have on the reliable operation of the BES. Identification and categorization of 31

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BES Cyber Systems support appropriate protection against compromises that could lead to 1

misoperations or instability in the BES. CIP-011-1 “Information Protection” requires SCE to prevent 2

unauthorized access to BES Cyber Systems Information by specifying information protection 3

requirements in support of protecting BES Cyber Systems against compromise that could lead to 4

misoperation or instability in the BES. 5

Information Technology, Transmission & Distribution, and Regulatory Operations have 6

worked together to identify and categorize SCE’s assets into the appropriate BES Cyber System and 7

Cyber Asset classification. SCE has dozens of High Impact assets, dozens of Medium Impact assets, 8

and tens of thousands of Low Impact assets. The proposed CIP Version 5 Reliability Standards do not 9

require the application of security controls to Low Impact assets, but the Commission raised the lack of 10

security controls in the NOPR issued on April 18, 2013. Depending on the terms of the eventual FERC 11

Order, the Commission may: approve the standards as proposed, thereby not requiring security controls 12

for Low Impact assets; or the Commission may require that security controls be applied to Low Impact 13

BES Cyber Systems only; or the Commission may require the application of security controls to every 14

Low Impact BES Cyber System and every Low Impact BES Cyber Asset as well. 15

The O&M and capital requests for this initiative are in Exhibit SCE-03, Volume 2 and in 16

Exhibit SCE-05, Volume 1. 17

3. Development and Implementation of Electronic Security Controls 18

CIP-005-5 “Electronic Security Perimeters” requires SCE to manage electronic access to 19

BES Cyber Systems by specifying a controlled Electronic Security Perimeter in support of protecting 20

BES Cyber Systems against compromise that could lead to misoperation or instability in the BES. CIP-21

007-5 “Systems Security Management” requires SCE to manage system security by specifying select 22

technical, operational, and procedural requirements in support of protecting BES Cyber Systems against 23

compromise that could lead to misoperation or instability in the BES. CIP-008-5 “Incident Reporting 24

and Response Planning” requires SCE to mitigate the risk to the reliable operation of the BES as a result 25

of a Cyber Security Incident by specifying incident response requirements. CIP-009-5 “Recovery Plans 26

for BES Cyber Systems” requires SCE to recover reliability functions performed by BES Cyber Systems 27

by specifying recovery plan requirements in support of the continued stability, operability, and 28

reliability of the BES. CIP-010-1 “Configuration Change Management and Vulnerability Assessments” 29

requires SCE to prevent and detect unauthorized changes to BES Cyber Systems by specifying 30

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configuration change management and vulnerability assessment requirements in support of protecting 1

BES Cyber Systems from compromise that could lead to misoperation or instability in the BES. 2

Information Technology, Corporate Security, and T&D are working together to meet the 3

electronic security control requirements in CIP Version 5 through the implementation of the Master 4

Access Project (MAP), along with the complementary Advanced Access Control (AAC) and Federated 5

Identity Management – Password Vault (FIM) projects. 6

As previously noted, MAP will develop a centralized technology tool to handle 7

governance aspects of authorized access controls to electronic and physical assets. MAP will replace 8

several manual processes by automatically tracking, maintaining, updating, and notifying personnel of 9

access, required training, violations, and employment status. MAP will address personnel access 10

authorization, management, tracking, and enforcement. 11

AAC will provide foundational infrastructure for both physical and logical access by 12

expanding the use of Public Key Infrastructure (PKI) developed in SCE’s earlier projects as part of the 13

Cyber Security PKI Roadmap. The project will integrate logical and physical security in order to 14

generate better controls, extend the implementation of user certificates to support all enterprise users, 15

and improve the integration between the PKI infrastructure and the enterprise authoritative source for 16

use identities. 17

FIM will implement the technologies, processes, and governance required to enable 18

password management for shared and privileged accounts to SCE systems from a federated management 19

infrastructure, improving security. 20

The capital requests for the MAP, AAC, and FIM projects are in Exhibit SCE-05, 21

Volume 2, Part 1. 22

4. Development and Implementation of Physical Security Controls 23

CIP-006-5 “Physical Security of BES Cyber Systems” requires SCE to manage physical 24

access to BES Cyber Systems by specifying a physical security plan in support of protecting BES Cyber 25

Systems against compromise that could lead to misoperation or instability in the BES. SCE will meet the 26

requirements of CIP-006-5 through the development and deployment of physical security perimeters at 27

T&D-controlled substations based on each substation’s assigned BES Impact classification level, the 28

construction of an improved Security Operations Center (SOC) and the installation of the CCURE 9000 29

System. 30

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The SOC Project is being led by Corporate Security. In this project, Corporate Security 1

will construct a new Security Operations Center in order to meet capacity requirements for staffing and 2

subsequent monitoring of critical cyber assets for CIP Version 5. Security monitoring processes will be 3

automated by deploying a NICE Situator tool, which is a Physical Security Information Management 4

(PSIM) tool designed to integrate the processes for physical access monitoring, incident reporting, 5

visitor management, and response management. The new Easy Lobby visitor management software will 6

be deployed and integrated with the CCURE and NICE Situator to demonstrate that visitor management 7

processes are compliant to the CIP V5 requirements. 8

The CCURE 9000 Upgrade Project is being led by Corporate Security and Information 9

Technology. The CCURE 9000 application environment is designed to support real-time security 10

monitoring and future expansion of the SCE alarm system as required by both CIP Version 5 and SCE’s 11

future business needs. In this project, Information Technology will migrate the existing CCURE 12

800/8000 system over to CCURE 9000 and implement a scalable foundation to support future sites that 13

are the BES and its requirements, as well as those outside the BES. 14

The O&M and capital requests for the SOC and CCURE 9000 projects are in Exhibits 15

SCE-05, Volume 1; SCE-05, Volume 2, Part 1; and SCE-07, Volume 4. 16

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IX. 1

LOCAL PUBLIC AFFAIRS 2

A. Overview of Local Public Affairs (LPA) 3

Local Public Affairs (LPA) is responsible for what is typically in-the-field, in-person 4

communication with customers in support of electric safety education, transmission system expansion 5

and relocation, distribution system upgrades, operations with community impact, and education on state-6

mandated policy initiatives such as energy efficiency, renewables, and low-income programs. LPA also 7

has primary responsibility for education of local government officials on many of these same matters, as 8

well as local reliability and demand response programs. LPA achieves this through community outreach 9

via local governments, non-profit organizations, neighborhood groups, government associations, and 10

chambers of commerce. LPA also works with local and regional governments in their capacity as 11

regulators of SCE's operations, as intermediaries between SCE and end-use customers, and as customers 12

in their own right. LPA supports the utility's operations by working directly with 206 franchises and the 13

governments of 186 cities, 15 counties, 14 municipal utilities, and 15 Native American tribes (13 14

federally recognized and two state recognized tribes).131 15

B. New and Expanded Roles and Responsibilities Since the 2012 GRC 16

LPA’s roles and responsibilities have grown substantially since we developed testimony for the 17

2012 General Rate Case due to an increased focus on community education regarding public safety 18

around electrical equipment and emergency preparedness on top of our existing support of electric 19

infrastructure siting, licensing, and construction programs. LPA has developed new programs in this 20

area as detailed below and will continue to implement them. Major examples of LPA’s expanded roles 21

and responsibilities since the 2012 GRC are discussed in the sections that follow. 22

1. Increased Public Education on Electric Equipment Safety 23

In 2011, following a series of events, including third-party contacts with power lines and 24

high winds, SCE took action132 to increase the frequency and effectiveness of public safety education. 25

LPA engaged in numerous, in-person, community outreach and education efforts on electric safety. 26

LPA deployed a new safety program by building on existing first-responder education and targeting 27

131 See workpapers for lists entitled “Incorporated Cities and Counties Served by SCE,” “Southern California Edison

Service Territory Federal Indian Lands Map,” and “Municipal Utilities in SCE Service Territory.”

132 See Exhibit SCE-09, Chapter 1.F.4.a, “Public Safety Around Electricity Education Campaign.”

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community groups such as the Community Emergency Response Teams (CERT) managed by local 1

Sheriff Departments. From 2012 to June 4, 2013, this safety program provided in-person education 2

through 65 CERT sessions that reached 2,165 individuals across SCE’s service territory and LPA 3

continues to expand the program to additional CERT members and other community and neighborhood 4

groups. In March 2013, this CERT outreach model was presented as a best practice at the 2013 5

California Statewide CERT Conference.133 6

To date, LPA staff and Speakers Bureau employee volunteers have relied on an 7

interactive, tabletop “Hazard Hamlet” demonstration tool to educate children and adults about electrical 8

safety.134 In addition to expanding its outreach with this education program, LPA assists in coordinating 9

and facilitating more robust “Electric Board” demonstrations.135 These programs reach children and 10

adults alike and complement the mass communication approach to public safety education led by 11

Corporate Communications.136 12

2. Increased Coordination and Training for Emergency Preparedness 13

Following the November 30, 2011, San Gabriel Valley windstorm, SCE undertook 14

extensive efforts to improve its emergency response communications with local public officials. LPA 15

sought and received input from local mayors, city managers, and emergency response personnel. SCE 16

also received feedback on its storm response through a CPUC public participation hearing in Temple 17

City, a central site in the storm damage area. Additionally, as encouraged by the Commission in SCE’s 18

2012 GRC, SCE filled the vacant leader position for LPA.137 19

To secure additional input on SCE’s storm response efforts and processes, the Company 20

commissioned an independent assessment by Davies Consulting,138 an international management 21

133 See workpapers entitled “California Volunteers, 2013 Statewide CERT Conference, Thank You Letter” for letter that

was sent to SCE following the statewide conference, held March 1-3, 2013, in Cerritos, California.

134 The Hazard Hamlet is a tabletop display used to illustrate the hazards of electrical facilities and equipment.

135 The Electric Board demonstration is led by a qualified SCE electrical worker, coordinated by Corporate Communications, and deployed in part through LPA.

136 Corporate Communications uses a mass communication approach to public safety with a program and materials for schoolchildren, agricultural workers, and construction workers. See Exhibit SCE-09, Chapter. 1.F.2.b, “SCE’s Public Safety Education Programs.”

137 See D.12-11-051 at p. 356.

138 See workpapers entitled “Southern California Edison’s Response to the November 30, 2011 Windstorm” for relevant sections of the Davies Consulting report that was produced on March 28, 2012.

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consulting firm with expertise in utility industry emergency preparedness and storm response.139 Based 1

on this collective body of feedback, SCE launched an effort to improve its operational storm response 2

and communications efforts.140 As a result of this assessment and other input, LPA accelerated a phase-3

in of the National Incident Management System (NIMS) and Incident Command System (ICS). LPA 4

also improved local government and community access to status updates during a natural disaster, as 5

described in sections below. In compliance with the Commission’s direction in D.12-11-051, SCE 6

submitted Advice Letter 2845-E to the Commission as a report on the progress SCE made on 7

windstorm-related initiatives. 8

a) National Incident Management System (NIMS) and Incident Command 9

System (ICS) Standards and Training 10

The National Incident Management System (NIMS) and Incident Command 11

System (ICS) are commonly accepted, national frameworks for coordinated emergency response. As 12

early as the fall of 2010, LPA already had begun training in NIMS and ICS to better interface with first 13

responders who employ these standards for emergency response. In 2011, SCE adopted these standards 14

for responding to natural disasters and developed a corporate implementation plan.141 By the end of 15

2012, 100 percent of LPA employees completed training in ICS at one level or another, ranging from the 16

Federal Emergency Management Agency’s (FEMA's) introductory computer-based training for 17

administrative assistants to multi-day, role-specific training and certification for managers. 18

In 2013, as part of SCE’s effort to effectively coordinate with local governments 19

on emergency response communications, LPA developed and executed an outreach program to comply 20

with AB1650142 by informing local governments of SCE’s emergency response plans and providing 21

specific guidance on emergency protocols and logistics for working with cities and counties on 22

emergency preparedness and disaster response. This program was developed with initial input from 23

local governments and first responders, but will continue to be refined as local agencies adopt and 24

139 Additional examples of recommendations from Davies Consulting include media training for Region Managers and

Flash Communication teleconferences to update impacted public officials.

140 SCE formed the Corporate Storm Performance Improvement Project (CSPIP) to implement improvements to processes and communication. See Exhibit SCE-07, Vol. 4, pp. 83-85.

141 See Exhibit SCE-07, Vol. 4, pp. 71-73 for more information on the Company-wide effort to deploy the ICS.

142 AB1650 requires electrical corporations providing service in California to develop, adopt, and update an emergency and disaster preparedness plan in compliance with the standards established by the Commission. See workpapers entitled “AB-1650 Public utilities: emergency and disaster preparedness.”

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improve their own programs and as LPA continues to comply with AB1650. As part of this outreach, 1

LPA distributed a practical field guide on SCE’s emergency communication information for use by LPA 2

staff in their work with local governments.143 3

b) Reverse 911 for Emergency Communications to Customers 4

Following the 2011 San Gabriel Valley windstorm, many local public officials 5

called for use of a reverse 911 system144 to alert customers to outage information. After consultation 6

with Sheriff and Police Departments that operate these systems it was determined that Fire and Police 7

Department communications take precedence over electrical system status updates. Nonetheless, LPA is 8

seeking and has obtained letter agreements with multiple jurisdictions for use of their reverse 911 9

system when available. The letter agreements provide an important redundancy to multiple, customer 10

communication efforts via local media, social media, and local officials. 11

c) Flash Communication Drills with City Managers and Elected Officials 12

In addition to adoption of ICS, San Gabriel Valley city managers recommended 13

adoption of a single-source communication update, recognizing that their own incident command 14

centers may not be accessible by SCE personnel in a natural disaster. LPA developed a system by 15

which mayors, city managers, and emergency response personnel can receive status updates for their 16

own ICS operational period briefings and planning meetings. Under this system, in the event of a 17

natural disaster, LPA will launch telephonic updates, noticed via e-mail, at regular intervals. To 18

enhance familiarity with and readiness of the system, LPA has conducted drills with officials from 19

throughout the service territory. As of June 2013, LPA has conducted 15 flash communication drills 20

with an average participation rate of 64 percent on e-mail acknowledgement and 47 percent on call-ins. 21

d) Customer Outreach through Diverse Community-Based Organizations 22

LPA leverages community-based organizations (CBOs) as trusted partners to 23

deliver important educational information to hard-to-reach ethnic and underserved communities. LPA 24

accomplishes this by engaging CBOs through community forums, capacity-building workshops for non-25

profit organizations, SCE’s volunteer Speakers’ Bureau, SCE’s emergency response volunteers, and 26

SCE’s Consumer Advisory Panel. These efforts complement and support outreach efforts on customer 27

143 See workpapers entitled “Emergency Communication Information For Local Governments Field Guide” for a copy of

the field guide.

144 See workpapers entitled “Emergency Planning & Preparedness Reverse-911 Systems” for a copy of the plan.

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programs and are the main source of in-person education for community leaders on new initiatives. 1

Starting in 2013, SCE’s Employee Resource Group volunteers are being trained for deployment during 2

disasters in support of customer communication efforts. 3

3. LPA’s New and Expanded Roles and Responsibilities Build on Existing Priorities 4

Related to Infrastructure Improvement and Expansion 5

SCE has undertaken a significant, multi-year electric infrastructure construction program 6

that has considerable impact on the roles and responsibilities of LPA. During the period from 2015 to 7

2017, SCE plans to invest in various transmission, substation, and distribution construction projects. 8

These projects directly impact the workload of LPA as LPA manages community outreach and 9

education related to siting, licensing, and construction of all new transmission and substation projects 10

that require a Certificate of Public Convenience and Necessity (CPCN) or a Permit to Construct (PTC) 11

from the CPUC and/or federal licenses for transmission projects that cross federal land as well as G.O. 12

131-D exempt projects that may have potential public sensitivities or impacts. LPA also manages 13

community outreach on behalf of T&D as part of the construction of distribution projects, including the 14

installation of new, replacement, relocation, and undergrounding of subtransmission and distribution 15

facilities. 16

a) Community Engagement on New Distribution Construction Activities 17

As detailed in Exhibit SCE-01, we need to continue increasing the replacement 18

rates for our major infrastructure components until we reach a level where reliability can be maintained. 19

Whether it is upgrading circuits or relocating facilities, many of these projects require LPA to interface 20

with local governments and communities on issues such as construction, permitting, traffic control, and 21

community engagement matters. 22

In addition to its program to build new transmission and substation projects, SCE 23

plans to invest billions of dollars to expand and replace significant portions of its aging distribution 24

infrastructure in 2015 through 2017145 as SCE continues to focus on maintaining reliability. This 25

construction work will take place throughout SCE’s service territory and will have considerable impact 26

on customers because construction will occur in more densely populated and trafficked areas. Along 27

with ongoing programs such as the Rule 20A undergrounding program146 and the Pole Loading 28

145 See Exhibit SCE-03, Vol. 4, pp. 17 – 23 for more information on projects.

146 See Exhibit SCE-03, Vol. 5, pp. 60-61.

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Program,147 these system-wide activities will create additional workload for LPA, including dealing with 1

permits issues, traffic control, work shutdowns, Rule 20 requirements, and assessing relocation costs for 2

ratepayers. The volume of this work will likely equal or surpass work on the transmission system due to 3

the large number of projects. 4

b) Licensing, Public Involvement, and Construction of New Transmission, 5

Substation, and Generation Projects 6

SCE is committed to a community engagement process that includes local 7

governments and community stakeholders during the siting, licensing, or permitting phases of a new 8

project's approval process.148 Because of this commitment, LPA assists in the siting of new transmission 9

or new substations by helping SCE account for local issues, concerns, and values regarding the location 10

of these transmission and substation projects. Active public involvement is encouraged by the CPUC 11

and by the California Environmental Quality Act (CEQA).149 The construction phase of new 12

transmission and substation projects requires a second significant phase of LPA activities wherein LPA 13

must deliver construction updates and regularly brief local government officials and staff, affected 14

residents, and other stakeholders, as well as work with SCE operations staff and local government staff 15

on permitting and traffic controls. Indeed, per the CPUC’s mitigation measures related to public 16

notification, regular community updates are required for certain projects such as Tehachapi Renewable 17

Transmission Project (TRTP).150 18

LPA’s workload continues to increase as it supports the construction of new and 19

upgraded transmission and substation facilities.151 These construction activities have significant 20

workload impacts on LPA staff who coordinate with the cities and counties where SCE’s new facilities 21

will be located on issues ranging from permits to community engagement. LPA manages community 22

outreach and education on all siting and licensing of new transmission and substation projects that 23

147 See Exhibit SCE-03, Vol. 6, Part 2, pp. 12-13.

148 General Order No. 131-D provides for public participation in the Company’s applications for either a Certificate of Public Convenience and Necessity or for a Permit to Construct these facilities, and for challenges to claims of project exemption from General Order No. 131-D review.

149 See workpapers entitled “CEQA, Title 14, Chapter 3, Article 13. Review and Evaluation of EIRS and Negative Declarations, Section 15201” for a copy of the guidelines 15201.

150 TRTP supports the intent of Senate Bill 1078, which established a program requiring IOUs to have 20 percent of the energy used produced by renewable generation sources by year 2017.

151 See SCE-03, Vol. 3, pp. 3 – 4 for timing and scope of projects.

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require a CPCN or a PTC from the CPUC and various federal permits as required. While a majority of 1

the T&D Major Projects Organization’s siting and licensing costs are capitalized, each of the projects 2

also requires extensive public involvement activities during the siting, licensing, and construction stages 3

of the project that are charged as an O&M expense. As opposition to transmission projects has grown 4

with increased activism by local governments and residents, LPA has increased its community outreach 5

and education efforts. For example, LPA has increased its community outreach involvement pending a 6

CPUC decision on undergrounding 500kV transmission towers in Chino Hills. 7

In 2012, SCE had dozens of transmission and substation projects in the siting, 8

licensing, and construction phases, including the construction of TRTP Segments 4-11 that will continue 9

through 2015 for some segments. SCE is planning considerably more transmission and substation 10

projects that will be in construction or scheduled to be built from 2015 to 2017. In addition, there are 11

hundreds of renewable interconnection requests in SCE’s interconnection queue, and these will result in 12

a significant number of siting and licensing projects. 13

In addition, due to the CPUC’s requirement to procure additional generation 14

(because of the uncertainty with existing generation required to meet pending regulatory requirements 15

associated with once-through cooling) to meet long-term reliability, LPA also will assist with the 16

communications to local jurisdictions, stakeholders, and the public on SCE’s procurement plans. 17

c) Interconnection of Renewable Energy 18

LPA’s workload continues to increase due to the number of new renewable 19

generation energy project interconnection requests needed to meet California’s ambitious renewable 20

energy goals.152 As of May 2013, there are 575 renewable interconnection requests in SCE’s 21

interconnection queue, and these will result in a significant number of siting and licensing projects.153 22

The majority of the state's renewable energy resources lie within SCE’s service territory. Other 23

surrounding utilities will also need transmission access to these renewable resources. SCE continues to 24

upgrade or build new transmission facilities to transmit this renewable energy for its own customers’ use 25

or to other utilities pursuant to FERC regulation. Although many of these projects are built by third-26

party developers, these projects still require LPA to communicate with local governmental entities and 27

stakeholders that may be impacted by new transmission line and substation interconnections. 28

152 See Exhibit SCE-03, Vol. 3, p. 29

153 See Exhibit SCE-03, Vol. 3, p. 29.

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d) Major Transmission Line Relocations 1

LPA continues to address major relocations and goods movement-related 2

transmission relocation projects such as the I-710 Freeway Expansion Project. For example, LPA is 3

working with T&D to address the relocation of SCE’s 220kV and 66kV lines next to the I-710 Freeway 4

to make way for the freeway expansion. LPA is addressing the potential need for a new 500kV line 5

from the Port of Long Beach (Hinson Substation) to the Mesa Substation in order to prepare for 6

potential Once Through Cooling regulations implementation and the potential shutdown/rebuild of the 7

major aging generating plants (more than 40 years old) along the coast. LPA is the primary interface 8

with the Metropolitan Transportation Authority, which has a major role in this proposed freeway 9

expansion. 10

C. Overview of Local Public Affairs 11

The LPA department is made up of five divisions. The Public Involvement & Education and the 12

Policy & Project Management divisions develop and manage major initiatives. The Regions and 13

Strategic Engagement divisions work in the field and oversee engagement with diverse stakeholders 14

across SCE’s service territory. The Local Government Affairs division works on SCE compliance with 15

local government regulations and ordinances, including the negotiation and payment of local Business 16

License Taxes and Franchise Fees. These various divisions work in tandem to advance the new and 17

expanding work described above in Section B. 18

1. Public Involvement & Education 19

The Public Involvement & Education (PI&E) division leads LPA’s involvement in the 20

construction phase of new transmission and substation projects. In this role, PI&E supports compliance 21

with the CPUC’s mitigation measures related to public notification such as public notice mailers, 22

newspaper advertisements, and project information hotlines. This division regularly communicates with 23

local jurisdictions and the impacted public regarding construction schedules, type of work, and hours of 24

operations. PI&E’s work is projected to remain steady beyond 2015 relative to 2012 due to an increase 25

in distribution infrastructure improvement projects throughout the urban core of SCE’s service territory. 26

In 2012, the PI&E division addressed the increase in transmission, subtransmission, and 27

substation licensing and construction projects. This division manages the public involvement process 28

for all new G.O. 131-D licensing and exempt transmission, subtransmission, and substation projects, as 29

described in Section 3 above. In addition, this division manages the public involvement process 30

identified for exempt projects that do not require a CPCN or PTC. Public involvement activities 31

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typically include assessment of potential community concerns, identification of interested stakeholders, 1

briefings to local governments and stakeholders, production of fact sheets and public communication 2

materials, responding to public inquiries and complaints on project information hotlines, and conducting 3

open houses and workshops for members of the public who want the facts relating to the new projects. 4

This team also develops targeted, neighborhood outreach as needed for SCE’s most publicly sensitive 5

infrastructure projects. 6

2. Policy & Project Management 7

The Policy & Project Management (PPM) division is responsible for: (1) conducting 8

department planning for new LPA initiatives that require coordination with other teams across the 9

Company; (2) leading LPA’s communication on policy issues; (3) coordinating the Company’s interface 10

with government associations, transit authorities, business groups, and water agencies; and (4) providing 11

administrative and operational support for the rest of the LPA department. 12

With respect to new initiatives, PPM staff members serve as subject matter experts and 13

prepare all necessary documents and collateral material for use by the Region Managers and Strategic 14

Engagement divisions. This centralized function provides consistency and accuracy in messaging based 15

upon guidance from senior management and Corporate Communications. The PPM division serves as 16

the central education resource in LPA on energy industry matters for government associations, 17

government agencies, and business associations such as the League of California Cities, Southern 18

California Association of Governments, California State Association of Counties, Metropolitan 19

Transportation Authority, and various councils of governments. The division provides coordination and 20

policy planning support on infrastructure projects that go through tribal lands. PPM manages ongoing 21

awareness and education efforts with respect to matters ranging from summer readiness and emergency 22

response to the charging of electric vehicles and the community impacts of state-mandated energy 23

policies. 24

PPM leads the previously noted Incident Command System for LPA in compliance with 25

AB1650 and in coordination with the corporate Business Resiliency team.154 LPA’s emergency 26

preparedness efforts were featured as a best practice at a national conference hosted by the Public 27

Affairs Council in Washington, D.C. in May 2013.155 28

154 See Exhibit SCE-07, Volume 4, pp. 70-74.

155 See workpapers entitled “Crisis Communications and Management Presentation” for a copy of the presentation.

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The Strategic Operations Support organizational unit within the PPM division provides 1

operational support to LPA in the form of: (1) process improvement and system alignment; (2) business 2

planning functions such as goal tracking; (3) technology and intranet/portal support; (4) internal 3

communication; (5) facilitating LPA employee and organizational development and training; and (6) 4

LPA support for non-profit organizations and professional/business associations. Support functions 5

range from corporate compliance tracking and regulatory compliance to department-level safety and 6

database management. Strategic Operations Support produces all LPA reporting, tracking, and internal 7

communications required by the Company, the OU, and the department. 8

3. Region Managers 9

LPA divides SCE’s service territory into five Regions: Northern, Eastern, Southern, 10

Central, and Metro. SCE’s Region Managers (RMs) are SCE’s primary field representatives to the 11


federally recognized and two state recognized tribes) located across SCE’s 50,000-square-mile service 13

territory. RMs represent SCE in person before the elected bodies of schools and special districts located 14

in southern and central California.156 In addition, this group is responsible for outreach to Native 15

Americans living in urban portions of SCE’s service territory. 16

As SCE’s primary representatives with local communities and stakeholders, RMs assist 17

in the implementation of public involvement activities on new transmission and substation licensing and 18

construction projects, from briefing local governments to responding to inquiries from local 19

stakeholders. RMs also handle utility operational and construction issues such as Tariff Rule 20A and B 20

undergrounding projects, line clearing, public works projects, relocations, streetlights, street 21

abandonments, system reliability, and land use issues. RMs handle local permitting, zoning and 22

financial issues. They also handle escalated matters related to the work of the Local Government 23

Affairs group described below. RMs are the lead communicators with local governments and 24

community organizations on all of the education efforts developed by LPA in the areas of safety 25

education and emergency response matters. Finally, RMs handle increasing media inquiries in 26

156 SCE and LPA’s dealings with the City and County of Los Angeles are managed by another Director, who is assisted by

RMs from the other Regions as appropriate to particular unincorporated county areas. In addition to its being SCE’s largest customer in terms of kilowatt-hour sales of electricity, Los Angeles County is enormous in its geographic reach and tremendously significant operationally as well. Many cities contract with the County to provide law enforcement, fire services, and public works services. In 2012, this workload will increase in order to support the Company's interests before Los Angeles County relating to TRTP construction and other unincorporated area activities.

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coordination with Corporate Communications at the local level in response to local outages or other 1

Company activities that attract local media attention. RMs are ideally positioned to quickly respond to 2

local emergencies because they live and work in communities throughout SCE’s 50,000-square-mile 3

service territory. 4

4. Strategic Engagement 5

The Strategic Engagement (SE) division performs a community relations function 6

working with large segments of low-income, ethnic, and underserved communities. These groups 7

include African American, Asian Americans, Pacific Islanders, Native Americans, Latinos, Lesbian, 8

Gay, Bisexual, and Transgender, seniors, and their respective community-based organizations, faith-9

based programs, and business/professional organizations. The team links these hard-to-reach SCE 10

customers with valuable programs and services, including economic assistance, energy efficiency, safety 11

around electricity, and emergency preparedness. 12

a) Community Forums 13

The SE division uses Community Forums in a variety of compositions and 14

communities to address a wide range of needs. Through these events, LPA engages hard-to-reach 15

consumers via third party organizations to deliver information on state mandated and other programs 16

such as energy efficiency, demand response, payment assistance, CARE, FERA, supplier diversity, 17

advanced technologies (smart meters, plug-in electric vehicles), electrical safety and emergency 18

preparedness, summer readiness, and San Onofre Nuclear Generating Station (SONGS) education. In 19

2009-2010, SE began to coordinate Community Forums across the service territory for nonprofit 20

organizations, faith-based organizations, small businesses, and educational institutions. Between 2010 21

and 2012, some 33 Community Forums were coordinated. LPA Region Managers host the panels that 22

are made up of SCE subject matter experts from across the Company. In 2010, the CPUC’s Consumer 23

Services & Information Division, Supplier Diversity and Community Outreach team began participating 24

in SCE’s Community Forums157 to provide non-profits in SCE service territory with information 25

regarding programs and services for low-income customers such as the universal lifeline program and 26

supplier diversity. In 2010, the SE division also coordinated with Southern California Gas Company, 27

which participated in select Community Forums to provide customers with information regarding its 28

mandated discount programs. In 2011, the SE division expanded the SCE Community Forums to 29

157 See workpapers entitled “Strategic Engagement - External Events” for a list of events in recent years.

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include a “Dare to Care” component that brings together leaders of local faith-based organizations to 1

discuss the importance of safety around electrical equipment. Through a partnership with the American 2

Red Cross, the SE division disseminated information regarding emergency preparedness and mandated 3

discount rates for income-qualified customers. Events were hosted in San Bernardino, Compton and the 4

Antelope Valley. The CPUC’s Supplier Diversity and Community Outreach team participated in the 5

forums. 6

Another component of Community Forums is the Capacity Building Workshops 7

that support community-based organizations by providing their leadership with information to increase 8

their capacity to serve low-income clients and underserved communities. Through partnerships with 9

capacity building organizations such as the Center for Nonprofit Management and Leadership Education 10

for Asian Pacifics Inc., the SE division provides proven strategies and workshops on fundraising, grant 11

writing, board and staff development, financial accountability, and the effective use of social media. 12

The SE division also uses Community Forums to connect with tribes and non-13

profit organizations serving Native Americans within SCE’s service territory. There also are a number 14

of tribes outside of SCE’s service territory with which LPA engages, especially those tribes located near 15

major transmission infrastructure development sites and the Big Creek hydroelectric system. In 2011, 16

the SE team began hosting tribal-specific Community Forums for such tribes as Bishop Paiute, Benton 17

Paiute, Bridgeport Indian Colony, Cold Springs Rancheria, and Mono Nation. In 2012, the SE team 18

hosted an event for leaders of the Tule River Indian Tribes and engaged the surrounding tribes including 19

Big Sandy Rancheria and North Fork Mono Nation. The Tule River Indian Tribes event was attended 20

by the CPUC’s Customer Service and Information Division, as well as the Governor’s Native American 21

Liaison. 22

b) SCE Speakers’ Bureau 23

The Southern California Edison Speakers’ Bureau program began in 1971 and is 24

made up of full-time employees who speak at no cost to hosting organizations. The Speakers’ Bureau 25

increases consumer awareness of electric safety, energy efficiency, energy conservation, renewable 26

energy sources, customer programs, and other topics. Multilingual employee representatives are 27

available to respond to requests for speakers from the public through the SCE website. Members speak 28

to service clubs, schools, and business organizations as well as senior, consumer and community groups. 29

Over the past four years, the program has reached more than 220,000 customers through more than 30

1,000 presentations. 31

117

c) SONGS Open Houses and Nuclear Education 1

In 2011, the SE division began coordinating SONGS Open House events in the 2

interest of nuclear education in communities near SONGS. The nuclear energy facility is located 3

outside of SCE’s service territory, in northern San Diego County. As such, nuclear education is 4

important to the people who live and work in northern San Diego County and southern Orange County. 5

SONGS Open House events are targeted at non-profit organizations in these communities to provide 6

their leadership with important information on nuclear facilities and how the plant prepares for 7

emergencies in coordination with the Inter-jurisdictional Planning Committee. With the permanent 8

closure of Units 2 and 3 at SONGS, future education efforts will focus on decommissioning the facility, 9

the implications for grid reliability, onsite used fuel storage, and the CPUC’s Order to Institute 10

Investigation (OII) process on cost recovery. In addition to nuclear education, these events for local 11

non-profit organizations also provide helpful capacity building information that support their ability to 12

serve more low income and underserved communities. 13

d) Employee Resource Groups 14

Employee Resource Groups (ERGs) build community ties, while offering 15

personal and professional development opportunities to employees. There are currently 14 ERGs158 that 16

collectively represent approximately 30 percent of the workforce at SCE, representing a range of 17

cultures, traditions, ethnicities, sexual orientation, and gender. Members volunteer their time outside of 18

work hours and promote diversity and inclusion within the Company. ERGs are employee-led, 19

voluntary organizations that also help reach out to multicultural communities with important messages 20

on energy-conservation and safety around electrical equipment. 21

The SE division mobilizes ERGs to distribute safety information to nonprofit 22

organizations and to support emergency response efforts. This division works with contacts at nonprofit 23

organizations throughout the service territory who have attended a Community Forum or Capacity 24

Building Workshop. ERG members often staff SCE distribution centers to provide water, ice, and 25

flashlights as well as safety and outrage information to impacted communities. The ERGs provide 26

support in multiple languages including Spanish, Cambodian, Vietnamese, Mandarin, and Chinese. 27

158 See workpapers entitled “Employee Resource Groups (ERG)” for a list of Employee Resource Groups.

118

e) Consumer Advisory Panel 1

Initiated in November 1998, the SCE Consumer Advisory Panel (CAP) was 2

formed to bring greater awareness and understanding of consumer issues of interest to SCE and Edison 3

International. CAP objectives are: (1) advising SCE senior management on consumer issues and public 4

policy; (2) raising awareness about legal, political, and regulatory issues facing the electric utility 5

industry; (3) promoting public awareness about initiatives of interest to consumers; and (4) nurturing 6

meaningful dialogue with opinion leaders from consumer groups, community-based organizations, 7

environmental groups, educational institutions, economic development organizations, small business, 8

civic groups, and government bodies. CAP helps SCE senior leadership to better understand community 9

issues that matter to SCE’s customers, with a focus on hard-to-reach and underserved communities. 10

Formed of 13 women and 14 minorities, panelists represent African American, Asian Pacific Islander, 11

Latino, Native American, women business owners, consumer groups, and faith-based organizations 12

across the state. The panel meets regularly with senior officers from SCE and Edison International to 13

provide input on the implementation of mandated customer programs and services, electrical safety 14

communication, disaster preparedness, and media/advertising. CAP members sometimes serve as an 15

informal focus group on SCE ethnic communications and media relations. 16

5. Local Governmental Affairs 17

LPA’s Local Governmental Affairs (LGA) monitors and manages SCE compliance with 18

the regulations and fees established by local governments. LGA also identifies and advocates against 19

unreasonable and costly operational precedents on behalf of customers because those costs later could be 20

passed along in electric rates. Efforts in this area have grown critical as local governments seek new 21

revenue to offset the economic downturn that began in 2007 and the state budget crisis that removed 22

community redevelopment funds from local budgets. 23

The Commission expects utilities to take reasonable steps to comply with applicable laws 24

and regulations.159 The GA organizational unit within LGA assesses proposed new or changed local 25

laws and develops SCE’s responses to local government/regulatory inquiries on financial matters that 26

may affect utility operations and audits. The organizational unit: (1) negotiates new and renewed 27

Franchise agreements with 206 jurisdictions across SCE’s service territory as described in Section 17; 28

(2) manages third-party audits for Franchises and Utility User Tax (UUT); (3) manages Business 29

159 See D.12-11-043, p. 6.

119

License Tax (BLT) payments, ordinance changes and related activities; (4) leads SCE’s implementation 1

of LAFCO-approved local government annexations and incorporations as well as associated internal 2

billing and coding processes; (5) manages UUT ordinance and code changes in approximately 76 3

jurisdictions which affect internal billing and coding processes; and (6) manages third party 4

environmental and development reviews and requests which can impact the Company at an operational 5

level. 6

The Compliance and Operations Team (CT) within LGA supports the Company’s 7

compliance with local government regulations and ordinances directly affecting the construction, 8

operation, and maintenance of the electric transmission and distribution system. The team facilitates 9

compliance with local ordinances involving tree trimming (i.e., line clearing), trenching, 10

undergrounding, facilities replacement or relocation, and right-of-way access. CT is involved in matters 11

pertaining to Rule 20 undergrounding, Secondary Land Use, streetlights, and minor operational matters. 12

CT seeks the adoption of reasonable policies by working with state and regional authorities, such as the 13

California Department of Transportation, that promulgate them. CT members act as liaisons to other 14

utilities on projects affecting them as well as SCE. CT seeks to address the implementation of local 15

ordinances and regulations in areas such as those cited above that can have a substantial financial impact 16

on customers. 17

CT identified a need to develop standardized traffic control plans that cover most of 18

SCE’s work in the public right of way. SCE’s Civil, Geotechnical, and Structural Engineering group 19

developed the plans that became part of the California Joint Utility Traffic Control Manual. CT 20

coordinated the development of the plans working with other utilities in the state as well as the 21

California Department of Transportation (Caltrans). Caltrans endorsed the manual as being consistent 22

with the California Manual on Uniform Traffic Control Devices (CMUTCD) that governs how to design 23

traffic control plans. CT also coordinates with RMs across all jurisdictions within SCE’s service 24

territory to explain the value of standardized plans, their contribution to safety, and ability to help 25

utilities and local governments save time and money. 26

D. FERC Account 920/921 – Local Public Affairs 27

1. Description of Expenses 28

As shown below in Figure IX-12, FERC Account 920/921 captures labor and non-labor 29

expenses of the LPA department that provides in-person communication with customers in support of 30

electrical safety education, storm and emergency response coordination with local governments, 31

120

transmission system expansion and relocation, distribution system upgrades, operational issues 1

impacting communities, and community education on state-mandated policy initiatives such as energy 2

efficiency, renewables, local reliability, and low income programs. A detailed description of LPA’s 3

activities that are captured in this account is provided in sections B and C in this testimony. 4

Figure IX-12 Local Public Affairs Recorded 2008-2012 / Forecast 2013-2015

FERC Account 920/921 (2012-$000)


Between 2008 and 2009, labor expenses increased by $1.146 million, primarily due to 6

hiring of 13 new positions supporting the growing number of transmission, subtransmission, substation 7

siting, licensing, and construction projects. Continued growth of the work in these areas drove a labor 8

expense increase of $1.259 million between 2009 and 2010. LPA hired seven new positions in 2010 to 9

support required communication with government, federally recognized Native American tribes, and 10

municipal utilities representatives as part of new work relating to emergency preparedness, disaster 11

response, and nuclear education. Between 2010 and 2011, labor expenses increased slightly. In 2012, 12

labor expenses decreased because LPA did not fill vacant positions due to the lateness of the 2012 GRC 13

decision and the Company’s Operational Excellence initiative. 14

121

Recorded non-labor expenses increased from 2008 through 2011, due to multiple factors. 1

Between 2008 and 2009, non-labor expenses increased by $498,000, primarily due to increased in-2

person customer outreach and included expenses relating to: (1) the inception of broad-based 3

Community Forums;160 (2) consultants that worked on transmission permitting and construction 4

coordination with local municipalities; (3) consultants that worked on time-tracking studies; (4) 5

expenses for trade shows at which LPA staff conducted education on programs such as CARE; and (5) 6

an increase in New Employee Training to better prepare new LPA employees to educate the customers 7

on subjects such as the fundamentals of an electric utility company. Between 2009 and 2010, non-labor 8

costs increased by $854,000, primarily due to an expansion of outreach through Community Forums. 9

During this period, LPA increased the number of Community Forums by more than ten-fold due to 10

sustained higher levels of interest in and delivery of information on emergency preparedness and 11

electrical safety. This period also marked the inception of Capacity Building Workshops for 12

community-based organizations and expenses related to managing activities related to LPA’s 13

engagement with customers and public officials. Between 2010 and 2011, there was a small increase in 14

non-labor expenses. Similar to the labor expenses, in 2012, non-labor expenses decreased by $1.422 15

million, primarily due to SCE’s Operational Excellence initiative and lateness of 2012 GRC decision. 16

As part of cost reduction measures in 2012, LPA: (1) lowered the total number of Community Forums; 17

(2) reduced the use of supplemental staff; and (3) cut back on the use of external consultants. 18

3. Test Year Forecast 19

Both labor and non-labor expenses in FERC Account 920/921 increased steadily since 20

2008 due to an increased workload, except for 2012, when expenses decreased as a result of the late 21

2012 GRC decision and the Operational Excellence Initiative. Due to the late GRC decision (which was 22

not issued until end of 2012) and the uncertainty around the amount to be authorized for this department, 23

LPA held off on filling vacant positions and cut back on costs, such as reduction in supplemental staff 24

and consultants. In D.89-12-057, the Commission stated that if recorded expenses in an account have 25

shown a trend in a certain direction over three or more years, the last year recorded year is an 26

appropriate base estimate for forecasting future expense levels. Because the labor and non-labor 27

expenses in this account have increased steadily, the LPA department is using 2012 as the base year to 28

160 Non-labor expenses relating to Community Forums were venue rental fees and other event-related costs.

122

forecast 2015 labor expenses.161 However, because 2012 labor is not indicative of future need, to this 1

amount LPA is adding an incremental $787,000 in labor expenses and $82,000 in non-labor expenses 2

for the addition of eight staff. The total forecast for LPA’s Test Year 2015 expense in FERC Account 3

920/921 is $13.542 million.162 4

4. Increase in Labor Forecast to Accommodate LPA Growth Needs for 2013, 2014, and 5

2015 6

LPA is forecasting an increase of $787,000 in labor expenses,163 for Test Year 2015. As 7

discussed earlier in this testimony, LPA’s basic workload in 2012 increased due to new work and 8

growing community opposition to infrastructure improvement projects for which LPA will be required 9

to expand outreach efforts.164 LPA has increased workload related to: (1) public safety education; (2) 10

emergency readiness and response; and (3) engagement with community-based organizations 11

representing ethnic and other under-served communities. 12

In 2013, LPA will fill four positions that were vacant in the Test Year 2012 (LPA froze 13

staffing levels as a result of SCE’s Operational Excellence initiative and the lateness of the 2012 GRC 14

decision). LPA also is requesting four new positions as outlined below in Table IX-6. 15

161 Note that 2012 forecast reflects the results of a time tracking study included in workpapers entitled “2012 Time Tracking

Study.”

162 This labor forecast reflects amount reduced for portion to be funded by shareholders according to the time-tracking study (16.1 percent of employees’ time is charged to shareholders from 2012 to 2014 and the remaining 83.9 percent is included in rates).

163 See workpapers entitled “2013-2015 Incremental Forecast Summary” for list of positions and MRPs.

164 See Chapter IX.B.3 above on “LPA's New And Expanded Roles And Responsibilities Build On Existing Priorities Related To Infrastructure Improvement And Expansion.”

123

Table IX-6 Local Public Affairs

Vacant And New Positions (2013)

Among the four vacancies, two are for Region Director (Principal Manager) positions for 1

the Metro and Central Regions. The Region Director oversees a team of seven to 14 Region Manager 2

and administrative staff with responsibility for 30 to 50 cities overall. These Region Directors are 3

needed in order to participate in regional and local legislative and regulatory environment so that it is 4

conducive to the successful execution and achievement of Company strategies, goals, and project plans. 5

They are responsible for developing and overseeing community engagement strategies to educate 6

external stakeholders, including city/county officials, federal and state legislators and district staff, and 7

key opinion leaders and community-based organizations. The positions are important for adequate span 8

of control, especially in storm and disaster response. 9

The other two vacancies are project manager (MPP2) positions that need to be filled in 10

the Policy & Project Management organization. These two project managers are responsible for 11

engagement with unique stakeholders groups impacted by large SCE transmission projects. The project 12

managers provide compliance and mitigation oversight. 13

The four new positions that LPA is requesting in the 2012 Test Year include a manager 14

position that is needed to support the Region Manager work in Eastern Region, specifically related to the 15

high number of major infrastructure projects in that area. Region Managers in that area are focused on 16

targeted public safety messages in these communities, and collaborating closely with local governments 17

and first responder organizations including County Emergency Operations Centers on emergency 18

readiness and response activities in San Bernardino and Riverside counties. Region Managers assigned 19

124

to San Bernardino County will report to this new manager (M2), who will report to and provide support 1

to the current Principal Manager for Eastern Region. 2

A new Corporate Representative (CRR3) position in the Strategic Engagement group is 3

required to support the increased level of outreach and engagement with a growing Latino community 4

within the SCE service territory. The corporate representative will assist in increasing and enhancing 5

communications to ethnic and other hard-to-reach audiences on key corporate initiatives and will 6

provide recommendations to Company senior management and executives on further enhancing 7

communications and corporate relationships with the Latino ethnic community. 8

Two new project analyst positions (APP2 and APP3) are needed to provide analytical 9

support for new initiatives led by LPA project management teams and RMs. This includes tracking 10

LPA’s compliance state mandates, development of emergency response tools for use by LPA staff, 11

delivery of public safety training in collaboration with Community Emergency Response Team (CERT) 12

organizations, and the tracking of stakeholder education activities related to public involvement and 13

outreach for infrastructure projects. Specific examples of this analyst support function include 14

supporting new business resiliency activities linked to LPA’s use of the Incident Command System and 15

coordinating new emergency response efforts in the form of Flash Communication drills with local 16

government entities. 17

By adding the four incremental new positions and filling the existing four vacant 18

positions, LPA will be able to manage the additional workload described in detail in this testimony 19

without any significant staffing increases over the 2012 Test Year. 20

5. Increase in Non-Labor Forecast to Accommodate LPA Growth Needs for 2013, 21

2014, and 2015 22

LPA is forecasting an $82,000 increase in non-labor expenses associated with the eight 23

new positions described above. Non-labor expenses include costs such as local business travel 24

(including mileage), training, and professional development.165 25

E. FERC Account 408 - Business License Tax 26


SCE is required to pay a Business License Tax in order to do business within each of the 28

40 cities that currently levy a Business License Tax (BLT) on SCE. The different bases for calculating 29

165 Expenses were calculated based on a standard 10.38 percent of labor per position.

125

the BLTs account for the fluctuations in the payments that SCE makes annually. Some BLTs are paid 1

based on gross annual revenue; a general flat fee or rate; or on either the number of employees or 2

number of vehicles used to conduct business within that city. Business license taxes are recorded in 3

FERC Account 408. 4


From 2008 to 2011, some communities have exempted SCE from paying a BLT, while 6

others require SCE to do so. From 2009 to 2012, SCE’s annual business license tax ranged from a high 7

of $116,137.75 in one city to a low of $40 in another city. In 2012, SCE paid BLT fees totaling 8

$504,191.93, with an average payment of $14,000 per city. 9


In 2012, SCE paid $504,191.93 in BLT. The average cost per city was $14,005. SCE 11

estimates $585,000 in BLT for Test Year 2015, with an average per city of $16,300. In Test Year 2015, 12

SCE expects to pay business license taxes with a forecast166 total of $585,000, which represents a 14 13

percent increase over the amount paid in 2012 as shown below in Figure IX-13. This increase in BLT 14

fees between 2012 and 2015 is based on a projected increase in electric revenues and the resulting 15

impact on SCE’s budget where the BLT payment is based on annual gross revenues as well as a 16

potential increase in requests for business license fees in areas where SCE has not been required to pay a 17

BLT in the past. 18

166 See workpapers entitled “Business License Fees-2015 GRC” for historical and projected BLTs.

126

Figure IX-13 Business License Tax History and Estimate

(Nominal $000)

2008 2009 2010 2011 2012 2013 2014 2015Amount 398 426 618 498 504 531 557 585

0

100

200

300

400

500

600

700

2008 2009 2010 2011 2012 2013 2014 2015

In 2015, SCE is forecasting $585,000 in business license tax expenses, with an average 1

per city of $16,300. This increase in BLT fees between 2012 and 2015 is based on a projected increase 2

in electric revenues and the resulting impact in areas in which the BLT payment is based on annual gross 3

revenues, as well as a projected increase in requests for business license payments from areas in which 4

SCE has not been required to pay such taxes in the past. 5

F. FERC Account 927 – Franchise Fees 6


Franchise Fee expenses are recorded in FERC Account 927 and include payments to 8

municipal and other governmental authorities. A Franchise is an agreement between a municipal 9

government and SCE to allow placement and maintenance of utility facilities in the public right of way. 10

127

Three types of Franchises are in use by the municipalities and counties in SCE’s service 1

territory.167 Which one is in use in a given jurisdiction depends on when the Franchise was entered into. 2

The current standard is the Franchise Act of 1937 (1937 Act).168 Table IX-7 below summarizes the 3

types and conditions of these Franchises. Whereas 1937 Act and Constitutional Franchises agreements 4

are indeterminate,169 and therefore do not expire, Broughton Act Franchises do expire. When a 5

Broughton Act Franchise expires, Franchises convert to the 1937 Act, usually resulting in higher 6

Franchise Fees. The 1937 Act allows for continued payment under the Broughton Act amount, which is 7

based on two percent of the value of the Franchise, or one percent of gross annual electricity sales, 8

whichever yields the higher amount. Terms and conditions of the three Franchise types are described in 9

Table IX-7. 10

Table IX-7 Franchise Types and Conditions


A Franchise “factor” is defined as total annual Franchise Fee payments expressed as a 12

percentage of total annual gross sales of electric energy. Table IX-8 below illustrates actual Franchise 13

factors for the period 2008-2012, and the forecast for the 2013-2015 periods. 14

167 See workpapers entitled “Municipalities’ Franchise Type” for a list of franchise type by municipality in SCE’s territory.

168 The Franchise Act of 1937, Public Utilities Code Section 6201 et. seq.

169 Because by law (reference CPUC Code 6205) charter cities are not limited to the terms of the Franchise Act of 1937, certain charter cities have franchises that contain payment terms and other provisions, such as a determinate life, that differ from the 1937 Act standard.

128

Table IX-8 Franchise Fee Factors (2008-2012)/Projected 2013-2015

Year Franchise Fee Payments (b) (c)

Gross Retail Sales Of Electric Energy

Franchise Factor (a)

2008

$105,380,458.82 $11,629,177,508.00 0.9062%

2009

$102,542,154.44 $11,317,868,546.00 0.9060%

2010

$103,985,234.18 $11,136,504,612.40 0.9337%

2011

$99,376,437.03 $11,023,035,126.62 0.9015%

2012

$100,537,527.61 $11,165,347,112.16 0.9004%

2013 Forecast

$102,363,362.42 $11,254,386,581.04 0.9095%

2014 Forecast

$102,363,362.42 $11,254,386,581.04 0.9095%

2015 Forecast

$102,363,362.42 $11,254,386,581.04 0.9095%

(a) Franchise Factor = Franchise Fee Payments/Gross Retail Sales of Electric Energy (b) Excludes Generation Municipal Surcharge, which is separately collected from the Direct

Access Customers only and not through the application for the Franchise Fee Factor. (c) Includes payments related to sales for resale beginning as of 2003

New jurisdictions were created through incorporations in the years 2008 to 2012, such as 1

Eastvale, Menifee, Jurupa Valley, and Wildomar, which are under the 1937 Act. Prior to incorporation, 2

these jurisdictions were unincorporated areas located in counties being paid under the terms of the 3

Broughton Act. New franchises were also renegotiated between 2008 and 2012 in the jurisdictions of 4

Azusa, Glendale, Colton, San Buenaventura, Kern County, and Inyo County, as their Boughton Act 5

contracts expired and they transferred to 1937 Act. These incorporations and renegotiations from 6

Broughton Act to 1937 Act resulted in increased Franchise payments for most of these municipalities. 7


The projection of 0.9095 percent as the Franchise factor for the test year 2015 is based on 9

a five-year average of the 2008 to 2012 Franchise factors. 10

As shown in Table IX-8, the Franchise factor varies from year to year. The Franchise 11

Fee payments are paid out to municipalities based on retail sales from the sale of electricity or the value 12

of the Franchise in their specific jurisdiction. Higher or lower retail sales and modifications to utility 13

facilities within a jurisdiction fluctuate year-to-year. These changes, which are caused by local 14

129

economic drivers such as a change in the customer base, account for variation in the Franchise factor 1

even in the absence of new or renegotiated Franchise agreements. Likewise, only a portion of the 2

Franchise Fees based on any calendar year’s gross receipts are paid in the same calendar year. A 3

significant portion of the franchise fees applicable to the gross receipts from one calendar year are paid 4

within the following calendar year, accounting for additional year-to-year variation in the Franchise 5

factor. Due to the inherent variation in the Franchise factor, a five-year average is an appropriate 6

estimate for 2015. 7

As in the past, SCE anticipates renegotiated Franchises, additional incorporations of new 8

cities, as well as further annexations of unincorporated county area by incorporated municipalities 9

within the Company’s service territory. The result of such changes would be an increase in payments 10

but, because they can be unpredictable, those possible increases are not included in test year projections 11

for this rate cycle. However, that makes the estimated Franchise factor of 0.9095 percent a conservative 12

estimate of the amount SCE will incur in the Test Year.17013

170 See workpaper entitled “Franchise Payments and GRC Authorized Franchise Factor, 1995-2012 Recorded and 2013 and

2015 Forecast.”

Appendix A

Witness Qualifications

A-1

SOUTHERN CALIFORNIA EDISON COMPANY 1

QUALIFICATIONS AND PREPARED TESTIMONY 2

OF VERONICA GUTIERREZ 3

Q. Please state your name and business address for the record. 4

A. My name is Veronica Gutierrez, and my business address is 2244 Walnut Grove Avenue, 5

Rosemead, California 91770. 6

Q. Briefly describe your present responsibilities at the Southern California Edison Company. 7

A. I serve as Vice President of Local Public Affairs (LPA) for SCE with overall responsibility for 8

formulating the company’s strategies for in-person communication with customers in support of 9

electrical safety education, storm and emergency response coordination with local governments, 10

transmission system expansion and relocation, distribution system upgrades, operational issues 11

impacting communities, and community education on state- mandated policy initiatives such as 12

energy efficiency, renewables, local reliability, and low income programs. LPA achieves this 13

through community outreach via local governments, non-profit organizations, neighborhood 14

groups, government associations and chambers of commerce. Finally, as it has done historically, 15

LPA works with local and regional governments in their capacity as regulators of SCE's 16

operations, as intermediaries between SCE and end-use customers, and as customers in their own 17

right. LPA supports the utility's operations by working directly with 206 franchises and the 18


federally recognized and two state recognized tribes). 20

Q. Briefly describe your educational and professional background. 21

A. With respect to my professional background, prior to my current position, I was Vice President 22

of Corporate Communications with responsibility for SCE’s communication strategies, media 23

relations, issues management, advertising, community involvement, philanthropic activities, 24

educational relations, volunteerism, and internal and external communications including content 25

and governance of the company’s Web sites. Before that, I was director of Public Affairs for 26

Edison International, responsible for advancing initiatives and outreach efforts on the company’s 27

behalf. I focused on company efforts to positively influence global warming issues and advance 28

new infrastructure development. Previously, I served as director of Regulatory Compliance for 29

SCE. In that capacity, I managed and organized resources to help ensure that company practices 30

and policies conformed to regulatory requirements, and I provided support to sustain and 31

A-2

improve work processes within that department. Prior to that, I served for two years as a 1

manager in SCE’s San Francisco office, working on proceedings before the Commission 2

primarily in the areas of low-income programs and environmental issues. I served in the Public 3

Affairs Department in various capacities: Director of the Government Education and Resource 4

Team focusing on providing accurate technical information to government entities as they 5

explored their energy options; Director of Public Affairs at Edison International serving two 6

years in Washington, D.C. as a lobbyist, and one year assisting affiliates on infrastructure 7

projects. Before joining SCE, I served as an Economic Development Deputy for then-Los 8

Angeles Councilmember Jackie Goldberg. Previously, I practiced law as a civil rights litigator 9

for the Los Angeles firm of Litt & Marquez. 10

With respect to my educational background, I earned my A.B. from Princeton University in 1983 11

and my J.D. from Boalt Hall School of Law at the University of California, Berkeley, in 1986. 12

Q. What is the purpose of your testimony in this proceeding? 13

A. The purpose of my testimony in this proceeding is to sponsor the portions of Exhibit SCE-09, 14

entitled External Relations, as identified in the Table of Contents thereto. 15

Q. Was this material prepared by you or under your supervision? 16

A. Yes, it was. 17

Q. Insofar as this material is factual in nature, do you believe it to be correct? 18

A. Yes, I do. 19

Q. Insofar as this material is in the nature of opinion or judgment, does it represent your best 20

judgment? 21

A. Yes, it does. 22

Q. Does this conclude your qualifications and prepared testimony? 23

A. Yes, it does. 24

A-3

SOUTHERN CALIFORNIA EDISON


OF MEGAN JORDAN 2


A. My name is Megan Jordan and my business address is 2244 Walnut Grove Avenue, Rosemead, 4

California, 91770. 5

Q. Briefly describe your present responsibilities at Southern California Edison. 6

A. I am the Vice President of Corporate Communications for Southern California Edison (SCE), 7

with overall responsibility for the company’s communication strategies, media relations, and 8

internal and external communications including content and governance of the company’s web 9

sites. I also oversee customer education communication, issues and crisis management, and 10

advertising, along with the company’s community involvement and philanthropic activities such 11

as corporate contributions and volunteerism. 12

Q. Briefly describe your professional background and education. 13

A. I joined SCE as director of Internal Communications in September 2010 and was promoted to 14

Director of Corporate Communications the following month when the position was combined 15

with the Director of External Communications position. I was appointed Vice President of 16

Corporate Communications in September 2011. Prior to SCE, I served as a senior vice president 17

and western region consumer practice leader at MSLGroup, a PR agency in Los Angeles. There 18

I served as co-director of the agency’s environmental communications global practice, and 19

western region consumer practice leader. There I was responsible for founding and leading an 20

ECO practice that developed programs to gain visibility for clients’ environmental and 21

alternative energy initiatives. Additionally, I served as the account lead for Nestlé and General 22

Motors’ advanced technology programs, and supported various healthcare clients. Prior to 23

MSLGroup, I served as SVP and deputy managing director at Cohn & Wolfe, a global 24

communications agency, as well as SVP and west coast director of the global healthcare practice 25

at Zeno Group, a PR agency. I also worked at Kaiser Permanente as director of Public Affairs 26

and Communications. Since January 2010, I have been an adjunct professor at Annenberg 27

School for Communication at the University of Southern California (USC) where I teach 28

A-4

environmental PR. I received a bachelor’s degree in Public Relations from USC and master’s 1

degree in Mass Communications from California State University, Northridge. 2


A. The purpose of my testimony is to sponsor portions of SCE-09, entitled External Relations as 4

identified in the Table of Contents thereto. 5


A. Yes, it was. 7


A. Yes, I do. 9


judgment? 11

A. Yes, it does. 12


A. Yes, it does. 14

A-5

SOUTHERN CALIFORNIA EDISON COMPANY

QUALIFICATIONS AND PREPARED TESTIMONY

OF EDWARD T. KJAER


A. My name is Edward Kjaer, and my business address is 2244 Walnut Grove Avenue, Rosemead, 2

California 91770. 3


A. I am the Director of the Transportation Electrification Integration Division within Integrated 5

Planning and Environmental Affairs. I am responsible for the division’s efforts to perform cross-6

functional planning and coordination of Transportation Electrification activities for SCE 7

(including light/medium/heavy duty PEVs, SCE’s fleet electrification, electrified ports, forklifts, 8

transit and other goods movement). 9


A. I attended Massey University in New Zealand, where my studies focused in the areas of 11

marketing and business economics. Between 1980 and 1985, I held a number of advertising 12

positions in New Zealand culminating in the position of Account Director in charge of the 13

Nissan and Sanyo advertising accounts. After emigrating to the U.S. in 1985, I worked on the 14

launch of the Acura Division (1985-1988) for American Honda’s Advertising Agency, rising to 15

the position of Vice President. From 1988 through 1995, I worked for Mazda Motor of America, 16

rising to the position of Corporate Marketing Manager. Beginning in 1996 and to the present, I 17

have held several positions in the Edison family of companies including: Director of Sales and 18

Marketing, Edison EV; Director, Automotive Division, Edison EV; and at Southern California 19

Edison- Director of ET Division; Director PEV Readiness and finally today, I am the Director of 20

Transportation Electrification Integration. 21



entitled External Relations as identified in the Tables of Contents thereto. 24


A. Yes, it was prepared under my supervision. 26


A. Yes, I do. 28

A-6


judgment? 2

A. Yes, it does. 3


A. Yes, it does. 5

A-7


QUALIFICATIONS AND PREPARED TESTIMONY

OF MARK E. NELSON


A. My name is Mark E. Nelson, and my business address is 8631 Rush Street, Rosemead, California 2

91770. 3


A. I am the Director of Integrated Planning in the Integrated Planning and Environmental Affairs 5

department. My present responsibilities as the Director of Integrated Planning include the 6

development of long-term resource plans for SCE, monitoring the electricity markets to help 7

assure their efficient operations, supporting generation initiatives and regulatory efforts at SCE, 8

and management of the Project Development Division. 9


A. I earned a Bachelor of Science degree in Economics from Iowa State University with emphasis 11

work in Chemical Engineering and Systems. I earned a Master of Science degree in 12

Econometrics from Iowa State University with thesis work in electricity demand analysis. I first 13

joined the Southern California Edison Company as a Planning Engineer in 1991 and held various 14

management positions through 1996, including Manager of Real Time Pricing and Customer 15

Software Systems. In 1996, I joined Edison Source and held a number of management positions 16

including Director of Retail Energy Operations until my departure in 1999 following the 17

cessation of energy marketing activities. From 1999-2003, I served as Managing Consultant of 18

Commerce Venture Group LLC, with primary responsibility for energy sector consulting and 19

analysis. I rejoined Southern California Edison in 2003 as Integrated Planning Manager and was 20

subsequently promoted to Director of Generation Planning & Strategy prior to promotion to my 21

current position. 22

Prior to joining Southern California Edison, I served as a Consultant for Midwest Solar, Inc., a 23

leading national supplier of large scale solar thermal systems, with responsibility for economic 24

and engineering analysis from 1980-83. From 1983-88, I held management and analysis 25

positions with subsidiaries of MidAmerican Energy, with responsibility for generation and 26

transmission projects, economic analysis, regulatory affairs and customer services. From 1988-27

91, I served as Vice President of Analysis for DATASSIST, where I was responsible for 28

A-8

economic and statistical analysis of electric and gas utility projects. I am the author of a number 1

of energy and business books and articles, including: An Econometric Study of Residential 2

Electricity Demand (ISBN 1-56471-005-X), Fundamentals of Business Process Analysis (1-3

56471-009-2), and “Understanding Natural Gas Demand for Electric Utilities.” 4

I have served as an adjunct professor or instructor at several universities, teaching economics and 5

business courses. 6


A. The purpose of my testimony in this proceeding is to sponsor portions of Exhibit SCE-09, 8

entitled External Relations as identified in the Table of Contents thereto. 9


A. Yes, it was. 11


A. Yes, I do. 13


judgment? 15

A. Yes, it does. 16


A. Yes, it does. 18

A-9



OF JOHN MATHEW PESPISA 2


A. My name is John Mathew Pespisa and my business address is 8631 Rush Street, Rosemead, 4

California 91770. 5

Q. Briefly describe your present responsibilities at Southern California Edison Company (SCE). 6

A. I am Director of the NERC Compliance Program in the Safety, Security and Compliance 7

Operating Unit. In this capacity, I oversee corporate NERC Compliance governance functions, 8

oversee SCE’s compliance with federal Reliability Standards, which have been promulgated to 9

ensure the safe, reliable operation of the power grid, and to protect the grid’s critical 10

infrastructure against cyber threats. 11


A. I am a graduate of Cal State Los Angeles and hold degrees in Electrical Engineering and 13

Business Management. 14

I began my career with Southern California Edison in 1987, starting in transmission operations 15

and electrical substations. Since then I have worked in positions including the operation of 16

SCE’s bulk electric and distribution systems, and supervisory positions at SCE’s Energy Control 17

Center, including Manager of short term power marketing, and Manager of Real-Time Power 18

Operations. I assumed my current position in November of 2011 as the Director of SCE’s 19

NERC Compliance Program. 20





A. Yes, it was. 25


A. Yes, I do. 27


judgment? 29

A. Yes, it does. 30

A-10


A. Yes, it does. 2

A-11



OF MEGAN SCOTT-KAKURES 2


A. My name is Megan Scott-Kakures, and my business address is 8631 Rush Street, Rosemead, 4

California 91770. 5

Q. Briefly describe your present responsibilities at Southern California Edison Company (SCE). 6

A. I am Vice President of the Regulatory Operations Department in the External Relations 7

Operating Unit. In this capacity, I oversee all California Public Utilities Commission (CPUC or 8

Commission) jurisdictional ratemaking, revenue requirements, revenue forecasting, load 9

research, pricing and tariff functions. My responsibilities also include management oversight of 10

SCE’s Commission-related General Rate Cases (GRC) and Energy Resource Recovery Account 11

(ERRA) proceedings. In addition, I oversee Federal Energy Regulatory Commission (FERC)-12

related pricing structures, design and interpretation of tariffs, including issues such as 13

transmission and reliability service rates. 14


A. I have a Bachelor of Arts degree from Claremont McKenna College and a Juris Doctorate from 16

the University of Michigan Law School. After law school, I was a law clerk for a federal judge 17

and then became a commercial litigation attorney. I have been employed by SCE since 1994. 18

Before assuming my current position with SCE, I was vice president and general auditor of 19

Edison International and SCE, responsible for oversight of the company’s internal audits 20

department and the execution of the internal audit function. I have also served as assistant 21

general counsel in the SCE law department, where I supervised regulatory work for the company 22

before the Commission relating to distribution service, energy procurement, customer rates, and 23

affiliate transactions. I assumed my current position of Vice President of Regulatory Operations 24

in May 2013. 25





A. Yes, it was. 30

A-12


A. Yes, I do. 2


judgment? 4

A. Yes, it does. 5


A. Yes, it does. 7

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