Motion for Approval of Settlement Agreement: SCE 2021 ERRA & PCIA Trigger Applications

Background

Each year, Southern California Edison (SCE) files an update to its power cost forecast via the Energy Resource Recovery Account (ERRA) application. The ERRA sets generation rates and the Power Charge Indifference Adjustment (PCIA) rates for the upcoming year. This year, SCE filed its application on July 1, 2020, and provided an update in November. Through the application, SCE seeks California Public Utilities Commission (CPUC or Commission) authorization for SCE’s revenue requirements for 2021. The forecast revenue requirements consist primarily of SCE’s proposed 2021 power costs, however the requirements also include 2020 year-end balancing account balances that SCE requests to recover from, or return to, the customer, and other miscellaneous expenses.

Additionally, in accordance with an earlier 2018 CPUC decision, the PCIA methodology was modified to include a “Cap & Trigger.” In essence, this methodology provides for a PCIA “Cap” of $0.05, and a requirement that the IOU file a “Trigger” Application if certain under-collection thresholds are met. SCE filed a Trigger Application on October 9 pursuant to this decision requiring an increase to the PCIA to restore the under-collection balance.

Description

CalChoice teamed with Clean Power Alliance (CPA) to engage specialized legal counsel, Keyes & Fox LLC (Keyes & Fox), to fully vet SCE’s 2021 ERRA. Included on this team is one of the state’s leading ERRA technical rate experts. The ERRA team began working on behalf of our members to review and analyze the ERRA application and to prepare discovery requests to better understand and if appropriate, challenge and protest, the costs associated with the ERRA application. Additionally, upon SCE’s filing of the Trigger Application in October, Keyes & Fox, along with representatives from CalChoice and CPA, began negotiating with SCE on a Settlement Agreement, to include issues from both the 2021 ERRA and the Trigger Application. The intent of the Settlement Agreement is to minimize the “rate shock” associated with the current methodology. SCE agrees with CalChoice and CPA that impacts of the PCIA under the new methodology have proven to be volatile to our customers.

The negotiations were fruitful, and at its core, the deal points include:
• Amortization of the 2020 under-collection (Trigger Application) over a period of 36 months
• Removal of the Cap & Trigger mechanism for 2021
• Support of a Petition for Modification to permanently remove the Cap & Trigger

The Motion for Settlement Agreement was filed with the CPUC on November 20. CalChoice and CPA agreed to support SCE’s efforts to get their rate decisions finalized at the December Commission meeting so that new rate would go into effect in January, so as not to be significantly delayed by SCE billing system upgrade scheduled for early 2021.

Next Steps

A Proposed Decision is expected early December, with a Final Decision anticipated on December 17.