BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U 338-E) to Establish Marginal Costs, Allocate Revenues, and Design Rates. A (Filed June 30, 2017) MOTION OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) AND SETTLING PARTIES FOR ADOPTION OF STREETLIGHT AND TRAFFIC CONTROL RATE GROUP SETTLEMENT AGREEMENT FADIA RAFEEDIE KHOURY JANE LEE COLE Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: (626) Facsimile: (626) Dated: July 6, 2018

2 MOTION OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) AND SETTLING PARTIES FOR ADOPTION OF STREETLIGHT AND TRAFFIC CONTROL RATE GROUP SETTLEMENT AGREEMENT Table of Contents Section Title Page I. INTRODUCTION...1 II. BACKGROUND...2 III. SUMMARY OF POSITIONS AND SETTLEMENT...3 A. B. C. D. Non-Allocated Revenues...3 Energy Charges and Customer Charges...5 Rate Option for Distribution Pole-Mounted Streetlights...6 Dimmable Streetlight and Ancillary Device Rate Design...7 IV. REQUEST FOR ADOPTION OF THE SETTLEMENT AGREEMENT...8 A. B. C. The Settlement Agreement is Reasonable In Light Of the Record...9 The Settlement Agreement is Consistent with Law...10 The Settlement Agreement Is In the Public Interest...10 V. PROPOSED SCHEDULE FOR COMMENTS AND IMPLEMENTATION OF SETTLEMENT AGREEMENT...11 VI. CONCLUSION...12 ATTACHMENT A STREETLIGHT AND TRAFFIC CONTROL RATE GROUP SETTLEMENT AGREEMENT i

3 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U 338-E) to Establish Marginal Costs, Allocate Revenues, and Design Rates. A (Filed June 30, 2017) MOTION OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) AND SETTLING PARTIES FOR ADOPTION OF STREETLIGHT AND TRAFFIC CONTROL RATE GROUP SETTLEMENT AGREEMENT I. INTRODUCTION Pursuant to Rule 12.1 et seq. of the California Public Utilities Commission s (Commission s) Rules of Practice and Procedure, Southern California Edison Company (SCE), on behalf of itself and the other Settling Parties the California City County Street Light Association (CAL-SLA), and the Coalition for Affordable Street Lights (CASL) requests that the Commission find reasonable and adopt the Streetlight and Traffic Control Rate Group Settlement Agreement (Settlement Agreement), which is appended to this motion as Attachment A. CASL and CAL-SLA represent streetlight, area light and traffic control customer interests. The Settling Parties have executed a Settlement Agreement that resolves all issues that have been raised with respect to non-allocated revenues, rate design and tariff matters for streetlight and traffic control rate schedules. Pursuant to the terms of the Settlement Agreement, and as soon as practicable following a Commission decision adopting the Settlement Agreement, but no earlier than the first quarter of 2019, SCE will adjust its rates for streetlight, area lighting, and traffic control customers pursuant to the terms of the Settlement Agreement. Section II of this Motion provides the background related to this proceeding. Section III describes in general the positions advocated by the Settling Parties in this proceeding and the terms of 1

4 the Settlement Agreement. Section IV demonstrates that the Settlement Agreement is reasonable in light of the whole record, consistent with law, and in the public interest, and that it should be adopted without modification. Section V discusses the procedural requests of the Settling Parties for disposing of this Motion and implementing revised rates. II. BACKGROUND This proceeding, Application (A.) , was initiated by the filing of SCE s application on June 30, 2017, along with service of its prepared direct testimony regarding marginal costs, revenue allocation and other aspects of rate design. On November 22, 2017, the Assigned Commissioner and Assigned Administrative Law Judge issued a Scoping Memo and Ruling following a November 2, 2017 prehearing conference identifying the distribution pole-mounted streetlight option and streetlighting rate structure as some of the nonresidential rate design issues to be resolved in the proceeding. On March 23, 2018, CASL and CAL-SLA were the only parties to submit prepared testimony regarding the streetlight rate group s non-allocated revenue requirement, streetlight rate design issues and/or tariff issues. CASL and SCE then had a series of meetings and engaged in productive discussions regarding some issues raised in CASL s testimony and agreed to resolve them outside of SCE s General Rate Case (GRC) Phase 2 proceeding. Thus, on May 23, 2018, CASL filed a motion to withdraw the March 23, 2018 Direct Testimony of Fred Lyn on Behalf of the Coalition for Affordable Streetlights Concerning SCE s Streetlight Outage and Maintenance Protocol (CASL-2), and Chapter IV of the Direct Testimony of William A. Monsen on Behalf of the Coalition for Affordable Streetlights Concerning Streetlight Rates and LED Conversion (CASL-1) in this proceeding. As of the date of this filing, that motion has not yet been granted but, because it is unopposed, the issues raised in those portions of CASL s testimony are not addressed in the Settlement Agreement. SCE provided notice to all parties of its intent to conduct a settlement conference related to all issues raised in the proceeding, and an initial settlement conference was held on April 6,

5 Continuing discussions related to the potential settlement of issues in this proceeding occurred among the interested parties after the settlement conference. III. SUMMARY OF POSITIONS AND SETTLEMENT The Settlement Agreement resolves all issues related to non-allocated revenues assigned to the Streetlight Rate Group, streetlight and traffic control rate design issues and streetlight tariff matters. The Settlement Agreement s primary provisions are summarized below but these and others are set forth in more detail in a comparison exhibit, Appendix A to the Settlement Agreement, which summarizes the positions of the Parties in their prepared testimony and how each issue is resolved by the Settlement Agreement. 1 The Settlement Agreement resolves all issues raised in the proceeding with respect to nonallocated revenues, rate design and tariff matters for streetlight and traffic control rate schedules. Illustrative rates based on the Settlement Agreement are provided in Appendix B to the Settlement Agreement. A. Non-Allocated Revenues To determine the initial level of non-allocated revenues to be directly assigned to the Streetlight Rate Group to recover the costs of SCE-owned streetlight facilities such as lamps and streetlight poles, SCE proposed to retain the methodology agreed upon among settling parties in SCE s 2012 and 2015 GRC Phase 2 proceedings and adopted by the Commission, which, based on the net book value and O&M expenses for streetlight service in 2015 as recorded in FERC account 373 and related O&M 1 Capitalized terms are defined in Paragraph 2 of the Settlement Agreement. The comparison exhibit also includes resolution of material uncontested issues, not summarized in this motion, such as SCE s proposal to eliminate incidental load exceptions to some time-of-use streetlight schedules and instead convert them into flat schedules with an assessment process to confirm that the customers usage is predominantly for lighting load. 3

6 expense accounts, equaled $ million. 2 To moderate bill impacts, SCE proposed that the level of non-allocated revenues not exceed 5 percent more than the current non-allocated revenues assigned to the streetlight class. SCE proposed that, for attrition years, it would adjust the non-allocated revenues consistent with the trigger mechanism used in the 2015 GRC Phase 2 streetlight (SL) Settlement Agreement. 3 CASL generally agreed with SCE s proposal in its direct testimony, and proposed to apply the methodology from the 2015 SL Settlement Agreement to the attrition year facilities charges, including SCE s proposal to cap non-allocated revenue requirement increases at five percent annually. 4 However, CASL proposed some adjustments, such as: 1) setting the baseline date at the cut-off date for data used in the test-year revenue requirement calculation, 5 2) reducing the trigger amounts to reflect smaller LS-1 customer base and any additional streetlight transfers that take place until the new baseline date for the 2018 GRC cycle, 6 and 3) including all approved streetlight transfers in the trigger amount, rather than those that have been physically transferred to the cities. 7 CAL-SLA opposed SCE s proposal to update the non-allocated revenue requirement based on triggers identified in 2015 SL Settlement Agreement (i.e., based on changes in the streetlight lamp or facilities counts) 8 because of a concern over potential rate volatility if a large number of streetlights were sold over the next three years. CAL-SLA explained that the revenue requirement would be adjusted downward by a maximum of 5% but the customer base of lamps paying facilities charges would decrease to a greater degree. To collect the adjusted revenue requirement, the rates would have to 2 The 2012 GRC Phase 2 settlement was approved in D The 2015 GRC Phase 2 settlement agreement was adopted in D See, also, Exhibit SCE-04A, p74 (and Appendix J). 3 SCE also updated its Results of Operations (RO) model to reflect the changes resulting from the Tax Cuts and Jobs Act of 2017 and recent sales of streetlight assets prior to settlement negotiations. 4 Direct Prepared Testimony of William A. Monsen On Behalf of CASL ( CASL-1 ), pp. 2-4, Id., p Id., p Id. pp Direct Prepared Testimony of CAL-SLA (CAL-SLA-1), p. 1 and pp

7 increase for the remaining LS-1 lamps. 9 Rather than continuing to applying the trigger mechanisms adopted in 2015 SL Settlement Agreement, CAL-SLA proposed that SCE s streetlight facilities revenue requirement be adjusted once only, keeping facilities charges constant through the attrition years. 10 CAL-SLA explained that its proposal is straightforward to implement and the revenues collected will directly scale with the number of LS-1 lamps and that fixed charges over the attrition years will allow customers to better understand and budget for their streetlight bills. 11 The Settling Parties reached a three-part compromise. First (as occurred in SCE s 2015 GRC Phase 2), the Settling Parties agreed that, as part of the Revenue Allocation Settlement Agreement, filed on July 3, 2018, the non-allocated revenues would be set at a certain level initially (here, $ million), and then leave to this attached Streetlight and Traffic Control Rate Design Settlement the setting of attrition year non-allocated revenues. 12 Second, in the attached Settlement Agreement, the Settling Parties agreed that, upon initial implementation, SCE would hold the non-allocated revenue requirement constant but increase by 5 percent the facilities charges (in streetlight rate schedules that have facilities charges). SCE would collect the balance of non-allocated revenues via distribution energy charges. Third, in attrition years, the non-allocated revenues would then be updated annually to account for, among other things, the sales transfer of streetlights to eligible entities and LED conversions, but the facilities charges would remain fixed at the five percent level established upon initial implementation. B. Energy Charges and Customer Charges SCE proposed to update energy charges based on its proposed marginal costs and the usage characteristics of streetlight customers. CAL-SLA proposed to set energy charges residually after the non-energy charges have been computed. CASL did not address energy charges. The Settlement 9 CAL-SLA-1, p Id., p Id., p See Paragraph 4.B.3 on page 16 of the MC/RA Settlement Agreement. 5

8 Agreement provides that SCE will set energy charges residually after non-energy charges are computed (including after setting the non-allocated revenues consistent with the preceding paragraph), and use marginal costs and usage characteristics to set the energy rates. With respect to customer charges, SCE proposed to use the Real Economic Carrying Cost (RECC) methodology as the basis for setting the monthly charges for Schedules AL-2 and LS-3. For Schedule TC-1, SCE proposed to collect a maximum of 27 percent of allocated revenue via the customer charge. CAL-SLA agreed with the proposed treatment for Schedule TC-1 customer charges, but proposed lower customer charges than SCE for Schedules AL-2 and LS-3 because CAL-SLA used ORA s marginal customer cost methodology (the new-customer only, or NCO, method). 13 CASL did not comment on customer charges. The Settling Parties compromised by establishing customer charges using a 50/50 split of RECC and NCO for Schedules AL-2 and LS-3. C. Rate Option for Distribution Pole-Mounted Streetlights Pursuant to the 2015 SL Settlement Agreement, SCE proposed a rate option for lamps that are mounted on SCE s distribution poles, as compared to those that are mounted on poles that support only streetlights. 14 SCE s proposal included lamp charges based on a net-plant-in-service methodology described in Exhibit SCE-04A, and allocation of streetlights non-allocated revenue requirement based on the marginal costs of standard-configuration luminaires. The proposed rate would provide a credit of $/lamp to the standard configuration charge for those customers with distribution pole-mount configuration. SCE also proposed to modify the existing percent distribution pole adjustment proportionally based on the number of customers taking service on the new rate option in order to prevent an automatic increase in streetlight facilities charges for standard configurations to account for the reduced revenues collected from distribution pole-mount configurations. 13 CAL-SLA-1, p Exhibit SCE-04A, pp

9 In its direct testimony, 15 CASL agreed with SCE s proposal and recommended its adoption. CAL-SLA supported SCE s proposal for a lamp credit but opposed SCE s proposed inventory fee for non-transfer cities. 16 Ultimately, the Settling Parties agreed to SCE s proposal for establishment of a distribution pole-mounted streetlight rate option, the details of which are in Paragraph 4.J. of the Settlement Agreement. In summary, the Settling Parties agreed that SCE would provide a credit of $/lamp to the standard configuration charge for those customers who take service on the distribution pole-mount rate option but will implement an inventory fee for non-transfer entities who wish to participate on this rate. However, SCE agreed to provide additional customer outreach (via written and oral communication to customers) so that eligible streetlight customers are aware of this new rate option and can make more informed decisions about whether to avail themselves of this new optional rate. Relatedly, the Settling Parties also agreed that SCE would assess any cost-saving opportunities for customers taking service on this new optional rate and on Schedule LS-1, Option E light-emitting diode (LED) conversions, and present those findings in the next GRC Phase 2. D. Dimmable Streetlight and Ancillary Device Rate Design SCE s direct testimony made no proposal with respect to dimmable streetlights and SCE does not currently provide a dimmable streetlight rate option. However, CAL-SLA proposed in its direct testimony that: 1) SCE should offer a new dimmable streetlight rate structure that bills customers based on metered electricity usage which consists of base LS-2 facilities charges plus new SCE administrative fees, with the same energy rate as that applied to non-metered streetlights; and 2) SCE should offer a new tariff for ancillary devices attached to streetlight poles and separately metered by customer-owned, streetlight control modules. 17 CASL expressed support for the development of a rate structure for 15 CASL-1, p CAL-SLA Direct Testimony, pp Non-transfer cities are distinguished from those cities that purchased streetlight facilities from SCE when that option was available. 17 CAL-SLA-1, p

10 dimmable lamps and ancillary devices that would facilitate cities investments in these technologies. 18 The Settling Parties agreed that SCE would conduct an assessment evaluating the feasibility of a rate structure for a dimmable streetlight that bills customers based on metered electricity usage and for ancillary devices attached to streetlight poles that are separately metered by customer-owned streetlight control modules. SCE s feasibility assessment will include a determination of equipment and infrastructure needs, and impacts to SCE s billing system that would be required to accommodate this new rate. Under the Settlement Agreement, SCE may propose new rate option in its next GRC Phase 2 application depending on the results of the feasibility assessment, the approval of any necessary funding requirements in the next GRC Phase 1 proceeding and/or the deployment schedule for any necessary equipment. However, SCE is not obligated to propose such a new rate option. IV. REQUEST FOR ADOPTION OF THE SETTLEMENT AGREEMENT The Settlement Agreement is submitted pursuant to Rule 12.1 et seq. of the Commission s Rules of Practice and Procedure. The Settlement Agreement is also consistent with Commission decisions on settlements, which express the strong public policy favoring settlement of disputes if they are fair and reasonable in light of the whole record. 19 This policy supports many worthwhile goals, including reducing the expense of litigation, conserving scarce Commission resources, and allowing parties to reduce the risk that litigation will produce unacceptable results. 20 As long as a settlement taken as a whole is reasonable in light of the record, consistent with the law, and in the public interest, it should be adopted without change. The Settlement Agreement complies with Commission guidelines and relevant precedent for settlements. The general criteria for Commission approval of settlements are stated in Rule 12.1(d) as 18 CASL-1, pp See, e.g., D (30 CPUC 2d 189, ) and D (40 CPUC 2d, 301, 326). 20 D , 46 CPUC 2d 538,

11 follows: The Commission will not approve stipulations or settlements, whether contested or uncontested, unless the stipulation or settlement is reasonable in light of the whole record, consistent with law, and in the public interest. 21 The Settlement Agreement meets the criteria for a settlement pursuant to Rule 12.1(d), as discussed below. A. The Settlement Agreement is Reasonable In Light Of the Record The prepared testimony of SCE, CASL and CAL-SLA, the Settlement Agreement itself, and this motion contain the information necessary for the Commission to find the Settlement Agreement reasonable in light of the record. Prior to the settlement, parties conducted discovery and served testimony on the issues related to streetlight and traffic control rate design issues. The Settling Parties request that the Commission admit the prepared testimony and related exhibits into the Commission s record of this proceeding. The Settlement Agreement represents a reasonable compromise of the Settling Parties positions. The prepared testimony of the Settling Parties as well as Exhibit A to the Settlement Agreement (i.e., the comparison exhibit), together with this motion and attached Settlement Agreement, contain sufficient information for the Commission to judge the reasonableness of the proposed outcome. The Settlement Agreement is a reasonable compromise of the Settling Parties respective positions, as summarized in Section III. Specifically, the Settlement Agreement s treatment of nonallocated revenues helps ensure more manageable bill impacts upon initial implementation, and then rate stability across the attrition years (with an easier-to-manage adjustment than the triggers adopted in the 2015 SL Settlement Agreement). The Settlement Agreement is also reasonable because of its safeguards against cost-shifting, including SCE s proposed annual review of daytime usage of AL-2 and LS-3 customers to help ensure 21 See also, Re San Diego Gas & Electric Company, (D ), 37 CPUC 2d

12 those customers usage is predominantly for lighting. B. The Settlement Agreement is Consistent with Law The Settling Parties believe that the terms of the Settlement Agreement comply with all applicable statutes and prior Commission decisions, and reasonable interpretations thereof. In agreeing to the terms of the Settlement Agreement, the Settling Parties have explicitly considered the relevant statutes and Commission decisions and believe that the Commission can approve the Settlement Agreement without violating applicable statutes or prior Commission decisions. C. The Settlement Agreement Is In the Public Interest The Settlement Agreement is a reasonable compromise of the Settling Parties respective positions, as summarized in Section III. The Settlement Agreement is in the public interest and in the interest of SCE s customers. It fairly resolves issues and provides more certainty to customers regarding their present and future costs, which is in the public interest. SCE s commitment to exploring the feasibility of a dimmable and ancillary device streetlight option, and the Settling Parties proposed establishment of a rate designed for distribution pole-mounted streetlights, potentially offers more meaningful customer choice while remaining faithful to costcausation principles. This Settlement Agreement fairly resolves issues and provides more certainty to customers regarding their present and future costs, which is in the public interest. The Settlement Agreement, if adopted by the Commission, avoids the cost of further litigation, and frees up Commission resources for other proceedings. Given that the Commission s workload is extensive, the impact on Commission resources is doubly important. The Settlement Agreement frees up the time and resources of other parties as well, so that they may focus on other proceedings and the other unresolved issues in this proceeding. The prepared direct testimony contains sufficient information for the Commission to judge the reasonableness of the Settlement Agreement and for it to discharge any future regulatory obligation with respect to this matter. 10

13 Each portion of the Settlement Agreement is dependent upon the other portions of the Settlement Agreement. Changes to one portion of the Settlement Agreement would alter the balance of interests and the mutually agreed upon compromises and outcomes that are contained in the Settlement Agreement. As such, the Settling Parties request that the Settlement Agreement be adopted as a whole by the Commission, as it is reasonable in light of the whole record, consistent with law, and in the public interest. V. PROPOSED SCHEDULE FOR COMMENTS AND IMPLEMENTATION OF SETTLEMENT AGREEMENT The Settling Parties seek approval of the terms of the Settlement Agreement so that SCE may implement rates as soon as practicable following the issuance of a final Commission decision approving the Settlement Agreement but no earlier than the first quarter of In order to accomplish this, and given that SCE expects this Settlement Agreement to be unopposed, the Settling Parties recommend the following time periods for comments and replies comments on the Settlement Agreement. In order to accommodate questions about the Settlement Agreement in the event that there are material contested issues of fact, or questions from the Commission following the filing of comments, the Settling Parties request that a portion of one day be scheduled for a hearing (with a panel of sponsoring witnesses) in accordance with the following schedule. Event Date Motion filed for Adoption of the Settlement Agreement July 6, 2018 Opening comments, if any, on the Settlement Agreement August 6, 2018 Reply comments, if any, on the Settlement Agreement August 21, 2018 Hearing on the Settlement Agreement, if necessary July 17, 2018 to July 18, On July 3, 2018, SCE submitted a procedural request to the ALJs, including its request to have hearings on the reasonableness of the streetlight settlement agreement on July 17 or 18th. 11

14 VI. CONCLUSION WHEREFORE, the Settling Parties respectfully request that the Assigned Commissioner, Assigned ALJ, and the Commission: 1. Approve the attached Settlement Agreement as reasonable in light of the record, consistent with law, and in the public interest; and 2. Authorize SCE to implement changes in rates and tariffs in accordance with the terms of the Settlement Agreement. Respectfully submitted, FADIA RAFEEDIE KHOURY JANE LEE COLE /s/ Jane Lee Cole By: Jane Lee Cole Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: (626) Facsimile: (626) And on behalf of the Settling Parties. 23 July 6, In accordance with Rule 1.8(d), each Settling Party has authorized SCE s counsel to sign and file this motion on its behalf. 12

15 Attachment A Streetlight and Traffic Control Rate Group Settlement Agreement

16 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U 338-E) to Establish Marginal Costs, Allocate Revenues, and Design Rates. A (Filed June 30, 2017) STREETLIGHT AND TRAFFIC CONTROL RATE GROUP SETTLEMENT AGREEMENT Dated: July 6, 2018 Attachment A-1

17 Streetlight and Traffic Control Rate Group Settlement Agreement Table of Contents Section Title Page PARTIES...2 DEFINITIONS...2 RECITALS...4 AGREEMENT...5 A. B. Illustrative Rates...6 Non-Allocated Revenues...6 1) 2) Initial and Subsequent Setting of Non-Allocated Revenues...6 Relationship Between Non-Allocated Revenues and Distribution Allocation in the Revenue Allocation Settlement Agreement...7 C. Rate Design and Allocation of Revenues Among Streetlight and Traffic Control Rate Schedules...7 1) 2) 3) Rate Structures...7 Customer Charges...7 Energy Charges...8 a) b) Generation-Related Energy Charges...8 Non-Generation-Related Energy Charges...9 4) Allocation of Revenues...9 D. E. F. Schedules LS-1 and LS Schedule LS Schedule AL ) 2) Option AL-2-A (Flat Rate, Non-Grandfathered)...10 Option AL-2 (Grandfathered Rate)...10 G. H. I. Daytime Usage Limitations on Schedule LS-3 and AL Schedule OL-1 and Schedule DWL...11 Schedule TC Attachment A-i-

18 Streetlight and Traffic Control Rate Group Settlement Agreement Table of Contents (Continued) Section Title Page J. Distribution Pole-Mounted Rate Option ) 2) Customer Outreach...12 Customer Elections...13 K. L. Dimmable Streetlight and Ancillary Device Rate...13 Assessment of Any Cost Savings for Customers Electing Service on Schedule LS-1, Option E Together With the Distribution Pole-Mounted Rate Option IMPLEMENTATION OF SETTLEMENT AGREEMENT...14 INCORPORATION OF COMPLETE AGREEMENT...14 RECORD EVIDENCE...14 SIGNATURE DATE...14 REGULATORY APPROVAL...14 COMPROMISE OF DISPUTED CLAIMS...15 NON-PRECEDENT...15 PREVIOUS COMMUNICATIONS...15 NON-WAIVER...15 EFFECT OF SUBJECT HEADINGS...16 GOVERNING LAW...16 NUMBER OF ORIGINALS...16 APPENDIX A COMPARISON OF PARTY POSITIONS AND SETTLEMENT...17 APPENDIX B ILLUSTRATIVE STREETLIGHT AND TRAFFIC CONTROL RATES...7 Attachment A-ii-

19 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U 338-E) to Establish Marginal Costs, Allocate Revenues, Design Rates. A (Filed June 30, 2017) STREETLIGHT AND TRAFFIC CONTROL RATE GROUP SETTLEMENT AGREEMENT This Streetlight and Traffic Control Rate Group Settlement Agreement (Settlement Agreement, or Agreement) is entered into by and among Southern California Edison Company (SCE), the California City-County Street Light Association (CAL-SLA), and the Coalition for Affordable Street Lights (CASL) (collectively referred to hereinafter as Settling Parties). 1. Parties A. SCE is an investor-owned utility (IOU) and is subject to the jurisdiction of the California Public Utilities Commission (Commission or CPUC) with respect to providing electric service to its CPUC-jurisdictional retail customers. B. CAL-SLA represents all streetlight and traffic control customers in California, with the primary purpose of educating and advocating positions on streetlight rates. C. CASL represents cities that take street and area lighting and traffic signal services from SCE. 2. Definitions When used in initial capitalization in this Settlement Agreement, whether in singular or plural, the following terms shall have the meanings set forth below or, if not set forth below, then as they are defined elsewhere in this Agreement: A consolidated estimated revenue requirement shall be as it is defined in Paragraph 4.B.(1) of the Revenue Allocation Settlement Agreement. Attachment A-2

20 B. Allocated Revenues mean the amount of SCE s authorized revenue requirement that is allocated to the Streetlight and Traffic Control Rate Group. Allocated Revenues are used to establish the Energy Charges and the Customer Charges applicable to the Streetlight and Traffic Control Rate Group. C. Commission or CPUC means the California Public Utilities Commission. D. Customer Charges mean the fixed dollar-per-month charges applicable to certain Streetlight Rate Group and Traffic Control rate schedules. E. Energy Charges mean the dollar per kilowatt-hour (kwh) charges applicable to Streetlight Rate Group and Traffic Control Rate Group rate schedules. Energy Charges recover SCE s costs for delivery services, generation, public policy and DWR revenue requirements. F. Functional SAPC Allocation means allocation of SCE s revenue requirement to each of SCE s rate groups based on the system average percentage change (SAPC) for the particular function, e.g., generation, or distribution and customer costs. In addition, this would include adjustments of FERC-jurisdictional transmission revenues as authorized by formula rates or otherwise. G. Grandfathered refers to the treatment the Commission has prescribed for eligible solar customers as set forth in Decisions (D.) and D H. Incidental Load is currently permitted for Schedule AL-2 and LS-3-Option B customers, and is defined as usage for non-lighting purposes incurred any time of day provided that such Incidental Load shall not either exceed 20 kw or comprise 15 percent of the customer s maximum 12- month lighting demand within any three months during a 12-month period. I. Revenue Allocation Settlement Agreement refers to the settlement of the same name filed in this proceeding on July 3, J. Non-Allocated Revenues are revenues assigned directly to the rate groups that incur these costs. As used in this Agreement, Non-Allocated Revenues are established in Paragraph 4.B. to be a combination of streetlight facilities costs and distribution energy costs. K. Non-Energy Charges mean the distribution charges applicable to street and area lighting, expressed as dollars per lamp per month. Non-Energy Charges are synonymous with service charges, and other charges applicable to street and area lighting. They include facilities charges and operations and maintenance (O&M) charges. Attachment A-3

21 L. Shortfall means the balance of the revenues resulting from the subtraction of the facilities charge revenues from the then-current Non-Allocated Revenues. The Shortfall is to be collected via distribution energy charges. M. Streetlight Agency means a city, county or other entity that serves as the customer of record on a streetlight service account. N. Streetlight Rate Group means the following SCE rate schedules: Schedule LS-1 Lighting Street and Highway Company-Owned System Unmetered Service; Schedule LS-2 Lighting Street and Highway Customer-Owned Installation Unmetered Service; Schedule LS-3 Lighting Street and Highway Customer-Owned Installation Metered Service; Schedule OL-1 Outdoor Area Lighting Service Unmetered Service; Schedule DWL Residential Walkway Lighting Unmetered Service; and Schedule AL-2 Outdoor Area Lighting Service Metered. O. Transfer Entities are cities, counties, or other entity that purchased their streetlight facilities from SCE. 1 P. TOU periods mean time-of-use. These are the time periods established for the provision of electric service in which demand charges or energy charges may vary in relation to the cost of service. Q. Traffic Control Rate Group means Schedule TC Recitals A. In Phase 2 of SCE s 2018 GRC, the Commission allocates SCE s authorized revenue requirement among rate groups and authorizes rate design changes for rate schedules in each rate group. B. On June 30, 2017, SCE filed it 2018 GRC Phase 2 application (Application A ) and served supporting testimony regarding marginal costs, revenue allocation and rate design. C. Protests and responses to SCE s Application were filed on August 7, No party submitted a protest relating to SCE s streetlight rate design proposals. D. On November 22, 2017, the Assigned Commissioner and Assigned Administrative Law Judge issued a Scoping Memo and Ruling following a November 2, 2017 prehearing conference (at 1 SCE did not sell distribution pole-mounted streetlights to any city. Attachment A-4

22 which CASL and CAL-SLA were granted party status through oral motions) identifying as among the nonresidential rate design issues to be resolved in the proceeding a potential distribution pole-mounted streetlight option and streetlight rate structure issues. E. On March 23, 2018, CASL and CAL-SLA served their initial testimony on streetlight rate design and/or revenue allocation issues. F. On May 23, 2018, CASL filed a motion to withdraw the March 23, 2018 Direct Testimony of Fred Lyn on Behalf of the Coalition for Affordable Streetlights Concerning SCE s Streetlight Outage and Maintenance Protocol (CASL-2), and Chapter IV of the Direct Testimony of William A. Monsen on Behalf of the Coalition for Affordable Streetlights Concerning Streetlight Rates and LED Conversion (CASL-1) in this proceeding. As of the date of this filing, that motion has not yet been granted but, because it is unopposed, the issues raised in those portions of CASL s testimony are not addressed in this Settlement Agreement. G. SCE provided notice to all parties of its intent to conduct a settlement conference related to all issues raised in the proceeding, and an initial settlement conference was held on April 6, Continuing settlement discussions occurred among the parties after April 6, H. The Settling Parties have evaluated the impacts of the various proposals in this proceeding and desire to resolve all issues related to streetlight and traffic control rates beginning with the implementation of a CPUC decision approving this Agreement, and have reached agreement as indicated in Paragraph 4 of this Agreement. I. Appendix A to this Agreement provides a comparison of the Settling Parties positions, where applicable, related to Streetlight and Traffic Control rates that have been resolved by this Agreement. In the event of a conflict between the terms of this Agreement and Appendix A, the terms of this Agreement shall control. J. Appendix B provides illustrative streetlight and traffic control rates based on the 2019 consolidated estimated revenue requirement. These rates are for illustrative purposes only and have no precedential value. 4. Agreement In consideration of the mutual obligations, covenants and conditions contained herein, the Settling Parties agree to the terms of this Settlement Agreement. Nothing in this Settlement Agreement shall be deemed to constitute an admission by any party that its position on any issue lacks merit or Attachment A-5

23 that its position has greater or lesser merit than the position taken by any other Party. This Settlement Agreement is subject to the express limitation on precedent described in Paragraph 11. Unless specifically stated otherwise herein, this Agreement and its terms are intended to remain in effect from the date rate changes are implemented as a result of a Commission decision in this proceeding until a decision is implemented in Phase 2 of SCE s next GRC. 2 A. Illustrative Rates The Settling Parties agree that the results of the rate design process illustrated by the rate schedules in Appendix B to this Agreement are reasonable. These rates are based on the 2019 consolidated estimated revenue requirement of $11,420 million described in more detail in Paragraph 4.B(1) of the Revenue Allocation Settlement Agreement. The Customer Charges and Energy Charges shall be adjusted to reflect SCE s actual authorized revenue requirement when this Agreement is first implemented consistent with the treatment of Allocated Revenues adopted in this proceeding. B. Non-Allocated Revenues 1) Initial and Subsequent Setting of Non-Allocated Revenues Consistent with Paragraph 4.B(3) of the Revenue Allocation Settlement Agreement, Non- Allocated Revenues specifically assigned to the Streetlight rate group shall be established initially at a level of $ million for Upon initial implementation of this Agreement, SCE will increase by five (5) percent the facilities charges (in streetlight rate schedules that have facilities charges) that are in effect at that time, and shall collect the Shortfall via distribution energy charges. Because facilities charges are collected only through unmetered rate schedules, the Shortfall shall be collected through the distribution energy charges in the unmetered rate schedules. 2 This Agreement supersedes and supplants the Streetlight and Traffic Control Rate Group Settlement Agreement adopted by the Commission in D (2015 Streetlight Agreement). Except as otherwise specified, any obligation from the 2015 Settlement Agreement not explicitly re-stated here shall not survive. Attachment A-6

24 The Non-Allocated Revenues will then be updated annually to account for, among other things, the sales transfer of streetlights to Transfer Entities and LED conversions. The streetlight lamp counts will also be updated annually to reflect the latest forecast and sales transfers from Schedule LS-1 to Schedule LS-2. Notwithstanding the foregoing, the facilities charges shall remain fixed at the level described in the prior paragraph. The updated Non-Allocated Revenues and streetlight lamp counts will then be used to calculate the Shortfall to be collected through distribution energy charges. 2) Relationship Between Non-Allocated Revenues and Distribution Allocation in the Revenue Allocation Settlement Agreement Notwithstanding any provision in this Settlement Agreement, changes to the Non-Allocated Revenues resulting from the process described in Paragraph 4.B(1), above, shall not modify the distribution allocation reflected in the Revenue Allocation Settlement Agreement. Moreover, any gain on sales that is required to be returned to ratepayers will be allocated consistent with the allocators in the Revenue Allocation Settlement Agreement, unless otherwise directed by the Commission as part of its approval of the transfer. C. Rate Design and Allocation of Revenues Among Streetlight and Traffic Control Rate Schedules 1) Rate Structures Except for Schedules LS-3 and AL-2, changes to which are described in Paragraphs 4.E. and 4.F, below, the rate structures of currently existing streetlight and traffic control rate schedules, consisting of Customer Charges, Energy Charges and Non-Energy Charges, shall be maintained for all applicable Streetlight and Traffic Control Rate Group schedules. 2) Customer Charges Upon initial implementation of this Agreement, the Customer Charges for Schedule LS-3, Series Service shall be set equal to $ per month. Schedule LS-3, Multiple Service Attachment A-7

25 and Schedules AL-2 and AL-2-A shall be set equal at $7 per month. For Schedule TC-1, the Customer Charge shall be set at $ Thereafter, these Customer Charges shall be adjusted on a Functional SAPC basis. The illustrative Customer Charges in Appendix B are as follows: Illustrative Customer Charges 3 Schedule Customer Charge (per month) LS-3, Series Service $ LS-3, Multiple Service $7.00 AL-2 $7.00 AL-2-A $7.00 TC-1 $ ) Energy Charges Proposed Energy Charges, based on the 2019 estimated consolidated revenue requirement, are set forth in Exhibit B. When this Agreement is first implemented, these estimated Energy Charges shall be adjusted, as necessary, consistent with the then-current revenues allocated to each rate group in accordance with the Revenue Allocation Settlement Agreement. Thereafter, these estimated Energy Charges shall be adjusted consistent with Paragraph 4.B(7) of the Revenue Allocation Settlement Agreement when SCE s authorized revenues change. Notwithstanding the foregoing, Energy Charges for unmetered service shall be consistent with the method set forth in Paragraph 4.B(1) of this Agreement. a) Generation-Related Energy Charges Generation-related Energy Charges shall be established based on the marginal energy costs set forth in the Revenue Allocation Settlement Agreement. However, for Schedule AL-2 (grandfathering option), which has TOU components, the on- 3 Customers served on Schedules LS-1 and LS-2 do not pay a Customer Charge. For these customers, fixed costs are recovered in non-generation-related energy charges. Attachment A-8

26 peak Energy Charges shall be set consistent with the Schedule TOU-GS-1-A Grandfathered Energy Charges. b) Non-Generation-Related Energy Charges Non-generation-related Energy Charges that are designed to recover revenues associated with customer costs (for Schedule LS-1 and LS-2 customers only), transmission, distribution, public purpose programs, new system generation service, nuclear decommissioning, CARE balancing account, the California Department of Water Resources bonds, and the CPUC reimbursement fee shall be established on the basis of the specified functional authorized revenue requirements and the terms specified in the Revenue Allocation Settlement Agreement. However, for Schedule AL-2 (grandfathering option), which has TOU components, the on-peak Energy Charges shall be set consistent with the Schedule TOU-GS-1-A Grandfathered Energy Charges. 4) Allocation of Revenues The initial facilities charges for the different lamp options are shown in Appendix B (as other charges ). The distribution energy charges for unmetered service will be adjusted to maintain the then-current Non-Allocated Revenues as described in Paragraph 4.B. After this Agreement is first implemented, any changes to the Allocated Revenues that are collected through Energy Charges and Customer Charges for the Streetlight and Traffic Control Rate Group shall be implemented on a Functional SAPC basis whenever a change to SCE s authorized revenues are implemented in rates, using the then-current forecast lamp count and the applicable kwh consumption per lamp. D. Schedules LS-1 and LS-2 There shall be no structural changes to Schedules LS-1 and LS-2, but Paragraph 4.J, below, describes a rate option to be added to Schedule LS-1. Attachment A-9

27 E. Schedule LS-3 Schedule LS-3 shall no longer have Option A and B and shall instead be modified to reflect what is described in Paragraph 4.C., 4 above, and the following: Schedule LS-3 shall become a non-time-variant rate structure with monthly limits on the allowable amount of on-peak usage (i.e., the existing Incidental Load provisions will be eliminated and an on-peak threshold is adopted instead). See Paragraph 4.G, below. All provisions of the current Schedule LS-3 not explicitly mentioned for revision herein shall survive. F. Schedule AL-2 1) Option AL-2-A (Flat Rate, Non-Grandfathered) Schedule AL-2-A will be applicable to all non-grandfathered customers who meet the eligibility requirements for Schedule AL-2. Schedule AL-2 shall be converted to non-time-variant rate structures with monthly limits on the allowable amount of on-peak usage (i.e., the existing incidental load provisions will be eliminated and an on-peak threshold is adopted instead). See Paragraph 4.G, below. 2) Option AL-2 (Grandfathered Rate) Off-peak energy charges shall be set consistent with Schedule AL-2-A (by function). Summer and winter on-peak Energy Charges shall be based on the grandfathered Schedule TOU-GS-1 A summer and winter on-peak charges (by function) 4 Certain provisions in the final version of Schedule LS-3, to be submitted via a compliance advice letter, will be moved around to reflect clearer organization. Attachment A-10

28 G. Daytime Usage Limitations on Schedule LS-3 and AL-2 SCE shall measure kwh usage to attempt to discern whether accounts served on Schedules LS- 3 and AL-2 incur usage predominately for nighttime lighting. On a rolling 12-month basis, SCE will compare all usage incurred on an account between the hours of 8 a.m. to 4 p.m. during the preceding 12 months to the account s total usage for the preceding 12 months. If the usage during the hours of 8 a.m. to 4 p.m. exceeds 30 percent of the account s total usage incurred, the account will become ineligible prospectively for service under Schedule AL-2 or LS-3 and will, at SCE s sole discretion unless the customer affirmatively and timely elects otherwise, be placed as soon as practicable on an applicable general service schedule. 5 For accounts with fewer than 12 months of historical usage data, where SCE determines that the usage incurred during the available months exceeds, or in SCE s opinion is likely to exceed, 30 percent of the total annual load, the accounts will become ineligible for service under Schedules AL-2 or LS-3 and will be placed on an applicable general service schedule. H. Schedule OL-1 and Schedule DWL There shall be no structural changes to Schedules OL-1 and DWL, but Paragraph J, below, describes a rate option to be added to Schedule OL-1. I. Schedule TC-1 Schedule TC-1 shall continue to consist of a monthly Customer Charge and a flat Energy Charge, as illustrated in Appendix B. SCE shall maintain the relationship between fixed and volumetric revenue recovery that was adopted by the Commission in the 2015 GRC Phase 2 Streetlight Settlement Agreement, as updated to account for differences in marginal costs between the GRCs, such that approximately 73 percent of revenue is recovered through volumetric charges and 27 percent through fixed charges. After this Agreement is first implemented, changes to Energy Charges and Customer Charges for Schedule TC-1 shall be 5 The 30 percent threshold provision will not apply to accounts with less than 35 kwh of annual load. Attachment A-11

29 implemented on a Functional SAPC basis whenever changes to SCE s authorized revenues are implemented in rates, using the then-current forecast number of service accounts, and the applicable kwh consumption per lamp. J. Distribution Pole-Mounted Rate Option Pursuant to an advice letter filing implementing the Commission s approval of this Agreement, SCE shall implement a rate option within Schedules LS-1 and OL-1 for distribution polemounted streetlights that will include lamp charges based on the difference between the netplant-in-service value of a standard configuration streetlight asset, and the net-plant-in-service value of a standard configuration streetlight asset that removes the pole cost entirely. This method is described in Exhibit SCE-04A. Accounts taking service on the distribution pole-mounted rate option will receive a credit offsetting the facilities charge equal to $4.29/lamp. This rate option will be offered to Transfer Entities. Non-transfer entities will also be eligible for this rate provided that they pay a tariffed fee of $1.58 per lamp to enable SCE to inventory SCE s streetlight facilities within the Streetlight Agency s jurisdiction to determine how many lamps are mounted on SCE s distribution poles. 1) Customer Outreach No later than the first quarter of 2019 provided that the Commission has adopted this Agreement by then, SCE shall begin outreach to eligible customers regarding the new distribution pole-mounted rate option. Specifically, SCE agrees to: Provide written notification to each LS-1/OL-1 streetlight customer about the new rate option and the process for enrolling to take elective service on the rate; Educate SCE account managers about the new rate option and how they can work with customers to get them served on the rate; Educate SCE s Local Public Affairs staff about the new rate option so they aware of it when they meet with local government customers; and, Attachment A-12

30 Discuss the rate option at the streetlight advisory panel meetings and in other meetings where SCE streetlight-related topics are discussed (e.g., council of governments or energy efficiency partnership meetings). 2) Customer Elections Customers must affirmatively elect to take service on this optional rate consistent with SCE s Tariff Rule 12. K. Dimmable Streetlight and Ancillary Device Rate SCE shall conduct an assessment to determine the feasibility of a dimmable streetlight rate schedule pursuant to which accounts might be billed based on metered electricity usage and for ancillary devices attached to streetlight poles separately metered by customer-owned streetlight control modules. SCE s feasibility assessment will include a determination of necessary equipment and infrastructure, and impacts to its billing system to accommodate this new rate. At its election and in its discretion, SCE may propose a new rate option in the 2021 GRC Phase 2 (or subsequent rate design proceeding) based on the results of the feasibility assessment, which proposal would include a potential deployment schedule for the equipment needed for the dimmable streetlight and ancillary devices as well as a timeframe to complete any necessary billing system changes. Any such proposal would also be subject to and conditioned upon Commission approval for any incremental funding required for the deployment of the new rate schedule(s). L. Assessment of Any Cost Savings for Customers Electing Service on Schedule LS-1, Option E Together With the Distribution Pole-Mounted Rate Option SCE shall conduct an assessment to determine whether there are any cost savings associated with customers who may elect to take service on both LS-1, Option E and the distribution polemounted rate option because both options require service work in the field. SCE will provide Attachment A-13