2018 General Rate Case

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1 Application No.: Exhibit No.: Witnesses: A.1-0- SCE-0 B. Anderson D. Bernaudo D. Kempf J. Lim L. Low S. Nagoshi D. Tunnicliff (U -E) 01 General Rate Case Customer Service Before the Public Utilities Commission of the State of California Rosemead, California September 1, 01

SUMMARY O&M This volume presents the Customer Service request of $1. million (constant 01 $) in operation and maintenance (O&M) expense for the 01 Test Year forecast. SCE s request is $.

million benefits) related to the proposed CS Re-Platform Project discussed in Exhibit SCE-0, Volume. SCE proposes a Test Year OOR forecast of $.1 million, a decrease of $.

2 SUMMARY O&M This volume presents the Customer Service request of $1. million (constant 01 $) in operation and maintenance (O&M) expense for the 01 Test Year forecast. SCE s request is $. million below 01 recorded adjusted O&M expense. Reflects $. million of reductions that offset more than the proposed program changes. Includes $. million ($. million expense and $1. million benefits) related to the proposed CS Re-Platform Project discussed in Exhibit SCE-0, Volume. SCE proposes a Test Year OOR forecast of $.1 million, a decrease of $.0 million from 01 recorded levels of $. million primarily due to a proposed reduction to SCE s Late Payment Charge and the Non-Residential Connection Charge, and lower Opt-Out fee volumes. Customer Service 01 O&M Expense Forecast (Constant 01 $ millions) Excludes Uncollectibles

CAPITAL SCE requests $1 million (Nominal $) for 01-00 capital expenditures for Customer Service meters, structures and improvements, and specialized equipment.

3 CAPITAL SCE requests $1 million (Nominal $) for capital expenditures for Customer Service meters, structures and improvements, and specialized equipment. Post TY Capital Expenditures are $0 million in 01 and $ million in 00 Customer Service s capitalized software expenditure forecast is $0.0 million (nominal $). $0.0 million for the CS Re-Platform project presented in SCE-0, Volume. $1. million for all other CS capitalized software projects requested in SCE-0, Volume. Customer Service Capital Expenditures (Nominal $ millions)

4 SCE-0: Customer Service Table Of Contents Section Page Witness I. SUMMARY OF TESTIMONY FOR CUSTOMER SERVICE...1 L. Low A. Electric Utility Operating Trends and Customer Service Strategy Current Industry Trends... a) Energy Industry Complexity... b) Increasing Customer Participation in the Grid... c) Growing Customer Expectations.... Customer Service Strategy... B. Operational Excellence/Productivity Historical Operational Excellence/Productivity Initiatives.... Future Operational Excellence/Productivity Initiatives... a) Approach for Identifying Cost Savings... b) Summary of Operational Excellence Savings by Division... (1) Customer Service Operations Division... () Business Customer Division... () Customer Programs and Services... C. Summary of Customer Service Operations and Forecasts Customer Service O&M Forecast.... Customer Service Capital Expenditure Forecast.... Customer Service Capitalized Software Forecast... i

5 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness. Customer Service Other Operating Revenue Forecast...1 D. Comparison of Authorized 01 to Recorded...1 E. Compliance Requirements...1 II. CUSTOMER SERVICE OPERATIONS DIVISION...1 L. Low III. METER SERVICES ORGANIZATION...1 D. Bernaudo A. MSO Overview...1 B. Meter Reading Operations [FERC Account 0] Description of Meter Reading Function and Base Year Operation Results...1 a) Automated Meter Reading...1 b) Manual Meter Reading...1 c) Real-Time Energy Meter Reading...1. Analysis of Recorded and Forecast O&M Expenses...0 a) Historical Variance Analysis...1 b) Comparison of 01 Authorized and Recorded O&M Expenses... c) Test Year Operation Expectations FERC Account 0... (1) Determination of Test Year Estimating Method... () Meter Reading Test Year Adjustments... () Meter Reading Forecast Summary.... Recovery of Edison SmartConnect Opt-Out Costs in the SmartConnect Opt-Out Balancing Account... a) Revenue from Opt-Out Fees... ii

6 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness b) Operating & Maintenance Expenses... c) Capital Expenditures... C. Test, Inspect, and Repair Meters [FERC Account.00] Description of the Test, Inspect, and Repair Meters Function and Base Year Operation Results...0 a) Sample and Routine Meter Tests...1 b) Request Tests... c) Installation Tests... d) Engineering and Meter Shop.... Analysis of Recorded and Forecast O&M Expenses... a) Historical Variance Analysis... b) Comparison of 01 Authorized and Recorded O&M Expenses... c) Test Year Forecast... (1) Determination of Test Year Estimating Method... () Test Year Adjustments... () Test, Inspect and Repair Meters Test Year Forecast Summary... D. Turn-On and Turn-Off Services [FERC.0] Description of Turn-On and Turn-Off Services Function and Base Year Operating Results.... Analysis of Recorded and Forecast O&M Expenses... a) Historical Variance Analysis... b) Comparison of 01 Authorized and Recorded O&M Expenses... iii

7 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness c) Test Year Operating Expectations FERC Account.0... (1) Determination of Test Year Estimating Method... () Test Year Adjustments... () Turn Off and Turn On Forecast Summary... E. Customer Installation and Energy Theft Expense [FERC Account ] Customer Installation and Energy Theft Function and Base Year Operating Results... a) Customer Installation... (1) Impact of ESC Meters on Customer Installation Activities... () Service Guarantee Missed Appointments... () Customer Installation Expense Operating Results...0 b) Energy Theft...0 (1) Meter Tamper Flag Program...1 () Unusual Usage Program...1 () Annual Survey Program... () Energy Theft Operating Results... c) Field Services Management and Supervision... (1) Field Services Management and Supervision - Operating Results.... Analysis of Recorded and Forecast O&M Expenses... a) Historical Variance Analysis... iv

8 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness b) Comparison of 01 Authorized and Recorded O&M Expenses... c) Test Year Forecast (FERC Account )... (1) Determination of Test Year Estimating Method... () Test Year Adjustments... () Customer Installation and Energy Theft Forecast Summary... F. Meter Services Operations and Management [FERC 0] Meter Services Operations and Management Support Function and Base Year Operating Results... a) Customer Service Safety... (1) Safety Field Operations...0 () Safety Support and Training...0 () Customer Service Safety Operating Results...0. Analysis of Recorded and Forecast O&M Expenses... a) Analysis of Historical Data... b) Comparison of 01 Authorized and Recorded O&M Expenses... c) Test Year Forecast (FERC Account 0)... (1) Determination of Test Year Estimating Method... () Test Year Adjustments... () Meter Services Operations and Management Support Forecast Summary... IV. REVENUE SERVICES ORGANIZATION... D. Kempf v

9 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness A. Revenue Services Organization Overview... B. Billing Services [FERC Account 0.00] Billing Services Functions and Base Year Operating Results... a) Energy Usage and Billing Process Oversight...0 (1) Billing Performance Measures...0 b) Billing Exception Processing...1 c) Program Services... d) Project Management... e) Policy Adjustments... f) Mailing Operations... g) Service Guarantees Timely and Accurate First Bill.... Analysis Recorded and Forecast O&M Expenses... a) Historic Variance Analysis for Billing Services... (1) Analysis of Billing Services Variance (Excluding Policy Adjustments)... () Analysis of Policy Adjustments Variance... b) Comparison of 01 Authorized and Recorded O&M Expenses... c) Billing Services Test Year Forecast... (1) Determination of Test Year Estimating Method... () Test Year Adjustments...0 vi

10 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness () Billing Services Forecast Summary... C. Credit and Payment Services [FERC Account 0.00] Credit and Payment Services Functions and Base Year Operating Results... a) Credit Services... b) Collection Activities... c) Payment Services...0 (1) Payment Posting...0 () Cost Per Payment...1 () Payment Posting Timeliness... () APA Network American Disability Act (ADA) Compliance... () Electronic Payment Options... () In-Person Services Rural Offices.... Analysis of Recorded and Forecast O&M Expense... a) Historic Variance Analysis for Credit and Payment Services... b) Comparison of 01 Authorized and Recorded O&M Expenses... c) Test Year Operating Expectations for Credit and Payment Services... (1) Determination of Test Year Estimating Method... () Test Year Adjustments... () Credit and Payment Services Forecast Summary... D. Postage [FERC Account 0.0]... vii

11 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness 1. Postage Function and Base Year Operating Results... a) Operating Results for Postage.... Analysis of Recorded and Forecast O&M Expense... a) Historic Variance Analysis for Postage... b) Comparison of 01 Authorized and Recorded O&M Expenses... a) Test Year Operating Expectations for Postage... (1) Determination of Test Year Estimating Method... () Test Year Adjustments for Postage... (1) Postage Forecast Summary...1 E. Uncollectible Expenses [FERC Account 0] Description of Uncollectible Expense.... Operating Results for Uncollectible Expense.... Historic Variance Analysis for Uncollectible Expense.... Test Year Operating Expectations for Uncollectible Expense... a) Uncollectible Forecast Summary... V. CUSTOMER CONTACT CENTER [FERC ACCOUNT 0.00]... S. Nagoshi A. Overview of the CCC... B. CCC Functions and Base Year Operating Results Inbound Call Handling.... Outbound Customer Communications.... echannel Services...1 viii

12 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness. Operations Support...1 C. Analysis of CCC Recorded and Forecast O&M Expenses Historical Variance Analysis...1. Comparison of 01 Authorized and Recorded O&M Expenses...1. CCC Test Year O&M Forecast...1 a) Determination of Test Year Estimated Method...1 b) Test Year Adjustments...1 (1) Customer Growth...1 () Program Changes...1 () Operational Excellence...1 c) Test Year Forecast Summary...1 VI. CSOD CAPITAL...1 D. Bernaudo A. Meter Capital Meter and Meter Related Work...1 a) Growth and Replacement Meter Installation Capital (Residential, Commercial, Industrial and Agricultural)...1 (1) Growth Meters...1 () Replacement Meters...1 b) Opt-Out (Legacy) Meter Capital...1 c) Real Time Energy Meters (RTEM) Maintenance...1 d) Meter-Related Projects...1 ix

13 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness (1) Cell Relay Communication and Maintenance...1 () Cell Relay Replacement...1 () PCAN Meter Replacement...1. Historical and Forecast Meter Volumes...1. Historical Expenditures.... Forecast Requirements... B. Specialized Equipment (CCS-00-SE-CO-MS-00001, CCS- 00-SE-CO-MS-0000) Project Description.... Specialized Equipment Scope and Cost Forecast...1 a) Hand-Held Meter Diagnostic Devices...1 b) Tool Kits...1 C. Structures and Improvements Meter Shop/Training Room Upgrade...1 D. Comparison of 01 Authorized and Recorded CSOD Capital Expenses...1 VII. BUSINESS CUSTOMER DIVISION [FERC ACCOUNT 0.00]...1 D. Tunnicliff A. Overview of Business Customer Division (BCD)...1 B. Account Management Services Account Management Services Resource Assignment...1. Account Management Services Activities...1 a) Rate Analysis Information and Education...1 b) Billing and Metering Inquiries...1 x

14 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness c) Credit Issue Information...1 d) Power Quality Information...1 e) Energy Advisor...1 f) Demand Response Information...1 g) Outage Communications... h) Economic Development Services... C. Technical Services Rate Analysis & Data Solutions...1. Engineering and Design Solutions...1. Education and Communications...1. Customer Choice Services...1 a) Description of Customer Choice Services...1 b) Electric Service Provider and Direct Access Activities...1 c) Community Choice Aggregation Activities...1. Customer Requests for Assistance with Distributed Generation Projects...1. Customer Relationship Management System...1. Street Lighting Solutions...1 a) Street Light Sales to Customers...1 b) AB 1 and SCE s Street Light Upgrade... D. Energy Education Centers... E. Analysis of BCD Recorded and Forecast O&M Expenses Analysis of Recorded BCD O&M Expenses...1 xi

15 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness. Comparison of 01 Authorized and Recorded O&M Expenses...1. BCD Test Year Forecast...1 a) Determination of Test Year Estimating Method...1 b) Test Year Adjustments...1 (1) Customer Growth...1 () Program Changes...1 () CS Re-Platform Benefits...1 () Operational Excellence...1 c) Test Year Forecast Summary... VIII. BUSINESS CUSTOMER DIVISION CAPITAL... D. Tunnicliff A. Structures and Improvements Energy Education Centers (CCS-00-SI-BC-CT and CCS-00-SI-BC-AT-00001)... B. Specialized Equipment (CCS-00-SE-BC-PT and CCS-00-SE-BC-TS-00001)...1 C. Comparison of 01 Authorized and Recorded BCD Capital Expenses...1 IX. CUSTOMER PROGRAMS AND SERVICES DIVISION [FERC ACCOUNT 0.00]...1 A. Overview of CP&S...1 B. Consumer Affairs and Customer Satisfaction Consumer Affairs...1 a) Escalated Customer Inquiry and Complaint Handling...1 b) Outreach Programs.... Customer Satisfaction...1 J. Lim xii

16 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness C. Marketing, Communications, and the Digital Customer Experience Marketing and Communications...1 a) Comprehensive Annual Summer Conservation Campaign...1 b) Self Service and Paperless Billing...1 c) Informing Electric Vehicle Consumers of Charging and Rate Options...1 d) Rate Communications...1. Digital Customer Experience...1 a) Optimized, Maintained, and Delivered Web Accessible and In-Language Services... b) Increased Digital Notifications to Support Self-Service Transactions and Engagement... c) Mobile-Optimization for Self-Service... D. Customer Program Management...1 B. Anderson 1. Energy Information and Management Programs...1 a) My Account Web Presentment of Cost and Interval Usage Data...1 b) Budget Assistant...1 c) SCE EnergyManager...1. Dynamic Pricing Programs...1 a) Time-of-Use (TOU) Rates...1 b) Critical Peak Pricing (CPP)...1 c) Real Time Pricing (RTP)...1. Customer Service Information Governance...1 xiii

17 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness. Renewable Tariffs and Interconnection Programs...1. Distributed Energy Resource Contract Management New Product Opportunities...01 E. Analysis of CP&S Recorded and Forecast O&M Expenses...01 J. Lim 1. Analysis of Recorded CP&S Expenses...0. Comparison of 01 Authorized and Recorded O&M Expenses...0. CP&S Test Year Forecast...0 a) Determination of Test Year Estimating Method...0 b) CP&S Test Year Adjustments...0 B. Anderson... J. Lim (1) Program Changes...0 () CS Re-Platform Benefits...1 () Operational Excellence...1 c) Test Year Forecast Summary...1 X. OPERATING UNIT MANAGEMENT AND SUPPORT (OUMS)...1 L. Low A. Description of OUMS and Base Year Operating Results...1 B. Analysis of OUMS Recorded and Forecast O&M Expenses Historical Variance Analysis...1 a) FERC Account b) FERC Account Comparison of Authorized 01 to Recorded...1. OUMS Test Year Forecast...1 a) Determination of the Test Year Estimating Method...1 xiv

18 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness b) Test Year Adjustment...1 XI. OTHER OPERATING REVENUES (OOR)... D. Kempf A. Introduction... B. Forecast Method for OOR...1 C. Residential Service Charges FERC Account 0. Residential Late Payment Charge (LPC)...1. FERC Account 1.00 Residential Service Connection Charge...1. FERC Account 1.0 Opt-Out Program Fee...1 D. Non-Residential Service Charges FERC Account 0.0 Non-Residential Late Payment Charge...1. FERC Account 1. Non-Residential Service Connection Charge... E. Other Service Charges FERC Account 1.1 Returned Check Charge.... FERC Account 1.0 At-Pole Service Connection Charge... F. Direct Access (DA) Service Fees FERC Account.01 Direct Access (DA) Service Fees...1 a) DA Service Fees Estimation Method...1 (1) Direct Access Service Fees No Proposed Changes... () Direct Access Service Fees Proposed Fee Changes... xv

19 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness () Direct Access Service Fees Proposed New Fees... () Direct Access Service Fees Eliminated... () Direct Access Service Fees - Consolidated into Other Fees.... Direct Access Service Fees Forecast OOR... G. Community Choice Aggregation (CCA) Service Fees...0 D. Tunnicliff 1. FERC Account.1 Community Choice Aggregation (CCA) Service Fees...1 a) CCA Service Fees Estimation Method...1 (1) CCA Service Fees No Proposed Changes... () CCA Service Fees Proposed Fee Changes... () CCA Service Fees Proposed New Fees... () CCA Service Fees Eliminated... () CCA Service Fees - Consolidated into Other Fees...0. CCA Service Fees Forecast OOR...1 H. Other - Miscellaneous OOR Accounts... D. Kempf 1. FERC Account.1 Manufactured Home Billing Service.... FERC Account. Optimal Billing Period... xvi

20 SCE-0: Customer Service Table Of Contents (Continued) Section Page Witness. FERC Account 1.0 Misc. Revenues- Recovered for Unauthorized Use / Non-Energy.... FERC Account. Energy Related Services...0 D. Tunnicliff. FERC Account. SCE EnergyManager... xvii

21 I. SUMMARY OF TESTIMONY FOR CUSTOMER SERVICE SCE s Customer Service organization has primary responsibility for interacting with SCE s customers, including educating customers about how their energy usage impacts their bill, billing customers in an accurate and timely manner, responding to customer requests for service, and addressing customer questions and concerns. In 01, SCE provided customer care to. million customers with over million service accounts. SCE s customers range from individual residential customers to some of the largest commercial, industrial, agricultural, and public sector organizations in California. SCE focuses on providing customer service in a safe, effective, and affordable manner. While meeting customers needs and expectations for customer service, Customer Service also focuses on achieving state and federal energy policy goals that rely on customer participation. SCE s Customer Service organization contains three divisions: Customer Service Operations Division (CSOD), Business Customer Division (BCD), and Customer Programs & Services (CP&S). This exhibit consists of eleven chapters. The first chapter of this exhibit summarizes the Customer Service 01 GRC Operations and Maintenance (O&M), capital, and Other Operating Revenue (OOR) forecasts. In addition, this chapter describes the Customer Service strategy, summarizes the Customer Service Operational Excellence initiatives, and identifies Customer Service s compliance with specific regulatory decisions relating to this GRC. Chapters II through X describe the activities performed by each Customer Service division and set forth the O&M Test Year forecast, as well as the forecasts of capital expenditures necessary to provide customer care. Chapter XI describes the Customer Service OOR activities and sets forth the forecast OOR for A. Electric Utility Operating Trends and Customer Service Strategy The activity descriptions and forecasts presented in this exhibit reflect SCE s customer service strategy. This strategy is informed by the current environment in which SCE operates, including increased complexity in the energy utility industry, increased customer participation in energy solutions, and rapidly changing customer expectations for service. This section describes the current utility 1 In addition to the capital forecasts included in this volume, capitalized software projects that support the Customer Service organization are described in SCE-0, Volumes and. Please see Mr. Payne s testimony in SCE-01. 1

22 industry trends that will affect the customer service operating environment for the 01 GRC period and Customer Service s strategy to address customers, the Commission s, and other stakeholders objectives. 1. Current Industry Trends The electric utility industry continues to evolve with more complex options for customer participation in energy solutions. As more choices become available for customers to participate in energy generation and storage, Customer Service must modernize its capabilities and systems to meet the changing needs of our customers. This section describes the current industry trends that drive SCE s customer service strategy for the 01 GRC period. a) Energy Industry Complexity The energy industry is constantly evolving due to changes in public policy that rely on increasing customer participation in new energy choices and solutions. For example, Senate Bill (SB) 0, which was signed into law in 01, doubles energy efficiency goals for California by 00. Achieving this public policy goal will require customer participation to adopt and implement the right mix of energy solutions. Other changes that add to the complex nature of the energy industry include: increased adoption of customer-owned solar, technology advancements in energy storage, increased use of Demand-Side Management programs, implementation of widespread residential time-of-use rates, adoption of in-home technologies and controls such as programmable thermostats, and Community Choice Aggregation (CCA). Because of these industry changes, SCE must adapt its customer programs, services, and customer care systems to meet the demands and expectations of customers in the rapidly changing energy industry. b) Increasing Customer Participation in the Grid As the electric industry evolves, SCE expects customer participation in the grid through distributed generation, energy efficiency, demand response, and energy storage to increase at a Clean Energy and Pollution Reduction Act of 01, Stats. 01 ch. (SB 0, de León), effective January 1, 01. Information regarding SB 0 is available at [as of August 1, 01]. See Customer Contact Center testimony, Chapter V, below, and at SCE-0, Vol., Digital Customer Self-Service capitalized software project testimony.

23 rapid pace. For example, the number of Net Energy Metering (NEM) applications SCE received has grown by an average by 0 percent per year since 0. SCE expects this trend to continue. As such, SCE must be able to support this growing customer demand by having the appropriate customer programs and customer care systems in place to provide timely and accurate program information, enable simple, efficient ways for customers to enroll in programs and rates, and participate in the grid and energy solutions that make sense for the customer. c) Growing Customer Expectations Customers today seek efficient and simple ways to do business and interact with companies, including energy utilities. In the 01 and 01 GRCs, SCE has implemented self-service options that are easy to access, intuitive to use, and available hours a day, as well as options to get help when needed from knowledgeable energy advisors. SCE has deployed self-service options through its website, SCE.com, as well as its interactive voice response unit. Many of our customers use SCE.com and its MyAccount capabilities to turn service on and off, receive and pay their electric bill, and better manage their energy usage with near real-time metering information. SCE also offers a wide array of energy conservation and management information and programs through its website. However, given the expectations for increased customer participation in energy solutions and the growing customer expectations for simple ways to interact with energy utility companies, SCE needs to make sure that the appropriate customer care processes and systems are in place during the 01 GRC.. Customer Service Strategy SCE developed its current customer service strategy in response to the observed trends in the energy utility environment as described in the previous section. In SCE s 01 GRC, Customer Service s customer service model included three key components for engaging customers: (1) energy solutions, () intelligent delivery and energy advisory services, and () effective and enabling customer interactions. This model was adopted by the Commission in D and now forms the foundation for SCE s 01 GRC customer service strategy that is focused on: (1) simplifying the customer experience, () advancing operational and service excellence, and () facilitating customer participation in the grid of the future. See Sections IX.D. and IX.E..b)(1)(c), below, for more information regarding the NEM activities funded in this GRC.

24 SCE s customer service strategy is centered around the goals of: (1) providing customers with efficient self-service transactions, () improving outage management and communications, () streamlining customer programs and services, and () increasing customer products and services awareness using more efficient customer service delivery channels. This strategy is expected to deliver operational and cost efficiencies for SCE, while also improving customer satisfaction by providing simple and efficient customer experiences. To achieve these goals, Customer Service plans to implement a number of process improvements across the organization. For example, to improve outage communications, SCE is investing in capitalized software that will allow customers to select their preferred channel of communication (phone, text, ), with customers preferred notification types. In addition, SCE is expanding its customer contact options to enable digital, mobile, and interactive voice response service to handle routine transactions. Importantly, SCE is investing in a new Customer Service technology platform that will replace SCE s current aging and obsolete customer service technology portfolio. These types of programs, customer care processes, systems improvements, and the associated cost savings are described in detail in the chapters that follow in this exhibit. The new Customer Service technology platform is fundamental to achieving the customer service strategy as described in Exhibit SCE-, Volume. B. Operational Excellence/Productivity For the 01 GRC cycle, Customer Service will focus on its core functions to improve cost efficiency and customer satisfaction. This will prioritize Customer Service operational efforts and allow the Customer Service organization to focus on the fundamentals so that it easier for customers to do business with SCE. 1. Historical Operational Excellence/Productivity Initiatives Customer Service has implemented ways to streamline and improve efficiencies to reduce costs and improve effectiveness of our services. Examples include the Commission-approved Edison SmartConnect (ESC) program and self-service initiatives, such as Customer Contact Center efforts to increase adoption of its Interactive Voice Response (thus avoiding the more costly Customer The Alerts & Notifications project is presented in testimony in Exhibit SCE-0, Vol..

25 Service Representative-handled calls), and Ebilling (thus reducing postage expenses). Our efforts have reduced overall O&M expenses from $. million in 0 to $0. million in 01, as shown in Figure I-.. Future Operational Excellence/Productivity Initiatives Customer Service has several Operational Excellence initiatives that are either underway now or will be implemented by 01 Test Year. The benefits totaling $. million are summarized in Table I-1 below. This table lists the estimated Test Year O&M expense savings associated with each proposed initiative and references the proposed Operational Excellence initiatives related descriptions in testimony. Refer to WP SCE-0 Ch. I-VI, pp. 1- for additional details regarding Customer Service Operational Excellence initiatives.

26 Line No. Table I-1 Future Productivity Initiatives Impact to 01 Test Year (Constant 01 $000) Area Estimated Cost Savings Text Reference FERC Account 1 Customer Contact Center & Phone Bills 0.00 CCC & Phone Bills Support ($1,) CH. V IVR Containment ($,0) CH. V Service Level Optimization ($1) CH. V Sourcing ($1,00) CH. V Customer Communication Center & Phone Bills Subtotal ($,) Meter Services Organization 0 MSO Support ($1,) CH. III Meter Services Organization Subtotal ($1,) Postage 0.0 Migration of Paper Bill to Online Billing ($,) CH. IV - D 1 Postage Subtotal ($,) 1 Billing Ebilling ($1,) CH. IV - B 1 Outsourcing ($1,) CH. IV - B 1 Billing Support ($1,) CH. IV - B 1 Billing Subtotal ($,1) 1 Credit and Payment Services Outsourcing ($0) CH. IV - C 0 Credit and Payment Support ($1) CH. IV - C 1 Credit and Payment Services Subtotal ($1) Customer Service Operations Division Subtotal ($1,) Business Customer Division 0.00 Public Roles Rest ($,00) CH. VII Business Customer Division Subtotal ($,00) Customer Programs & Services 0.00 Program Optimization ($,) CH. VIII Customer Programs & Services Subtotal ($,) Total ($,)

27 a) Approach for Identifying Cost Savings SCE s Operational Excellence and Productivity Initiatives focus on improving cost efficiency and customer satisfaction. To develop the various Customer Service-related initiatives, SCE focused its Operational Excellence efforts to drive customer interactions to lower-cost channels, optimize core customer service functions, and avoid complexity in customer offerings. SCE expects these initiatives to improve customer satisfaction by consistently delivering on customer expectations, creating simple customer experiences, and improving the execution of core customer service functions. The main initiatives in each Customer Service division are described below. b) Summary of Operational Excellence Savings by Division (1) Customer Service Operations Division SCE expects CSOD productivity initiatives to save more than $1. million from Major productivity initiatives include enhancing self-service options for customers and increasing enrollments in online billing and payment. These initiatives will support overall reduction in labor, billing, and postage costs. CSOD expects to further reduce overall labor costs by increasing the percentage of live-agent call sourcing and increasing partnership efforts with existing vendors. These productivity initiatives are described in Chapters III, IV, and V of this exhibit. () Business Customer Division SCE expects BCD productivity initiatives to save $. million from BCD will achieve the majority of the cost savings by reassigning account-management resources and increasing self-service options for large customers. These initiatives are described in Chapter VII of this exhibit. () Customer Programs and Services SCE expects CP&S productivity initiatives to save nearly $. million from CP&S will achieve the majority of the cost savings by utilizing lower-cost marketing channels and reducing labor costs. These initiatives are described in Chapter IX of this exhibit. C. Summary of Customer Service Operations and Forecasts This section summarizes the Customer Service forecasts for O&M, capital expenditures, capitalized software expenditures, and the OOR for the 01 GRC period.

28 Customer Service O&M Forecast Customer Service forecasts a total 01 Test Year O&M funding level of $1. million, $. million less than the Base Year recorded costs. This forecast includes $. million of Operational Excellence reductions described in the previous section that offset more than the proposed program changes and the O&M impact of the CS Re-Platform program. Figure I-1 below provides a summary by FERC Account type and activity group: customer growth, program changes, CS Re-Platform O&M expenses and benefits, and Operational Excellence. The Customer Service Test Year request also includes an O&M net increase of $. million ($. million in expenses and $1. million in benefits) related to the planned implementation of a CS Re-Platform project that replaces the obsolete Customer Service System (CSS). The CS Re-Platform project is described in detail in SCE-0, Volume, and other Information Technology (IT)-related implementation costs as a result of CS Re-Platform are described in SCE-0, Volume 1. Descriptions of the individual Customer Service FERC account forecasts are described in detail within this exhibit.

29 Figure I-1 Customer Service Summary of 01 Test Year O&M Expense Forecast (Constant 01 $ Millions) $0 $ $ $ ($) ($) $00 01 Recorded Customer Growth Program Changes CS Re-platform CS Re-platform Benefits Operational Excellence 01 Forecast Line No. Functional Area 01 Recorded Customer Growth Program Changes CS Replatform CS Replatform Benefits Operation Excellence 01 Forecast 1 Distribution Acconts FERC 0,, $. $0. -$0. $0.00 ($0.) ($1.1) $.1 Customer Accounts FERC 01, 0, 0, 0 $1. $. $.0 $. ($0.0) ($1.) $1. CS&I Accounts FERC 0, 0 $. $0.0 $1.0 $0.00 ($0.) ($.0) $1.0 Total $0. $.1 $. $. ($1.) ($.) $1. 1 Figure I- below provides Customer Service s five-year recorded O&M expense history and the O&M forecast including the 01 Test Year.

30 Figure I- Customer Service Summary of O&M Test Year Forecast (Excluding Uncollectibles) (Constant 01 $000) $00,000 $0,000 $00,000 $,000 $0,000 $0,000 $ Labor Non-labor Other Expense Recorded/Adjusted Forecast Category Labor 1,1 1, 1,0 1, 1,1 1,00 Non-labor,00,1,0,,0, Other Total,,, 1, 0,1 1, 1. Customer Service Capital Expenditure Forecast Customer Service forecasts the general capital expenditures necessary to deliver customer service. Chapter VI of this exhibit provides the forecast for meters, specialized equipment, structures, and improvements. Chapter VII of this exhibit provides the forecast for BCD specialized equipment, structures, and improvements. Table I- summarizes the Customer Service capital expenditure forecast for

31 Table I- Customer Service General Capital Forecast (Nominal $ Millions) 1. Customer Service Capitalized Software Forecast The testimony and forecast for Customer Service capitalized software projects are discussed in Exhibit SCE-0, Volumes and. The summary of Customer Service s capitalized software expenditure forecast of $0.0 million for is provided below in Table I-. Line Forecast Plant Class No Meters $1.0 $. $. $. $. Structures and Improvements $1. $1. $.0 $1.1 $1. Specialized Equipment $0.1 $0. $0. $0. $0. Total $. $.0 $. $0.0 $. Table I- Customer Service Capitalized Software Projects Forecast (Nominal $ Millions) Line No Description Total 1 CS Re-platform - $.0 $1. $. $.0 $0.0 Digital Customer Self-Service $. $.0 $.00 $.0 $1.0 $1.0 Alerts and Notifications $0. $.0 $.0 $0.0 - $. MDMS Stabilization (Oracle Exdata Upgrade) $1.0 $ $. SCE.Com Strategic Upgrade/Stabilization $ $.1 CS Capitalized Software Projects <$.0 $1. $1.00 $.0 $ $.00 Total $1. $.0 $.0 $0.0 $.0 $0.0 The most significant Customer Service capitalized software project for this GRC period is the CS Re-Platform project, with forecast expenditures of $0.0 million. This project is needed to replace SCE s obsolete customer service technology portfolio. That portfolio includes the current CSS

32 mainframe billing system, which was constructed in the late s using now-obsolete technology. The CS Re-Platform project will utilize the SAP Customer Relationship & Billing (CR&B) module on a platform that is flexible and scalable. SCE expects the CS Re-Platform project to create a stable technology environment, lower operating costs, improve our ability to support customer service capabilities, and meet future needs in a cost-efficient manner. The details and forecast information for this capitalized software project are provided in Exhibit SCE-0, Volume. Other key Customer Service capitalized software projects include: (1) Digital Customer Self-Service Project, which will increase customer self-service options by enhancing the digital experience by integrating SCE.com with our CRM system, making upgrades to our Interactive Voice Response (IVR) system, developing our Customer Data Warehouse, and enhancing our Outage Communications System; () Alerts and Notifications Project, which will enable system capabilities to provide customers with the ability to manage their contact information and alert preferences through self-service, and enable SCE representatives to enroll customers into alert programs of their choice; and () Meter Data Management System (MDMS) Upgrade Project, which will refresh the software utilized for managing the billing data for over five million customers. Because SCE s customer engagement model relies significantly on system enhancements, we require capitalized software investments to implement our strategy. These investments will enable us to modernize our customer service practices and procedures to match customers expectations for customer service. The details and forecast information for these capitalized software projects are provided in Exhibit SCE-0, Volume.. Customer Service Other Operating Revenue Forecast For the 01 Test Year, SCE proposes updated service fees to reflect our current cost of providing services that are recovered through OOR. Overall, the Test Year forecast OOR of $.1 Systems, Applications and Products (SAP) Enterprise Resource Planning and data management software. SAP s CR&B module is an industry-specific solution for the utility industry that has numerous components such as device management, customer service, billing and invoicing, and accounts receivable management. See, e.g., SAP IS-U Online Training overview, Success Soft Solutions, available at [as of August 1, 01]. 1

33 million is decreasing by $.0 million from 01 recorded levels of $. million mainly because SCE proposes to reduce the Late Payment Charge and the Non-Residential Connection Charge, and estimates lower Opt-Out fee volumes. The reduced costs to perform many of these services support SCE s proposed reductions to both our residential and non-residential service fees. The Customer Service OOR, service charges, and fees are contained in Chapter XI of this exhibit. Table I- Customer Service OOR By Service Charge or Fee 01 Recorded and 01 Forecast (Nominal $000) Line FERC Account Name No. Account Recorded Proposed Difference Late Payment Charge Non-Residential $, $, $ (1) 0. Late Payment Charge Residential $,0 $, $ (1,) 1.1 Returned Check Charge $ 1, $ 1, $ () 1.00 Connection Charge Residential $, $,01 $ 1. Connection Charge Non-Residential $,1 $,0 $ (1,) 1.0 Connection Charge At Pole $ 1 $ $ Misc. Revenue Recovery Unauthorized Use Non-Energy $ $ $ Opt-Out CARE Initial $ $ $ (1) 1.0 Opt-Out NON-CARE Initial $ $ 1 $ () 1.0 Opt-Out CARE Monthly $ $ $ (1) 1.0 Opt-Out NON-CARE Monthly $ 1, $ $ (1,) 1.01 Direct Access Services $ $ 1 $ (1) 1. Service Fee Optimal Billing Period $ 0 $ 0 $ Community Choice Aggregation $ 0 $ 1, $ 1, 1.1 Manufactured Home Billing Service $ $ $ - 1. SCE EnergyManager $ 1 $ 1 $ (1) 1. Energy Related Services (ERS) $ 1 $ 1 $ - 1 TOTAL CS OOR $, $,1 $ (,0) 1

34 D. Comparison of Authorized 01 to Recorded SCE s 01 GRC Decision (D.1--01) requires SCE to provide the 01 requested, authorized, and recorded amounts for O&M and capital. For Customer Service, this information is summarized in Figure I- (O&M expenses) and Figure I- (capital expenditures). Additional detail is provided for each FERC Account in the Analysis of Recorded and Forecast O&M Expense section as well as the CSOD and BCD capital sections of testimony. Figure I- 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded for Customer Service (01 $000) $00 $ $00 ($. ) $ $0 $0 $0 01 Request 01 Authorized Variance 01 Recorded See D.1--01, Ordering Paragraph (OP). 1

35 Figure I- 01 GRC Requested and Authorized Capital Expenditures Compared to 01 Recorded for Customer Service (Nominal $ millions),000 0,000 $0,,000 0,000 $1, 1,000 ($,) ($) ($1,001) $1,0,000, Request 01 Authorized Meters Variance Specialized Equipment Variance Structures & Improvements Variance Meters Specialized Equipment Structures and Improvements 01 Recorded 1 E. Compliance Requirements Customer Service is required to comply with the following regulatory decisions related to the GRC proceeding: In D.1--01, SCE was directed to provide a comparison of the Commission-authorized 01 O&M expense and capital expenditures to SCE s recorded 01 O&M and capital expenditures. As such, this information is provided for each FERC activity and major capital category within Chapters III-X. D approved the Joint Motion of SCE and the City of Lancaster for Adoption of Settlement Agreement, wherein SCE agreed to perform a comprehensive update of all the D.1--01, OP. 1

36 CCA Service Fees in the 01 GRC. For testimony regarding the comprehensive review and update of the CCA Service Fees, please see Chapter XI of this exhibit. D.1-1-0, in the SmartConnect Opt-Out proceeding, authorized the continued use of the Opt-Out interim fees and restricted the collection of the service fee to the first three years from the date the customer opts out of the smart meter. It also required SCE to open a Balancing Account to track the cost of providing the Opt-Out option to SCE residential customers. For testimony regarding the Opt-Out Service fees and forecast, please see Chapter XI and for the Opt-Out Balancing Account see Chapter IV of this exhibit. D adopted a two-tier structure with a Tier to Tier 1 ratio of 1. to 1.0, and a high usage surcharge, the Super User Electric Surcharge, for extreme usage defined as above 00 percent of baseline. In compliance with D , SCE filed Advice Letter 1-E on July, 01, to establish the Residential Rate Implementation Memorandum Account (RRIMA) to track its verifiable incremental costs associated with: (1) TOU pilots, () TOU studies, including hiring a consultant or consultants to assist in developing study parameters, () marketing, education, and outreach costs associated with the rate changes approved in this decision, and () other reasonable expenditures necessary to implement D Under D , the entries in the RRIMA must be reviewed in SCE s next GRC (i.e., its 01 GRC) with the burden on SCE to show the expenditures were incremental, verifiable, and reasonable. Costs recorded in the RRIMA for the period October 1, 01, through June 01, and proposed modifications to RRIMA are addressed in SCE-0, Vol. 1, Chapter IV. 1

37 II. CUSTOMER SERVICE OPERATIONS DIVISION CSOD includes the Meter Services Organization (MSO), Revenue Services Organization (RSO), and Customer Contact Center (CCC) and records costs to FERC Accounts 0 through 0, and portions of various Distribution FERC Accounts in the 0 series. These CSOD functions and their Test Year forecasts are described in Chapters III-VI. The primary functions of CSOD include: Meter Services Organization: MSO is responsible for the metering system and all meterrelated activities including meter reading, meter testing, meter installation and removal, ESC meter communication and operations, and field-related customer services. MSO is described in Chapter III. Revenue Services Organization: RSO is responsible for all billing, payment, credit, collection activities, and various other programs. RSO is described in Chapter IV. Customer Contact Center: The CCC handles all inbound and outbound telephone communications, communication through other channels, and operations support. The CCC is described in Chapter V. CSOD Capital: Capital requirements for CSOD include meter capital, specialized equipment, and structures and improvements necessary to support MSO operations. CSOD capital is described in Chapter VI. 1

38 III. METER SERVICES ORGANIZATION This chapter describes SCE s MSO, its Base Year activities, and its Test Year O&M expense forecast. A. MSO Overview MSO includes Meter Reading/Data Collection, Over-the-Air Operations (OTAO), Electrical Metering Services, Engineering and Meter Shop, Field Services, and Operations and Management. These groups are described in the sections that follow. MSO O&M expenses are recorded to five FERC Accounts: 0,.00,.0,, and 0. In 01, SCE completed the deployment of its Advanced Metering Infrastructure project (ESC), which included the installation of. million smart meters and supporting infrastructure in households and business with demands less than 00 kw. 1 As a result, SCE now reads over percent of its meters automatically. The impact of the deployment of ESC on MSO operations, described in detail in the sections below, was significant and widespread. For example, the deployment of ESC virtually eliminated the need to manually read nearly five million meters each month, reducing meter-reading costs (recorded in FERC Account 0) from over $ million in 0 to just over $ million in 01. Completing the deployment of ESC also impacts the analysis of historical MSO operations in this GRC. Specifically, though SCE presents historical O&M expenses for the period 0-01 as required, the 0-01 data reflects MSO operations during the deployment of the ESC and is not representative of current or future operations. In addition, though deployment of ESC was essentially completed in 01, MSO took a number of actions in 01 and 01 to stabilize the ESC system and address the hard-to-complete meters. As a result, O&M expenses in 01 and 01 in some of the MSO activities described below do not reflect on-going, steady-state operations. B. Meter Reading Operations [FERC Account 0] The Meter Reading/Data Collection function collects and records meter-usage data needed to bill customers and enable their participation in energy management programs and services. SCE reads over million meters throughout its 0,000-square-mile service territory, mostly over-the-air using the ESC 1 At the end of the ESC deployment there were a number of meters that were not replaced due to their geographic location, site-specific meter location, or communication network issues. These hard-to-complete meters, sometimes referred to as meters left behind require additional effort to install. 1

39 system. SCE has historically maintained high performance with timely and accurate meter reading, and the over-the-air functionality of the ESC system will only enable further improvement. 1. Description of Meter Reading Function and Base Year Operation Results The meter services group manages the following activities: (1) Automated Meter Reading, () Manual Meter Reading, and () Real-Time Energy Metering. At the end of 01, over percent of SCE s meters were being read automatically by the ESC system and Real-Time Energy Meters. Each of these functions are discussed in more detail below. a) Automated Meter Reading OTAO manages SCE s Advanced Meter and Communication System and satellite communication devices. OTAO analyzes meter and communication data to identify failed devices, issue repair orders, optimize communication performance, update firmware, and mitigate system problems. OTAO performs this activity to verify that complete and accurate customer billing, as well as meter event and performance data, is received and processed seven days a week. b) Manual Meter Reading At the end of 01, SCE was manually reading approximately,000 meters. Approximately,000 of those meters are located in areas or within facilities where connectivity to the ESC communications systems is difficult or impractical. The remaining,000 of those meters are legacy electromechanical meters for customers that elected service under SCE s SmartConnect Opt-Out tariff (Schedule ESC-OO). These manually-read meters are spread over SCE s 0,000-square-mile service area, requiring considerable drive time between meters to obtain bi-monthly meter reads. Field Service Representatives (FSRs) now perform manual meter reading and data collection, because SCE eliminated the meter-reader position with the deployment of the ESC system. Where feasible, MSO continues to use established meter-reading routes, to allow as many meters as possible to be aggregated into daily routes to maximize efficiency. c) Real-Time Energy Meter Reading SCE currently has approximately 1,00 Real-Time Energy Meters (RTEM) deployed on its system for its large commercial and industrial accounts. Fifteen-minute interval-usage data is automatically collected and stored on a daily basis, and day-after usage data is provided to these customers through the internet. Unlike ESC meters, which process data through MDMS, RTEM- 1

40 metered usage data is processed daily through SCE s Customer Data Acquisition System (CDAS), which applies data validations and routes usage data to the billing system to prepare monthly bills.. Analysis of Recorded and Forecast O&M Expenses Meter Reading O&M expenses are recorded in FERC Account 0. This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for Meter Reading are shown in Figure III- and discussed below. 1 1 Refer to WP SCE-0 Ch. I-VI, pp. - for the recorded and forecast O&M expenses for FERC Account 0. 0

Figure III- Meter Reading Recorded 0-01 / Forecast 01-01 FERC Account 0 (Constant 01 $000) 1 a) Historical Variance Analysis As shown in Figure III-, labor expenses declined by $1.

41 Figure III- Meter Reading Recorded 0-01 / Forecast FERC Account 0 (Constant 01 $000) 1 a) Historical Variance Analysis As shown in Figure III-, labor expenses declined by $1. million from 0 to 01 as ESC automated meter-reading operations increased from percent in 0 to an average of. percent by the end of 01. In 01, SCE recorded a $1 million reduction in labor costs manual meter-reading expenses associated with the deployment of ESC meters. In 01, labor costs increased by approximately $00,000 due to not yet fully realizing all of the ESC benefits including manual meter reading expenses associated with completing ESC meter placement in remote geographic areas and hard-to-complete meters throughout SCE s service territory. Non-labor costs also increased by approximately $.0 million in 01 as full integration of the OTAO reading operations required additional professional services to stabilize the ESC network and operational costs increased due to additional cellular carrier costs from increased airtime. From 01 to 01, labor costs declined as fewer 1

42 1 manual meter reads were performed, and non-labor contractor costs decreased as the ESC communications system stabilized. In addition, in 01 SCE centralized MSO support groups resulting in shift of approximately $00,000 from FERC Account 0 to FERC Account 0. b) Comparison of 01 Authorized and Recorded O&M Expenses Figure III- compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account 0 in compliance with D As shown in Figure III-, SCE s recorded expenses for 01 in FERC Account 0 were less than the authorized amount by $. million. This variance is primarily due to SCE conducting fewer manual meter reads than originally projected. This was accomplished through improvements to the communications system, which reduced the number of non-communicating ESC meters. In addition, SCE did not increase staffing levels in the ESC Operations Center (SOC) as originally planned for 01 because of continuous Operational Excellence initiatives.

43 Figure III- 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account 0 (01 $ 000) $0,000 $1,000 $1, $1,0 $1,000 $1,000 $1,000 $,000 $,1 $, $,000 $,000 $,000 $,000 $0 01 Request 01 Authorized Variance 01 Recorded 1 c) Test Year Operation Expectations FERC Account 0 Figure III- shows the recorded adjusted historical and forecast expenses for the Meter Reading/Data Collection function. Details regarding the forecast O&M expenses for this function are described below and summarized in Figure III-. (1) Determination of Test Year Estimating Method As noted in Section III.A, SCE was completing the deployment of ESC in 0 and 01. As a result, the recorded adjusted costs in those years do not reflect current Meter Reading Operations and should be excluded from the analysis to determine the Test Year estimating method. As shown in Figure III-, for the period 01 through 01, both labor and non-labor expenses have declined on a year-to-year basis with stabilization of the ESC communications system and manual meter reading continuing to decline. The Last Recorded Year most accurately reflects current Meter

44 Reading operations and internal organization of MSO s Support Group. For these reasons, the Last Recorded Year is the appropriate basis for forecasting the Test Year labor and non-labor expenses. () Meter Reading Test Year Adjustments SCE s forecast of Test Year O&M expenses for the meter reading function (FERC Account 0) reflects an increase for customer growth offset by a reduction due to implementing bi-monthly meter reads for Opt-Out customers. These adjustments are described in detail below and the resulting O&M forecast is shown in Figure III- and Figure III- below. (a) Customer Growth The number of customers served in SCE s service territory is forecast to increase by. percent from 01 to 01. This adjustment is based on the cumulative annual increases as projected in SCE s March 01 Annual Retail Sales Forecast. Customer growth directly impacts OTAO and the remaining manual meter reading and data collection operations as more meters are added, creating additional operational workload and increased ESC communications costs. While meeting this added workload, the meter reading and data collection operations group expects to maintain high performance with timely and accurate meter reading and data collection. SCE forecasts a $,000 increase in meter-reading costs, and adjusts the 01 Test Year forecast accordingly. 1 (b) Program Changes Bi-monthly Reads Pursuant to D.1-1-0, SCE began conducting manual meter reads every other month, rather than on a monthly basis, for customers with opt-out meters in To reflect this, SCE forecasts a reduction of $1. million in the Test Year compared to 01 recorded costs of $.1 million for this activity. 1 1 Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding the customer growth adjustment to FERC Account 0. 1 D.1-1-0, OP. 1 Refer to WP SCE-0 Ch. I-VI, p. for additional information regarding the bi-monthly meter read adjustment to FERC Account 0.

45 () Meter Reading Forecast Summary As shown below in Figure III-, SCE forecasts $.1 million in O&M expenses for FERC Account 0, a reduction of $1.1 million or ten percent compared to Base Year O&M expenses of $. million. Figure III- Meter Reading Comparison of 01 Base Year to 01 Test Year FERC Account 0 (Constant 01 $000) $1,000 $1,000 $,000 $, $ ( $1, ) $,1 $,000 $,000 $,000 Program Changes Bi-Monthly Meter Reading ($1,) $,000 $0 01 Recorded Customer Growth Program Changes 01 Forecast. Recovery of Edison SmartConnect Opt-Out Costs in the SmartConnect Opt-Out Balancing Account In December 01, the Commission issued D in Phase of A Amongst other programmatic provisions for the Smart Meter Opt-Out Program, this Decision set Opt-Out fees for residential customers consistent with interim fees established by D (Phase 1

46 Decision). 1 The Decision also approved the establishment of a balancing account (i.e., SmartConnect Opt-Out Balancing Account (SOBA)) to record revenues and corresponding costs for providing the opt-out service. D authorized recovery of SCE s recorded SOBA costs up to $0. million, subject to certain restrictions and providing the following information in future GRCs: (1) a summary of costs incurred and revenues collected associated with providing the opt-out option, () the portion of revenue that was over or under collected, and the subsequent allocation of refunds that will be allocated to the residential customer class, and () any future proposed adjustments to the opt-out charge or monthly fees to account for over or under collections. 1 In SCE-0, Volume 1, SCE provides additional regulatory background regarding the establishment of the SOBA, proposes to close the SOBA beginning January 01, and fulfills requirements one and two in summary. This testimony addresses the reasonableness of the SOBA recorded and forecast O&M expenses of $1. million and capital revenue requirement of $.0 million through December 1, 01. During the Update Phase of this GRC proceeding, SCE will provide the most recent SOBA recorded activity. These costs and revenues collected through Opt-Out customer charges are summarized in Table III- below. 1 Non-CARE customers electing the Smart Meter Opt-Out option are subject to an initial fee of $ and $ monthly fee for a three year period, while CARE customers are subject to an initial fee of $ and $ monthly fee. See SCE Schedule ESC-OO (Edison SmartConnect Opt-Out). 1 SCE does not seek modification of the Opt-Out fees established in D See Section XI.C., below, for further discussion.

47 Table III- SmartConnect Opt-Out Balancing Account Recorded (April 01 through June 01) and Estimated (July 01 through December 01) (Nominal $000) Line No. Description Recorded through June 01 Estimated July 01 - December 01 Total 1 Revenues from Opt-Out Fees ($,1) ($1) ($,) Operation & Maintenance Expense $1, $1,1 $1,0 Indirect Labor Costs $1,0 $ $1, O&M Expense Subtotal $1, $,0 $1,0 Capital-Related Revenue Requirement $1, $1,1 $, a) Revenue from Opt-Out Fees As shown in Table III-, SCE recorded $.1 million in revenue from Opt-Out charges from May 01 through June 01. The recorded revenue is derived by multiplying the volume of Opt-Out customers by the respective Opt-Out initial and monthly fees for CARE and Non-CARE customers. As of June 01, SCE had 1, Opt-Out customers (, CARE, 1, Non-CARE). SCE estimates to collect approximately $1,000 in revenues from July 01 through December 01. This estimate is based on the current levels of initial and monthly Opt-Out charges being collected by SCE. Going forward, SCE expects Opt-Out program participation levels to remain relatively consistent with 01, but assumes a significant decrease in Opt-Out revenue over this period because the majority of Opt-Out customers will have been on the program for three years, and thus will no longer be required to pay the monthly fee. 1 b) Operating & Maintenance Expenses The recorded SOBA O&M expenses through June 01 is $1. million (nominal dollars) and reflects labor and non-labor expenses for Opt-Out program support activities from 1 Refer to WP SCE-0 Ch. I-VI, pp. 0-1 for additional details regarding Edison SmartConnect Opt-Out forecast volumes. For additional details regarding SCE s Opt-Out tariff, see SCE Schedule ESC-OO (Edison SmartConnect Opt-Out).

48 the stage of program inception in May 01 to June 01. A description of the major costs are provided below. Metering Services - Meter-related activities, necessitated by the establishment of the Opt-Out program, make up over 0 percent of the direct recorded O&M expenses through June 01. From program inception to June 01, SCE recorded approximately $1.1 million in Meter Services-related expenses. The primary costs for SCE were related to performing nearly one million manual meter reads. In addition to meter reading, this includes labor and non-labor for FSRs to turn electric service on and off, disconnect electric service for nonpayment, negotiate access to customer premises, respond to billing and energy-consumption inquiries, replace meters, and collect exception reads that would generally be automated otherwise. This also includes expenses to test analog meters as well as ESC meters returned from the field before they can be redistributed to the field. Customer Outreach and Marketing - In compliance with D , SCE conducted an Opt-Out notification letter campaign in 01 to notify customers who had expressed interest in the Opt-Out program. Costs for developing the campaign material (including several notification letters, confirmation letters, door hangers, etc.) triggered higher costs in 01 and 01; SCE does not forecast these higher costs going forward. The recorded expense in this category is $,000 through June Customer Billing & Enrollment Support - This category includes recorded costs related to customer enrollment, account set-up, billing exceptions, and rebills related to Opt-Out fees. SCE handled enrollments and billing for 1, Opt-Out customers through June 01. The recorded expense for this category is $,000 through June 01. Program Management - This category includes costs to manage the Opt-Out program, including policy development, program implementation, quality control, data analysis, and compliance for the program. The recorded expense for this category is $0,000 through June 01.

49 Training - In 01, SCE developed and administered Opt-Out program training so that employees would have the necessary understanding to execute Opt-Out transactions, such as answering customers inquiries, enrolling customers in the program, and explaining the appropriate Opt-Out fees. This expense of $1,000 did not continue into subsequent years. Indirect Costs - Indirect labor costs recorded in the SOBA through June 01 is $1. million. This includes costs for retirement benefits, payroll taxes, workers compensation, and disability benefits. Currently, SCE estimates an incremental expense of $1.1 million of direct and $,000 of indirect labor O&M expenses will be recorded in the SOBA by December 01. This is based on SCE s assumption that manual, bi-monthly meter reading will be the primary Opt-Out activity going forward, with FSRs performing an average of approximately,000 meter reads per year with enrollment levels staying relatively consistent with 01 levels. As previously stated, the estimated costs for July 01 - December 01 will be subsequently updated with the most recent SOBA balance during the Update Phase of this proceeding. 0 c) Capital Expenditures SCE recorded a capital-related revenue requirement of $1. million associated with $. million of capital expenditures in the SOBA through June 01. These costs include consulting expenses for designing, developing, and testing the ESC Opt-Out system infrastructure, and costs to train staff on the new Opt-Out system. SCE estimates $1.1 million in ongoing capital-related revenue requirement from July 01-December 01 related to previous capital expenditures. C. Test, Inspect, and Repair Meters [FERC Account.00] The Test, Inspect, and Repair Meters function includes SCE s Electrical Metering Services (EMS), Engineering and Meter Shop operations, and the field maintenance and repair of electric billing and load survey meters. These functions are described in Section III.C.1 below. The O&M expenses associated with these activities are recorded in FERC Account.00. The recorded and forecast O&M expenses associated with this function are described in Section III.C. below. 0 Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding SOBA.

50 Description of the Test, Inspect, and Repair Meters Function and Base Year Operation Results The Test, Inspect, and Repair Meters function includes SCE s EMS, Engineering, Meter Shop operations, and field maintenance and repair of electric billing and load survey meters. EMS supports SCE s metering systems by administering required meter test and maintenance programs pursuant to SCE s Rule, Part G. 1 EMS also installs meters and associated metering equipment for complex metering installations. The greatest volume of work arises from meter-accuracy testing, which is divided into sample and routine tests, request tests, and installation tests. Engineering manages metering strategy, meter technical specification and selection, routine meter deployment support, and the reliability and quality of all metering products used on the SCE system. Engineering Products and Engineering Operations activities are primarily driven by customer population growth, customer metering load requirements, meter failure and communication issues, introduction of new meter technology, and customer participation in Demand Response (DR) programs. During 0-01, an average of approximately,00 complex metering jobs were completed each year, which are performed by specially-trained meter technicians. In addition, SCE s metering engineers work with manufacturers to evaluate new metering products to meet SCE s customer needs. This group also analyzes trouble reports generated by SCE s billing organization and OTAO to determine the root cause, identify equipment needed for replacement, and provide replacement information to field meter technicians who perform the replacement. The Meter Shop tests meters as they are received from suppliers and manages the warranties and maintenance on meters returned by field service personnel. Meter Shop personnel also conduct root cause analysis of field meter failures to maintain the safety, reliability, and data integrity of the meters in the field, and they work with manufacturers on meter product issues, including quality and functionality improvements. 1 SCE s Rule, Part G requires that, All meters and meter services must conform to the standards set forth in the Direct Access Standards for Metering and Meter Data ( DASMMD ) as approved by the CPUC. The CPUC established DASMMD standards in D

51 Field maintenance and repair meter tests verify installations are completed properly by confirming that the service voltage and wiring are correct. Appropriate measurements and inspections confirm the service is being metered correctly, which is necessary for accurate billing. Meter technicians also perform non-test work to the meter and panel, including service wiring, interval read verifications, installation of relay equipment, communication checks, and site assessments to determine if radio coverage is available prior to installing radio communication meters. Since 0, EMS has completed over 1,00 non-test jobs related to trouble reports on an annual basis. Table III- presents the meter test and inspection operating results for sample and routine tests, request tests, and installation tests, as well as the forecast volumes. Table III- Meter Test and Inspection Volumes Recorded 0-01 / Forecast Line No. Description Sample and Routine,, 1, 1, 1, 1, 1,0 1,1 Request Test,,0 1, 0,1,,,,1 Installation,,1, 1, 1,1 1, 1,01 1, Total 1,1 0, 0,,,1,,,1 a) Sample and Routine Meter Tests Sample and routine meter tests are those defined by SCEs Rule Part G that requires All meters and meter services must conform to the standards set forth in the Direct Access Standards for Metering and Meter Data ( DASMMD ) as approved by the CPUC. SCE s sample and routine test function pursuant to the DASMMD consists of four testing programs: (1) annual testing of meters with annual usage of two million kwh or more, () biennial testing of meters with annual usage between 0,000 kwh and two million kwh, () random sample testing of non-residential meters with annual usage less than 0,000 kwh, and () random sample testing of residential meters. In 01, sample and routine meter tests increased primarily due to the reallocation of SCE s field employees to perform annual and biennial sample and routine inspections following the completion of SCE s ESC meter deployment. Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding non-test jobs. 1

52 b) Request Tests Request tests come from customers, Field Services personnel, and the Billing group (billing inquiries). Customers may question the accuracy of their meter and request a test under the provisions of SCE s Rule 1. A meter test may also be requested by the Commission, generally in response to a billing inquiry. Field Services personnel observe conditions in the field, such as meter damage, that require a meter test to determine if the meter is registering usage accurately or if it needs repair. When meter accuracy is found to be outside of established tolerance limits, the Billing group is provided with test results upon which billing corrections are based. In 01, request tests increased due to ESC over-the-air request tests, which are internal requests related to communication irregularities associated with the new ESC network that required a meter technician to conduct certain diagnostic tests at the meter location. Beginning in 01, request tests decreased due to improvements to the stability of the ESC network. SCE forecasts 01 volumes based on 01 recorded volumes because we expect to experience a similar volume of request tests since the network was stabilized. c) Installation Tests Installation tests consist of meter installation tests in the field on all complex metering services following meter replacement and for new services to facilitate safe and accurate installation per Rule 1. Even though SCE tests all commercial and industrial meters in the Meter Shop upon receipt from the supplier, the field installation tests are used to identify potential service wiring problem conditions or meter programming errors that could result in unsafe conditions or inaccurate billing. In 0 and 01, installation meter tests were lower than average because SCE was completing its ESC deployment. Beginning in 01, installation tests returned to levels consistent with growth for new services and replacement for existing commercial services. SCE forecasts installation volumes in 01 to be similar to 01 volumes, which reflect a stabilized volume of installation tests. d) Engineering and Meter Shop Table III- below shows the number of Meter Shop tests performed each year from 0-01, as well as the forecast through 01.

53 Table III- Meter Shop Tests Recorded 0-01 / Forecast Line No. Description Non-ESC,0,,1, 1 ESC,0 1,00 1,0,0 0,0 0, 1,0 1, Total,,1 1,1,1 1,,,, 1 In 0 and 01, SCE tested ESC meters as part of ESC deployment. In 01, the ESC program was fully deployed, eliminating meter testing related to ESC deployment. In 01, SCE tested fewer ESC meters than during the 0-01 deployment period to install the hard-to-complete meters. In 01, we resumed business-as-usual meter shop testing averaging approximately 0,000 meter tests per year. Forecast volumes for 01 are based on 01 volumes adjusted for customer growth.. Analysis of Recorded and Forecast O&M Expenses Test, Inspect, and Repair Meters O&M expenses are recorded in FERC Account.00. This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for Test, Inspect, and Repair Meters are shown in Figure III- and discussed below. Refer to WP SCE-0 Ch. I-VI, pp. - for the recorded and forecast O&M expenses for FERC Account.00.

54 Figure III- Test, Inspect and Repair Meters FERC Account.00 Recorded 0-01 / Forecast (Constant 01 $000) 1 1 a) Historical Variance Analysis From 0 to 01, routine and sample testing temporarily declined during the deployment of ESC meters. As discussed in the forecast section below, this decline in routine and sample testing was a one-time occurrence. The decline ended when SCE completed ESC deployment in December 01 and resumed normal sample and routine testing programs in 01, as well as additional ESC request tests. In 01, our first post-smartconnect deployment year, system inefficiencies caused MSO to implement the Personal Qualification Standard Program (PQS). This program is designed to increase safety and standardization for our Meter Technicians. In 01 and 01, the ESC system stabilized and efficiencies were realized. In 01, labor and non-labor expenses increased $. million, primarily because resources assisting on the ESC program returned to normal operations. Also in 01, MSO resumed performing annual and biennial sample test and inspections. In 01, labor decreased $1. million due to

55 a reduction in SCE OTAO and non-otao request tests and not completing biennial sample tests and inspections. In 01, SCE reduced meter shop testing, lowered engineering operations activities, and lowered support costs by $,000. b) Comparison of 01 Authorized and Recorded O&M Expenses Figure III- compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account.00 in compliance with D As shown in Figure III-, SCE s recorded expenses for 01 in FERC Account.00 were less than the authorized amount by $1. million, or.0 percent. This variance is primarily due to implementing ESC system stabilization efforts, which reduced the need to perform approximately 1,000 OTA request tests. In addition, fewer meters were covered under warranty in 01, which shifts O&M expenses to meter capital.

56 Figure III- 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account.00 (01 $ 000) $0,000 $1,000 $1,000 $1,000 $1,000 $,000 $,000 $,000 $,000 $,000 $0 $1, $1, 01 Request 01 Authorized $1, $1,0 Variance 01 Recorded 1 1 c) Test Year Forecast Figure III- shows the forecast O&M expenses for the Test, Inspect, and Repair Meters function (FERC Account.00). Details regarding the forecast are below. (1) Determination of Test Year Estimating Method As noted in Section III.A, SCE was completing the deployment of ESC in 0 and 01. As a result, the recorded adjusted costs in those years do not reflect current Test, Inspect, and Repair Meters operations and should be excluded from the analysis to determine the Test Year estimating method. In 01 and 01, costs were higher than steady-state levels as SCE was addressing hard-to-complete meters and stabilizing the ESC system. As a result, 01 and 01 recorded costs are not representative of ongoing operations for this area. For these reasons, the Last Recorded Year is the appropriate basis for forecasting the Test Year labor and non-labor O&M for future Test, Inspect, and Repair Meters expenses.

57 () Test Year Adjustments SCE s forecast of Test Year O&M expenses for Test, Inspect, and Repair Meters (FERC Account.00) includes adjustments to the Last Recorded Year to address customer growth, a program change associated with reduced repaired meter test and inspect expenses, and benefits associated with implementing the CS Re-Platform project. These adjustments are described in detail below and summarized in Figure III-. (a) Customer Growth The number of customers served in SCE s service territory is expected to increase by. percent from 01 to 01. This adjustment is based on the cumulative annual increases as projected in SCE s March 01 Annual Retail Sales Forecast. Customer growth directly impacts test, inspect, repair, and meter maintenance functions as more meters are added, increasing workload and associated costs. To reflect the increased volume of meter tests, inspections, and repair activities, an adjustment of $,000 was made to the Test Year forecast. (b) Program Change - Repaired Meter Test and Inspect Expenses SCE tests meters received prior to installation at a customer s facility. The cost of Meter Shop acceptance and field installation testing for new meters is capitalized and not included in FERC Account.00. During the ESC deployment period (0 01), over five million new meters were placed in service. ESC meters are covered by a manufacturer s warranty that covers 0 percent of the meter cost if the meter fails within the first five years after receipt. As a result, most ESC meters requiring replacement in the Base Year were returned to the manufacturer where they were repaired under warranty and sent back to SCE. SCE performed acceptance testing on 0 percent of these repaired and returned meters, and a meter installation test on commercial meters. After the five-year initial warranty period has expired, failed ESC meters are eligible for warranty replacement only if the overall failure rate exceeds 0. percent. Due to the age and structure of the warranty, SCE forecasts a decline in the number of tests and inspections required for meters repaired under warranty. Specifically, SCE does not expect to exceed the aggregate Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding the customer growth adjustment for FERC Account.00. Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding the ESC meter warranty terms.

58 percent contractual failure rate required to trigger warranty repair coverage for ESC meters inservice longer than five years. SCE forecasts that only about 0 percent of the broken meters will be eligible for repair under the warranty (meters that are less than five years old) in 01, declining to ten percent in 01 and 01. This decline in meters received by SCE that were repaired under warranty will reduce meter test activities that record to O&M. To reflect this, SCE forecasts a $,000 reduction in labor expenses in the Test Year. (c) CS Re-Platform Benefits As described in SCE-0, Vol. 0, the CS Re-Platform program will eliminate the inefficiencies associated with obsolete and disparate applications and systems through implementation of a simplified, modern, integrated suite of Customer Service applications. The transition to a modern digital environment will result in increased SCE employee productivity and lower costs to provide service. As a result, SCE forecasts a $,000 Test Year reduction in Test, Inspect and Repair Meters O&M expenses. () Test, Inspect and Repair Meters Test Year Forecast Summary As shown below in Figure III-, SCE forecasts $1. million in O&M expenses for FERC Account.00, a decrease of $,000 compared to Base Year O&M expenses of $1.0 million. A summary of the Test Year forecast expenses compared to the Base Year recorded expenses is shown in Figure III-. The aggregate failure rate for ESC meters was less than 0. percent as of December 1, 01. Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding the adjustment for repaired meter test and inspect labor expense reduction. The CS Re-Platform benefits included in SCE s 01 Test Year forecast are proposed, contingent upon approval of the corresponding CS Re-Platform project costs. Should the Commission not adopt the proposed CS Re-Platform costs in this FERC activity, the corresponding benefits must also be removed from the Test Year forecast. Refer to WP SCE-0 Ch. I-VI, p. 0 for support regarding CS Re-Platform benefits.

59 Figure III- Test, Inspect and Repair Meters Comparison of 01 Base Year to 01 Test Year FERC Account.00 (Constant 01 $000) $1,000 $1,000 $1,000 $1,0 $ ( $ ) ( $ ) $1,1 $1,000 $,000 $,000 $,000 $,000 $,000 $0 01 Recorded Customer Growth Repair Meter Testing CS Re-Platform Benefits 01 Forecast 1 D. Turn-On and Turn-Off Services [FERC.0] This section describes the Turn-On and Turn-Off Services function in Section III.D.1. The O&M expenses associated with this function are recorded in FERC Account.0. The recorded and forecast O&M expenses associated with this function are described in Section III.D. below. 1. Description of Turn-On and Turn-Off Services Function and Base Year Operating Results One of the key functions of Field Services Operations is customer Turn-On and Turn-Off requests for electric service. Approximately percent of ESC meters have the functional capability to be energized or de-energized through the Remote Service Switch (RSS). The RSS has a success rate of percent. The remaining percentage will be turned on and off manually using field resources. Refer to WP SCE-0 Ch. I-VI, p. 1 regarding RSS performance information.

60 Customer-requested Turn-On and Turn-Off services are recorded in FERC Account.0, the cost analysis and Test Year forecast for which will be addressed in this section. 0 FSRs receive dispatched field orders on a daily basis that are downloaded into assigned FSR wireless laptop computers. Same-day dispatched orders are also downloaded, paged, or radioed to the FSR from the Customer Contact Center. In addition to completing service orders and field collection orders while at the customer location, FSRs also review the field environment to identify potential energy theft situations and hazardous field conditions and record relevant information for follow-up. With the introduction of RSS for residential customers in 01, the weighted average cost of turning electric services on or off for residential services is $.0. 1 The cost of Turn-On services is recovered directly from the customers receiving these services through a service charge, which is recorded as OOR in FERC Account 1.00 and Account 1., respectively. SCE expects that, at any given time, less than one percent of residential customers will not have RSS capability due to the customer electing service in the Opt-Out Program, communications failures, or other failure types. Because of this normal level of inoperative RSS capability, the cost of providing manual Turn-On and Turn-Off services for these accounts has been included in the service connection charge as a weighted average cost for all customers receiving this service. Table III- below shows the number of completed Turn-On and Turn-Off orders from 0 through 01, both with and without the use of the RSS. A soft turn-on or turn-off is one that is completed with a meter read only, and there is no need to actually turn the service off. 0 FERC Account.0 excludes FSR activities for credit and collection driven disconnections record in FERC See Chapter XI.C.., below, for testimony regarding the Residential Service Connection Charge. 0

61 Table III- Completed Turn-On and Off Orders Recorded 0-01 / Forecast Line No. Description 0 01 Recorded Forecast Turn Ons Manual Turn Ons,0 00,,0,,,,, RSS/Soft Turn Ons 1, 1,0, 1,1,0 1,1,1 1,1, 1,1,1 1,1,1 1,1, Total Turn Ons 1,0, 1,, 1,,0 1,0, 1,,0 1,,0 1,, 1,,00 Turn Offs Manual Turn Offs 0 1,,,,,0, RSS/Soft Turn Offs 01 1,0,00 1,1,0 1,1, 1,, 1,1, 1,1, Total Turn offs 1,1,1 1,0, 1,,0 1,,1 1,,0 1,1, 1,1, 1,1,1 Total All Turn On/ Turn Offs,,0,,0,00,,,1,,,1,,,,, Historically, the number of manual Turn-On orders exceeds the number of manual Turn-Off orders for two reasons: (1) customer growth as new customers were added, the number of active services increases proportionately; and () many Turn-On and Turn-Off orders happen simultaneously for customers who are moving into a location at the same time the existing customer is moving out. Although this common occurrence of simultaneous turn-on/turn-off is counted as two separate orders, it is completed with just one field visit to obtain a single meter read that is used for both the new customer s opening bill and for the departing customer s closing bill. When this situation occurs, the Turn-On order is counted as a manual turn-on, and the Turn-Off order is counted as a soft turn-off. With the RSS in full operation beginning in 01, the number of manual turn-ons and manual turn-offs has dropped significantly. As shown in Table III- above, the disparity between manual turn- ons and turn-offs is due to customer growth and simultaneous Turn-On and Turn-Off orders. Not included in this FERC Account are Field Services activities related to credit orders, which include disconnection for non-payment, delivery of final call notices to special needs customers prior to disconnecting service, and after-hour reconnects. These activities are discussed in more detail in RSO Credit in Section IV.C of this volume. Special needs customers include critical care, elderly (seniors), and disabled customers. 1

62 . Analysis of Recorded and Forecast O&M Expenses Turn-On and Turn-Off Service O&M expenses are recorded in FERC Account.0. This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for Turn-On and Turn-Off Service are shown in Figure III-. Figure III- Turn-On and Turn-Off Services FERC Account.0 Recorded 0-01 / Forecast (Constant 01 $000) a) Historical Variance Analysis As shown in Figure III-, implementing ESC and the RSS resulted in the reduction of labor and non-labor expenses by $. million from 0 to 01 as less manual turn-ons Refer to WP SCE-0 Ch. I-VI, pp. - for the recorded and forecast O&M expenses for FERC Account.0.

63 1 and turn-offs were required. In 01, non-labor expenses were higher than 01 by $,000 because SCE had not yet fully realized all of the ESC RSS benefits included in the 01 recorded amount. Additionally, labor and non-labor charges that were recorded in the balancing account in 01 began recording to O&M in 01. The continued use of the RSS that was implemented in July 0 for residential Turn-On orders has kept costs in account.0 relatively flat, averaging $. million from 01 through 01. b) Comparison of 01 Authorized and Recorded O&M Expenses Figure III-1 compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account.0 in compliance with D As shown in Figure III-1, SCE recorded expenses for 01 in FERC Account.0 exceeded the authorized amount by $ thousand, or. percent. This variance is primarily due to an increase in vehicle expenses associated with manual field service functions.

64 Figure III-1 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account.0 (01 $ 000) $,000 $,000 $,1 $,1 $ $,00 $,000 $,000 $,000 $1,000 $0 01 Request 01 Authorized Variance 01 Recorded 1 1 c) Test Year Operating Expectations FERC Account.0 Figure III- shows the recorded adjusted historical and forecast expenses for the Turn-On and Turn-Off Service function (FERC Account.0). Details regarding the forecast are below. (1) Determination of Test Year Estimating Method As noted in Section III.A, SCE was completing the deployment of ESC in 0 and 01. As a result, the recorded adjusted costs in those years do not reflect current Turn-On and Turn-Off Services operations and should be excluded from the analysis to determine the Test Year estimating method. Specifically, as explained in Section III.D..a), implementation of the RSS reduced O&M expenses by more than 0 percent between 0 and 01. Following 01, operations for this activity have stabilized and both labor and non-labor costs have declined slightly year-over-year during the period 01 through 01. Because 01 more accurately reflects current Turn-On and Turn-Off

65 Services operations, the Last Recorded Year is the appropriate basis for forecasting the Test Year labor and non-labor expenses. () Test Year Adjustments SCE s forecast of Test Year O&M expenses for the Turn-On and Turn-Off Services (FERC Account.0) includes adjustments to the Last Recorded Year to address customer growth and benefits associated with implementing the CS Re-Platform project. These adjustments are described in detail below and summarized in Figure III-. (a) Customer Growth The number of customers served in SCE s service territory is forecast to increase by. percent from 01 to 01. This adjustment is based on the cumulative annual increases as projected in SCE s March 01 Annual Retail Sales Forecast. The Turn-On and Turn-Off field operations are directly impacted by customer growth as more meters continue to be added, creating additional routine Turn-On and Turn-Off field orders. To reflect the impact that customer growth will have on the volume of Turn-On and Turn-Off orders and operating cost, SCE made an adjustment of $,000 to the Test Year forecast. (b) CS Re-Platform Benefits As described in SCE-0, Vol. 0, the CS Re-Platform program will eliminate the inefficiencies associated with obsolete and disparate applications and systems through implementation of a simplified, modern, integrated suite of Customer Service applications. The transition to a modern digital environment will increase SCE employee productivity and lower costs to provide service. As a result, SCE forecasts a $,000 Test Year reduction in Turn-On and Turn-Off Services O&M expenses. The decision to use Last Recorded Year as the basis for the Test Year O&M labor and non-labor forecast for FERC Account.0 is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For FERC Account.0, labor and non-labor expenses have trended downward over the period Refer to WP SCE-0 Ch. I-VI, p. 0 regarding the customer growth adjustment for FERC Account.0. The CS Re-Platform benefits included in SCE s 01 Test Year forecast are proposed, contingent upon approval of the corresponding CS Re-Platform project costs. Should the Commission not adopt the proposed (Continued)

66 () Turn Off and Turn On Forecast Summary As shown below in Figure III-1, SCE forecasts $. million in O&M expenses for FERC Account.0, a decrease of $1,000 compared to Base Year O&M expenses of $.00 million. Figure III-1 Turn-On and Turn-Off Services Comparison of 01 Base Year to 01 Test Year FERC Account.0 (Constant 01 $000) $,000 $,000 $,00 $ ($) $, $,000 $,000 $,000 $1,000 $0 01 Recorded Customer Growth CS Re-Platform Benefits 01 Forecast E. Customer Installation and Energy Theft Expense [FERC Account ] This section describes the Customer Installation and Energy Theft function, which are recorded in FERC Account. The recorded and forecast O&M expenses associated with this function are described in Section III.E. below. Continued from the previous page CS Re-Platform costs in this FERC activity, the corresponding benefits must also be removed from the Test Year forecast. Refer to WP SCE-0 Ch. I-VI, p. 1 for support regarding CS Re-Platform benefits.

67 Customer Installation and Energy Theft Function and Base Year Operating Results Customer installations, field services management and supervision, and energy theft were significantly affected during the deployment of ESC during 0-01, because nearly all five million of SCE s legacy electromechanical meters were replaced with new, solid state, two-way communicating meters. These functions are described in detail in this section. a) Customer Installation The Customer Installation function includes activities in response to requests or problems that customers have identified regarding their billing or electrical service. This includes billing inquiries, calls about noisy meters, removal of lock rings for remodels, and reporting damaged meters. In addition to customer-initiated orders, the Billing group, and automated exception review processing programs in the MDMS, generate electronic orders to the field requiring meter inspections and meter pick-up reads. Customer installation activities are impacted by customer growth and the volume of customer requests, the specific nature of those requests, and internally-identified billing exceptions. These are generally complex issues, which require the involvement of field personnel and equipment. The majority of field service activities recording to this account are categorized as pick-up reads. Most of these types of reads in 0 and 01 were completed by Meter Readers on or near their normal meter reading routes. Starting in 01, all pick-up reads were completed by FSRs due to the elimination of the meter reader position following the deployment of ESC meters. The remaining field service activities recording to FERC Account are categorized as Field Service exception orders. Table III- below summarizes the Field Service pick-up reads and exception orders completed each year from 0 through 01 and the forecast level of activities through the Test Year.

68 Table III- Field Service Pick-up Reads and Exception Orders Recorded 0-01 / Forecast Line Recorded Forecast Description No Meter Reading Pick Up Reads, 1, Field Service Pick Up Reads 1,0 1,0, 1,,,0,,00 Field Service Exception Orders, 0,,0 1,0,0,,, Total, 1,01 1, 1,0, 1, 1, 1, (1) Impact of ESC Meters on Customer Installation Activities During SCE s ESC deployment process in 0, MSO experienced an increase in Meter Reader pick-up reads, and an increase in 01 for field service pick-up reads. These increases were due to a rise in in errors as a result of the utilization of less experienced, temporary Meter Readers during the ESC deployment, as well as a temporary volume of pick-up reads during the time the new technology was being installed, the start of OTA communication, and resolving other issues. In 01-01, with ESC capabilities in place, more accurate and timely meter data decreased the volume of billing- and field-service-related pick-up reads. Field exceptions increased in 01 because of the use of SCE.com for Turn-On service, which triggered a verification exception order to determine if a customer s home was all electric or gas. Also in 01, additional exception orders were triggered to remove meter Lock Rings for customer panel maintenance work such as panel upgrades. Field exception orders decreased percent in 01 because SCE removed the automatic trigger for these verification exception orders. SCE will perform these exception orders at customers request. Overall, the ESC system has reduced the number of pick-up reads required and is projected to level off in the future due to stabilization of the ESC system, as shown in the forecast for 01 to 01 in the above table. The reduction from 0 to 01 was a result of SCE completing most internal, billing-related pick-up reads automatically, directly from the ESC meters as the system stabilized. The incremental cost for OTAO pick-up reads during the ESC deployment period was charged to the Edison SmartConnect Balancing Account (ESCBA) and are included in the 01 recorded year expenses.

69 () Service Guarantee Missed Appointments SCE s Missed Appointment service guarantee states that SCE will arrive at the agreed-upon appointment within 0 minutes before or after the scheduled appointment time. SCE pays a $0 credit for each missed appointment related to service establishment (turn-on) and billing inquiries. Table III- below shows the Missed Appointment service guarantee credits SCE paid over the last five years. In 01, out of a five-year average of,1 turn-on appointments and billing inquiries, SCE paid 1 claims, or. percent of all turn-on and billing-inquiry appointments. Table III- Missed Appointment Service Guarantee Credits Recorded 0-01 (Nominal $000) Line Recorded Five-Year Missed Appointments No Average 1 Number of Claims Made Number of Claims Paid Amount Paid $,00 $,0 $,0 $,0 $,0 $,1 Total Volume of Turn On Appointments and Billing Inquiries Paid % of Total Volume of Turn On Appointments and Billing Inquiries,0,0,, 1,0,1.%.%.%.%.%.% SCE proposes to include the cost of service guarantee credits in our cost structure based on the average number of missed appointments that have been recorded over the last five years. SCE rarely receives a customer complaint regarding a missed appointment, because complaints are generally self-reported by SCE. Most late or missed appointments result from heavy traffic preceding work that requires more time to complete than planned, or higher-priority emergency work causing a deferral of the routine work. This service commitment results in improved service levels for all customers and should be treated as a normal cost of business. Due to the variability in the number of claims paid across the years, SCE proposes that the five-year average of $,1 for credits be used as the

70 base-level target for the Missed Appointment service guarantee credits to be included in rates and is a part of the Billing FERC Account 0.00 forecast for the 01 Test Year. () Customer Installation Expense Operating Results In 01, over-the-air meter reads lead to a reduction in billing-inquiry-check reads. The increase to field service exceptions in 01 and 01 was a result of exception orders triggered by an increase in customers utilizing SCE.com to for turn-on service. In these cases, an exception order was automatically triggered to verify whether the residence was primarily served by gas or electricity. Exception orders typically involve handling unsafe conditions, load and voltage checks, removal and replacement of lock rings, communication on billing inquiries, zero-usage investigations, and Turn-On service order validations, which all increase labor costs. Table III- shows the Field Service exception orders for 0-01 and the forecast for Line No. Description Table III- Customer Installation Field Orders Recorded 0-01 / Forecast Recorded Forecast Field Service Exception Orders, 0,,0 1,0,0,,, b) Energy Theft The Energy Theft function includes activities required to collect revenues that would otherwise be lost as a result of energy theft or billing exceptions caused by irregularities in meter registration. This revenue-assurance function identifies customers who potentially benefit from energy usage without authorization from the utility, identifies and corrects situations in which a customer has been billed incorrectly as a result of revenue assurance investigations, and collects the revenue for unauthorized usage. Since completing ESC meter deployment in 01, SCE no longer has the ability to visually inspect all of its metering installations on a monthly basis through the course of manual meter See Billing Forecast Adjustments in Section IV.B..c)()(b), below. Meter registration irregularities include: non-theft meter errors, service not registered correctly for proper billing, and unbilled or unmetered service. 0

71 reading. As a result, SCE s Energy Theft program is undergoing a major transformation and has initiated three programs that are currently in various stages of implementation: Tamper Flag Program: ESC meters are able to detect various unauthorized intrusions into the metering system and communicate tamper flags that initiate a field investigation; Unusual Usage Program: this involves additional data being provided to this program through MDMS data in conjunction with tamper events, which will generate new leads; and Annual Survey Program: the Commission-mandated annual survey of 0. percent of installed ESC meters designed to mitigate the absence of meter readers eyes in the field that were trained to identify potential meter irregularities as part of the monthly, manual meter reading process. 0 (1) Meter Tamper Flag Program The ESC system has the ability to record Power Down, or situations where the meter has been removed, Power Up, or situations where a meter is installed, and Inversion Tamper Detected, or when a meter has been installed inverted, as independent events in the event log. In addition, a service switch open failed event will be recorded if the service switch fails to open when an open-switch signal is sent. A flag also exists when a load-side voltage is present after an open-switch signal has been sent. Each of these tamper-flag events can generate a field investigation order, which will increase the number of field visits. Implemented in early 01, the Tamper Flag Program is in the early deployment stage and is being tested for a variety of potential detection functions. SCE is in the process of developing more defined procedures and expects the program to be fully implemented and operational in 01. SCE expects that the Tamper Flag Program will result in approximately,000 investigations in 01. () Unusual Usage Program The Unusual Usage Program uses customer interval usage patterns in conjunction with tamper events to identify potential energy theft cases. Historical usage patterns become 0 ESC Phase III deployment Decision D.0-0-0, Section, p. 1, and Section.1., p.. 1

72 disrupted and undergo certain predictable changes when a meter has been bypassed in energy theft situations. These usage patterns can be detected using software algorithms. This method of theft detection is especially useful for identifying commercial theft cases where the usage pattern does not track the typical pattern established for that particular type of business. SCE is in the process of developing more defined procedures for this program. SCE expects to implement portions of this program in late 01. () Annual Survey Program A general assumption of the ESC program was that energy theft losses would likely increase absent the regular visual inspections conducted by meter readers unless ESC-system-assisted energy-theft programs replaced this role. 1 The ESC Deployment Settlement Agreement, as authorized by the Commission in D.0-0-0, supported SCE s proposed Revenue Protection plans, and required the continuation of the 0. percent annual survey of ESC meter installations as a substitute for eliminating the monthly field visits to each meter site by SCE s meter readers. SCE has now completed the first five years of conducting the 0. percent annual survey of ESC meter installations, the results for which are shown in Table III-1 below. 1 As presented in the ESC application, A.0-0-0, Appendix A, Settlement Agreement, Section.E., pp. -. SCE s workpapers in A contained references to Revenue Protection: Using AMR and Other Tools to Guard Against Theft and Unintentional Losses, Metering Research Series, Chartwell, Inc., 00.

73 Table III-1 ESC Energy Theft Field Inspection Survey Results Recorded 0-01 (Constant 01 $) Line No. Description Meters Inspected,0,0,1,1, Percent of ESC Meters Inspected 0.% 0.% 1.% 0.% 0.% Verified Tampering Found 1 Energy Theft Cases Billed Energy Theft Revenue Billed $,1 $,0 $,,1 $,1 $00, SCE will continue to monitor energy theft by continuing the 0. percent annual surveys as directed by the Commission. As seen in 01 in the table above, an increase in meters inspected occurred because surveys were performed simultaneously while deploying the small population of meters that were not replaced with ESC meters during the mass deployment between 00 and 01, due to proximity issues or areas where ESC mesh network communication was not available. These meters were replaced beginning in 01. Annual survey results are closely monitored to determine the potential for energy theft and the types of energy theft that are associated with the new metering technology. () Energy Theft Operating Results The detection of unmetered and unbilled energy use that is not traceable to intentional tampering or theft is the other function of SCE s Revenue Protection program. The number of verified and billed energy theft and unbilled energy cases that were processed over the last five years is shown below in Table III-1. See D

74 Table III-1 Energy Theft and Billing Exception Cases Recorded 0-01 (Constant 01 $) Line No. Description Energy Theft Cases Billed 1, 1 Energy Theft Amounts Collected $1,, $1,1, $1,1, $1,1, $, Billing Exception Cases Billed 1 Billing Exception Amounts Collected $,0 $, $, $, $, Total Amounts Collected $,, $,0,1 $1,1,0 $1,,0 $0,00 The number of cases billed and revenue collected shows detected energy theft and unbilled energy cases reducing over the last five years. This is because, as anticipated, eliminating meter readers also eliminated SCE s primary source of meter-tamper detection, which has contributed to the significant reduction in the number of billed theft and unbilled energy cases. As shown in Table III-1 above, SCE billed approximately percent fewer energy cases from 0 to 01. SCE expects that theft detection will improve as these programs mature. c) Field Services Management and Supervision Field Services Management and Supervision includes costs related to management and supervision of our Field Service personnel, training for FSRs, and informational and safety meetings. As the number of personnel performing these activities is forecast to remain constant through 01, the costs related to these management, supervision, and support functions will also remain fairly constant. (1) Field Services Management and Supervision - Operating Results The Field Services Management and Supervision function includes the non-core FSRs functions as associated with: attending meetings, labor-relations issues, vehicle repair and maintenance, and training costs. There are also some supervision-related costs, such as labor and employee expenses, allocated to this function. In 0, the certification training continued and SCE introduced additional technology training to educate FSRs about the new probe required to obtain information from ESC meters manually.. Analysis of Recorded and Forecast O&M Expenses Customer Installation and Energy Theft O&M expenses are recorded in FERC Account. This section describes the historical O&M expenses, the Test Year forecast method, and the

75 adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for Customer Installation and Energy Theft are shown in Figure III-1. Figure III-1 Customer Installation and Energy Theft Recorded 0-01 / Forecast FERC Account (Constant 01 $000) a) Historical Variance Analysis In 01, labor and non-labor expenses decreased by $.0 million as a result of completing the FSR Certification training and reducing the work force after transitioning from manual to automated pick-up reads and RSS operations. In 01, expenses increased $1. million primarily due to labor for RP [energy theft] investigations and inspections and training costs for a new work management system. In 01, labor and non-labor decreased by $1. million because the verification trigger from Refer to WP SCE-0 Ch. I-VI, pp. -1 for the recorded and forecast O&M expenses for FERC Account.

76 SCE.com was corrected and ESC pickup reads decreased by. percent due to a reduction in noncommunicating meters as shown in Table III-. b) Comparison of 01 Authorized and Recorded O&M Expenses Figure III-1 compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account in compliance with D As shown in Figure III-1, SCE s recorded expenses for 01 in FERC Account were less than the authorized amount by $1. million, or. percent. This variance is primarily due to the delay in implementing two programs authorized in the 01 GRC related to Tamper Flags and Unusual Usage, which are still in the development stages. In addition, ESC stabilization efforts reduced the need for approximately 0,000 pick-up reads.

77 Figure III-1 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account (Constant 01 $000) $,000 $, $, $,000 $,000 $,000 $,000 $,000 $,000 $,000 $1,000 $1, $, $0 01 Request 01 Authorized Variance 01 Recorded 1 1 c) Test Year Forecast (FERC Account ) Figure III-1 shows the forecast O&M expenses for the Customer Installation and Energy Theft function (FERC Account ). Details regarding the forecast are described below. (1) Determination of Test Year Estimating Method As noted in Section III.A, SCE was completing the deployment of ESC in 0 and 01. As a result, the recorded adjusted costs in those years do not reflect current Customer Installation and Energy Theft operations and should be excluded from the analysis to determine the Test Year estimating method. 01 and 01 also do not reflect future expenditures as SCE was fulfilling hard-to-complete meter installations and stabilizing the ESC system. These resources are no longer available to perform visual inspections for energy theft and, as such, 01 accurately reflects current Customer Installation and Energy Theft operations. For these reasons, the Last Recorded Year is the appropriate basis for forecasting the Test Year labor and non-labor expenses.

78 () Test Year Adjustments SCE s forecast of Test Year O&M expenses for the Customer Installation and Energy Theft function (FERC Account ) reflects an increase for customer growth. This adjustment is described in detail below and the resulting O&M forecast is shown in Figure III-1 and summarized in Figure III-1. (a) Customer Growth The number of customers in SCE s service territory is forecast to grow by. percent from 01 to 01. This is based on the average of the three-year customer growth rate from 01 through 01 from SCE s March 01 Retail Sales and Customer Forecast. The increased number of customers will increase customer meter installation and energy theft activity. Thus, SCE made an adjustment of $1,000 to Last Recorded Year to forecast Test Year expenses to account for the impact of customer growth on Customer Installation and Energy Theft operations. () Customer Installation and Energy Theft Forecast Summary As shown below in Figure III-1, SCE forecasts O&M expenses for FERC Account of $. million, an increase of $0.1 million above the Base Year O&M expenses of $. million. Refer to WP SCE-0 Ch. I-VI, p. regarding the customer growth adjustment for FERC Account.

79 Figure III-1 Customer Installation and Energy Theft Comparison of 01 Base Year to 01 Test Year FERC Account (Constant 01 $000) $,000 $,000 $, $1 $, $,000 $,000 $,000 $,000 $,000 $1,000 $0 01 Recorded Customer Growth 01 Forecast F. Meter Services Operations and Management [FERC 0] This section describes the Meter Services Operations and Management function in Section III.F.1 below. The O&M expenses associated with this function are recorded in FERC Account 0. The recorded and forecast O&M expenses associated with this function are described in Section III.F. below. 1. Meter Services Operations and Management Support Function and Base Year Operating Results The Meter Services Operations and Management functions recorded in FERC Account 0 include Customer Service Safety and Management Support, which are described below. a) Customer Service Safety As the largest provider of field services and electrical repair and maintenance functions within Customer Service, MSO develops and enforces Customer Service Safety and Environmental Health policies, practices, and procedures. The Customer Service Safety organization also develops and implements safety programs specifically designed for the Customer Service Operating Unit, and focuses on providing services to comply with California OSHA regulations and Commission

80 safety requirements. Customer Service employs a wide variety of occupations, which encompass field, technical, and office environments. To accomplish this, the Customer Service Safety group analyzes injury data to understand the safety issues associated with each occupational environment, and designs programs, policies, and procedures to address safety issues to reduce employee injuries. Customer Service Safety is organized into two groups, Safety Field Operations and Safety Support and Training, which are described below. (1) Safety Field Operations SCE s Safety Environmental Specialists (SESs) in Field Operations work closely with personnel in the field and are focused on strengthening our safety culture by interacting with management, safety team members, and front line employees. SES activities include (1) providing field and office personnel coaching and guidance, () developing and implementing safety-awareness programs, procedures, and policies, () conducting general and compliance safety-awareness training, () supporting management and employee safety teams to design client-specific programs, () participating in incident reviews, () partnering with site management in facility inspections, and () providing safety trends and performance reports. These activities are conducted at various field locations, requiring significant travel for SESs. () Safety Support and Training Safety Support and Training employees perform safety-related analytical, administrative, and program support functions for Customer Service. Safety Support and Training is responsible for all safety-related reporting, incident, accident, and compliance training for Customer Service. This group collaborates with Field Operations in developing programs aimed at preventing injuries and provides project management support for the Safety Culture Change Process. Additionally, in collaboration with Corporate EH&S, Corporate Communications, and other partners, this group develops safety and environmental communications that address issues affecting Customer Service employees. () Customer Service Safety Operating Results Customer Service is committed to maintaining a healthy and safe workplace for its employees based on the premise that employees are responsible for promoting a safe workplace and complying with all safety policies and regulations. The safe workplace is one where 0

81 1 employees are committed to their own safety as well as to that of their co-workers. Each organization is engaged in its ongoing safety action plans. The Days Away from Work, Restricted Duty, and Transfer (DART) Rate, is a common utility measurement that enables SCE to benchmark against other utilities to track improvements in safety. The DART Injury Rate, which shows the number of DART injuries for every 00,000 hours worked, measures our overall safety performance. Customer Service s DART performance over the last five years is shown in Table III-1 below. For 01, the Customer Service DART Rate was 0. percent, which was a percent improvement over the five-year average of 1. percent. With SCE s challenging work environment, this reduction over the previous five-year average of. percent represents a notable accomplishment. Customer Service will continue to focus on reducing workplace injuries by developing and implementing new programs and action plans targeting our safety culture. Table III-1 Customer Service Operations DART Rate Percentage Recorded 0-01 Line No. DART Rate Five Year Average 1 Injury Index.%.% 1.1% 0.% 0.% 1.% Management Support personnel provide administrative and operational support, as well as process control, project management, and strategic planning services for all of MSO operations. The following eight groups comprise our Management Support organization: 1. The Business Systems and Field User Support team provides subject-matter expertise, technology implementation, and support for system testing, including field deployment.. The Training and Delivery staff is dedicated to training MSO employees in support of safety, quality initiatives, and new work processes. The team is responsible for delivering that material in classroom settings and through daily briefings. 1

82 The Major Initiatives group supports business process and requirements management, risk management, mitigation, change management, transition planning, and operational readiness (including triage and post-support work).. The Operational Improvement Program group manages operations and cross-functional process improvement projects. The group oversees compliance, business continuity, and corporate exercise activities across MSO. The group maintains the MSO Information Center on the intranet and produces operational communications products for multiple written, online, and internal video channels.. The Business Analytics & Reporting team produces reports that are essential to day-to-day operations. It completes routine performance metrics and reporting (i.e., weekly, monthly, yearly) and develops ad hoc analytics.. Operational & Regulatory Planning develops regulatory information, performs benchmarking analytics, and monitors industry trends. The group develops complex analytics, operational data modeling, and business planning integration.. The Quality Management System group provides methods for process and corrective action improvements, documentation standards and controls, assessment and audit methods, procedures, reporting and records management, as well as oversees of legacy and ESC field operations work.. The Resource Management Center (RMC) manages the centralized and consolidated multiple systems used by field supervisors and matches human resource asset availability and proficiency to the field-work activities. The RMC manages work initiation, planning, forecasting, scheduling, and reporting, as well as physical space appropriation.

83 . Analysis of Recorded and Forecast O&M Expenses Meter Services Operations and Management O&M expenses are recorded in FERC Account 0. This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this function. The recorded adjusted historical and forecast O&M expenses for the Meter Services Operations and Management function are shown in Figure III-1. Refer to WP SCE-0 Ch. I-VI, pp. - for the recorded and forecast O&M expenses for FERC Account 0.

84 Figure III-1 Meter Services Operations and Management Recorded 0-01 / Forecast FERC Account 0 (Constant 01 $000) 1 a) Analysis of Historical Data In 01, SCE eliminated approximately 1 positions in conjunction with Operational Excellence efforts resulting in a $1. million reduction to labor. In 01, SCE implemented additional Operational Excellence initiatives impacting this function that, in combination with a delay in re-staffing vacant core positions, reduced labor O&M expenses by $. million. In 01, SCE combined support functions within MSO, shifting approximately $00,000 in labor O&M expenses from FERC Account 0 to this activity. In 01, SCE restructured its safety programs and incentives, reducing non-labor expenses by $1,000. In 01, SCE increased the use of contract employees to perform a firmware upgrade to all ESC meters. This, in conjunction with an increase in training related to ESC advanced technology changes, increased non-labor expenses by $0,000. In 01, non-labor declined by

85 $,000 as a result of reducing contractor support and avoiding maintenance fees on the work management system due to the implementation of the Clicksoft software. In 01, non-labor increased by $,000 due to an increase in miscellaneous materials to support field operations, general employee expenses, and the use of contractors to assist in developing the future metering strategy. b) Comparison of 01 Authorized and Recorded O&M Expenses Figure III-1 compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account 0 in compliance with D As shown in Figure III-1, SCE s recorded expenses for 01 in FERC Account 0 were less than the authorized amount by $,000, or just 0. percent, which is within normal operating uncertainties.

86 Figure III-1 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account 0 (01 $ 000) $,000 $,000 $,000 $, $, $, $ $,000 $,000 $,000 $,000 $1,000 $0 01 Request 01 Authorized Variance 01 Recorded 1 c) Test Year Forecast (FERC Account 0) Figure III-1 shows the recorded adjusted historical and forecast expenses for the Meter Services Operations and Management function (FERC Account 0). Details regarding the forecast are below. (1) Determination of Test Year Estimating Method As noted in Section III.A, SCE was completing the deployment of ESC in 0 and 01. As a result, the recorded adjusted costs in those years do not reflect current Meter Services Operations and Management operations and should be excluded from the analysis to determine the Test Year estimating method. As noted above, in 01 and 01, SCE implemented a series of Operational Excellence initiatives. Further, in 01, SCE restructured the Meter Services Operations and Management function. As a result of these changes, historical expenses in the years 0 through 01

87 do not accurately reflect current operations. The Last Recorded Year accurately reflects current Meter Services Operations and Maintenance, therefore the Last Recorded Year is the appropriate basis for forecasting the Test Year labor and non-labor expenses. () Test Year Adjustments SCE s forecast of Test Year O&M expenses for the Meter Services Operations and Management function (FERC Account 0) reflects an increase for customer growth offset by a reduction associated with planned Operational Excellence initiatives. These adjustments are described in detail below and the resulting O&M forecast is shown in Figure III-1 and summarized in Figure III-1. (a) Customer Growth The number of customers in SCE s service territory is expected to grow by. percent from 01 to 01. This adjustment is based on the cumulative annual increases as projected in SCE s March 01 Annual Retail Sales Forecast. Because of the associated increase in support and management activities, SCE forecasts a Test Year increase of $1,000 in FERC Account 0. (b) Operational Excellence MSO plans to reduce Test Year support expenses that fall in FERC 0. This Operational Excellence initiative is forecast to save $1.1 million in the Test Year, as a result of streamlining, prioritizing, and eliminating selected support functions. () Meter Services Operations and Management Support Forecast Summary As shown below in Figure III-1, SCE forecasts $. million in O&M expenses for FERC Account 0, a decrease of $1.0 million or 1 percent compared to Base Year O&M expenses of $. million. Refer to WP SCE-0 Ch. I-VI, p. 1 for additional details supporting the customer growth adjustment for FERC Account 0. Refer to WP SCE-0 Ch. I-VI, p. 1 for additional details supporting the Operational Excellence adjustment for FERC Account 0.

88 Figure III-1 Meter Services Operations and Management Comparison of 01 Base Year to 01 Test Year FERC Account 0 (Constant 01 $000) $,000 $,000 $, $1 $1, $,000 $, $,000 $,000 $,000 $,000 $1,000 $0 01 Recorded Customer Growth Operational Excellence 01 Forecast

89 IV. REVENUE SERVICES ORGANIZATION This chapter describes SCE s RSO, its Base Year activities, and its Test Year O&M expense forecast. A. Revenue Services Organization Overview RSO operational, management, and support personnel conduct all billing, payment, credit, collection, and program operations. RSO also delivers over million billing statements, notices, reminders, and other correspondence to customers each year. To provide accurate and timely billing for SCE s.1 million service accounts, RSO conducts operational oversight for bills sent to all customers, validation and exception processing of interval usage data, exception billing for all customers, and operationalization of regulatory initiatives and activities that impact the routine customer energy usage validation, billing, and credit processes. Credit and payment activities strive to keep SCE s uncollectible expenses as low as possible by establishing and implementing credit and payment policies and practices designed to prevent service disconnections by providing the customer with convenient and flexible payment options. Program Services activities include program operations for various customer engagement utility products and programs across SCE. Each of RSO s four major functional areas are described below: Billing Services, Credit and Payment Services, Postage, and Uncollectible Expense. The analysis of historical data, the Test Year estimating method, and respective Test Year forecasts for RSO activities are addressed in each of the following sections. B. Billing Services [FERC Account 0.00] This section describes the Billing Services function as described in Section IV.B.1 below. The associated O&M expenses are recorded in FERC Account The recorded and forecast O&M expenses associated with this function are described in Section IV.B. below. 1. Billing Services Functions and Base Year Operating Results The RSO Billing Services group provides timely and accurate billing services to SCE s.1 million service accounts. This organization manages, maintains, and supports the customer usage and billing processes and program operations. In 01, SCE issued. million customer billing statements, notices, reminders, and other correspondence. In addition to the majority of accounts that are

90 routinely billed through SCE s CSS, approximately,00 accounts require complex manual processing, largely because of new rates or rate structure changes. RSO processes over two million customer energy-usage and billing exceptions annually. SCE s costs related to policy adjustments are also captured in FERC 0.00, included in the Test Year forecast, and addressed as part of the Historic Variance Analysis for this account. The primary activities within Billing Services are discussed below. a) Energy Usage and Billing Process Oversight The Energy Usage and Billing Process Oversight group performs routine oversight of the energy usage and billing process, which includes usage validation, bill calculation, bill consolidation, and bill delivery. This function includes monitoring current quality control processes for regulatory compliance and billing accuracy. The group performs process-improvement analysis to reduce failure points and maintain efficiency within the usage-validation and customer-billing processes and conducts random sampling of bills and notices to verify accuracy and timeliness. When errors are found, the Billing Process Oversight group identifies the causes of billing errors and changes billing operations, procedures, or systems to avoid similar errors in the future. When customers are not billed in a timely manner, operational areas are alerted to analyze the root causes of usage and billing delays. Additionally, since customers may select the manner in which they receive their monthly bill statement, the Billing group oversees electronic billing options, such as Electronic Data Interchange, CheckFree (Fiserv), enlarged bill font, Braille billing, and SCE.com. The Billing group also oversees SCE s Service Guarantees related to the accuracy and timeliness of customers first bill. (1) Billing Performance Measures RSO s Billing Performance Measures include Revenue Billed, Customers Billed, Bills Prepared Timely and Accurately, and Estimated Bills. RSO uses these measures to confirm that customers are billed in a timely and accurate manner. The results achieved from 0 through 01 are shown in Table IV-1. Refer to WP SCE-0 Ch. I-VI, p. 1 for additional details regarding complex rates requiring manual billing. 0

91 Table IV-1 Billing Performance Measures Recorded 0 01 Line No. Description Revenue Billed.%.%.%.%.1% Customers Billed.%.%.%.%.% Bills Prepared Accurately.%.%.%.%.% Estimated Bills 1.1% 0.% 0.1% 0.1% 0.1% Revenue Billed measures the revenue dollars actually billed as a percentage of total potential revenue that could be billed by month-end. Customers Billed measures the number of customers actually sent bills each month as a percentage of customers who potentially could have been sent bills that month. These two measures saw a slight dip in 01 due to MDMS problems at the end of 01. Bills Prepared Accurately measures the number of accurate bills as a percentage of all bills sent. Estimated Bills measure the number of estimated bills as a percentage of all bills sent. The high levels of performance and the significant improvement since 0 in the Bills Prepared Accurately and Estimated Bills performance measures are primarily the result of more accurate and timely interval usage data from ESC meters and the MDMS. This improved data minimizes the number of billing exceptions generated by MDM and CSS as bills are being processed. b) Billing Exception Processing SCE calculates and delivers the vast majority of bills through a highly-automated process requiring little or no manual intervention. However, with approximately 0,000 billing accounts processed daily and the large quantity of interval-usage data involved, even a very small percentage of missing or out-of-tolerance data creates a considerable amount of labor-intensive exception analysis. The Exception Processing group processes all exceptions timely and accurately so customers can benefit from their interval-usage data, receive timely and accurate bills, and take advantage of the various demand response programs and rates that SCE offers. The interval-usage group and the customer-billing-exception-processing group review, analyze, and resolve these exceptions. The Refer to WP SCE-0 Ch. I-VI, pp. 1-1 for additional details regarding billing performance measures. 1

92 Billing Operations Management group helps ensure accurate and timely customer billing and initiates corrective action as necessary. Table IV-1 shows a summary of usage and billing exceptions for the period 0 through 01, which continue to impact RSO s resource requirements. The total number of CSS system-generated customer billing exceptions has diminished significantly from a high of,0 exceptions in 0 to,01 exceptions in 01 because many traditional billing exception processes have been replaced by the MDMS system validations and automated exception processing. SCE forecasts that usage and billing exceptions may increase in future years due to increased program enrollment, billing exception, and account maintenance activities related to Net Energy Metering and CCA growth, as explained in SCE s testimony regarding Test Year Adjustments for FERC Account Table IV-1 Usage & Billing Exceptions Recorded 0 01 (Amounts in 000s) Line No. Exception Type System-Generated Exceptions 0 Special Billing Exceptions Account Maintenance* N/A N/A 1 1 Direct Access Exceptions 1 RTEM Interval Usage Exceptions Meter Order Processing Exceptions ESC Usage Exceptions 1,00 1 Returned Mail Exceptions Net Energy Metering (includes MASH) Total Billing Exceptions *Tracking for this category began in With the completion of the SmartConnect deployment, System-Generated exceptions decreased percent, from a high of,000 exceptions in 0 to 0,000 exceptions in 01. Special Billing exceptions and RTEM Interval Usage exceptions have also decreased during the 0-01 period.

93 Data processed through the MDMS has improved the accuracy and completion of turn-on and turn-off orders and data validation. However, the number of customer meters and quantity of customer usage data SCE processes daily has significantly increased ESC Usage exceptions because each data collection and posting issue that occurs can result in a large number of exceptions. Since full deployment, ESC Usage exceptions have increased percent, from,000 exceptions in 0 to,000 exceptions in 01. These exceptions increased in 01 and 01 due to the new MDMS system; decreased in 01 due to adjusting the usage and demand validation thresholds; and increased in 01 due to additional data collection and posting processing issues. For example, SCE experienced some problems with meter data loading on multiple days at the end of 01. Returned Mail exceptions occur when a customer s mailed statement is returned as undeliverable. The 1,000 Returned Mail exceptions in 01 was abnormally low because of a temporary halt in tracking while a customer address confirmation process was implemented. In late 01, tracking was restarted and Returned Mail volume remained steady in 01 and 01. The address confirmation process helped stabilize the volume of returned mail at 0,000 pieces per year in 01, and is forecast to continue at this level into 01. c) Program Services Program Services operations works closely with Customer Programs and Services (SCE-0, Chapter VII) to oversee various customer engagement utility products and programs across SCE, including Medical Baseline, Home Area Network, E-billing, and Plug-In-Electric Vehicles. Program Services operations includes program enrollment, incomplete application processing, technical review, audit activities, quality control, communication with customers regarding complex inquiries, customer notifications, system maintenance, system enhancements, and reporting. d) Project Management Project managers and analysts implement billing-related projects, including rate changes and new rate schedules, programs mandated by regulatory decisions, and system process improvements. The Project Management group is essential to the successful implementation of regulatory-directed programs affecting billing and the overall performance of RSO. The Project Management group also develops and prioritizes business requirements for process improvements, such as the Operational Excellence initiatives described below.

94 e) Policy Adjustments Representatives in Billing, Credit, Customer Contact Center, Consumer Affairs, and the Business Customer Division resolve customer disputes and company-initiated adjustments related to billing errors or inconsistencies, in some cases by initiating a policy adjustment for a customer s bill. Typically, such disputes can result from meter or billing errors, differences relating to service establishment dates, or unresolved billing complaints or issues. RSO administers the policy adjustment process to provide fair and consistent treatment of our customers based on the specific circumstances. f) Mailing Operations The Mailing Operations group prints, inserts, reconciles, and mails 1,000 paper bill statements, letters, and checks each business day. Mainframe servers, high-volume printers, and bill inserters automate customer bill printing and mailing. The mainframe servers also support operations for calculating, printing, and mailing bills to. million SCE customers not enrolled in paperless billing, paychecks to SCE s employees, and payment checks to SCE s suppliers. g) Service Guarantees Timely and Accurate First Bill SCE issues a $0 Service Guarantee credit when an accurate bill is not provided to a customer within 0 days of establishing service for a new customer account. SCE reports this performance to the Commission on a semi-annual basis. The process to bill customers is not completely automated, and requires some manual operations. Though the processes have been designed for consistency, quality, and timeliness, manual operations introduce the possibility of error. Table IV-1 below shows the First Bill service guarantee credits SCE paid to customers from 0 through 01. Over the five-year period, SCE met the service standard. percent of the time and paid an average of $,000 per year in First Bill service guarantee credits. The only time SCE s performance fell slightly below percent was during the implementation of the new greenhouse gas (GHG) climate credits. 0 Of the 1, First Bill service guarantee credits issued in 01,,000 credits were related to implementing the GHG climate credit. 0 GHG allowance revenues were received as part of California s Cap-and-Trade program, and were applied as credits to residential customer bills in 01 and in 01.

95 Line No. Table IV-1 Service Guarantee Timely and Accurate First Bill Recorded 0 01 Timely and Accurate First Bill Recorded Five-Year Average 1 Number of First Bills Issued 1,,0 1,,01 1,, 1,,1 1,, 1,1,1 Number of Paid Services Guarantees for Timely and Accurate First Bill,,, 1,,,1 Amount Paid ($000) $ 1 $ 1 $ 0 $ 0 $ 0 $ Percent of Timely And Accurate First Bills.%.%.%.%.%.% In 01, SCE achieved this standard. percent of the time. Only, of the 1,, first bills issued in 01 were untimely or inaccurate. Because billing operations are not 0 percent automated and require some manual operations, service guarantees should be considered a normal cost of doing business and therefore should be funded as part of ongoing operating expenses. Currently, the Service Guarantee credit is a shareholder expense rather than a normal operating expense. Because paying this small level of service guarantees is more cost-effective than paying the incremental costs to achieve perfect performance, SCE proposes that a base level of service guarantee credits should be included in rates as a reasonable and effective cost of providing service. The proposed change from shareholder to ratepayer service guarantee funding is included in the Program Changes component of the Test Year forecast for Billing Services.. Analysis Recorded and Forecast O&M Expenses Billing Services O&M expenses are recorded in FERC Account This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for Billing Services are shown in Figure IV-0 and discussed below. 1 1 Refer to WP SCE-0 Ch. I-VI, pp. -1 for the recorded and forecast O&M expenses for FERC Account 0.00.

a) Historic Variance Analysis for Billing Services As shown in Figure IV-0, over the five year period from 0 to 01, Billing Services recorded adjusted costs declined 0 percent from $. million to $.

96 a) Historic Variance Analysis for Billing Services As shown in Figure IV-0, over the five year period from 0 to 01, Billing Services recorded adjusted costs declined 0 percent from $. million to $. million due to increased efficiencies and streamlining of work functions further discussed below. Figure IV-0 Billing Services Recorded 0-01 / Forecast FERC Account 0.00 (Constant 01 $000) (1) Analysis of Billing Services Variance (Excluding Policy Adjustments) Labor expenses decreased by $.0 million or 0 percent from $. million in 0 to $1. million in 01. Implementation of ESC significantly reduced Billing operations labor from 0 through 01 as a result of further ramping down usage and billing exceptions post ESC deployment. Labor expenses continued to decline in 01 and 01 due to continued operational efficiencies such as automating one-step exception processing and streamlining

97 work functions across RSO, including reducing project management and analyst tasks related to regulatory and compliance work functions. Non-labor expenses include materials, contracts, and billing system and programming support. Over the five-year period, non-labor expenses decreased $. million, or percent, from $. million in 0 to $. million in 01. Year-to-year variances in non-labor expenses are driven by the changes in processes and the introduction of new and more complex rate structures. In 01, non-labor expenses (for paper, envelopes, and printing) decreased $1. million from 0 due to postage efficiencies related to bill forms and reduction in contract labor. In 01, non-labor expenses increased $0. million due to supplemental contract work for application processing. In 01, non-labor expenses decreased $0. million due to process efficiencies that lowered consulting costs and supplemental contract work. Operational expenses such as billing and project expenses remained steady from 01 to 01. () Analysis of Policy Adjustments Variance The Policy Adjustment expenses include billing adjustments that may address customer issues related to field errors, and are shown in the Other expense category. Policy adjustments can vary significantly year-to-year, usually due to several large adjustments which may involve multiple accounts. Table IV-1 shows the Policy Adjustment expenses for 0 to 01. Table IV-1 Policy Adjustment (Without Billing Expenses) 0 01 Recorded Adjusted Expenses (Constant 01 $000) Line No. Category Labor Non-Labor Other 1 0 Total In 01, policy adjustments increased $,000 over 0, primarily as a result of a large policy adjustment of $,000 involving multiple accounts. In 01, policy adjustments decreased to $,000 and remained at a similar level of $,000 in 01. In 01, policy adjustments

98 increased to $0,000 when over,00 policy adjustments totaling approximately $01,000 were made due to Net Energy Metering-related billing issues. b) Comparison of 01 Authorized and Recorded O&M Expenses Figure IV-1 compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account 0.00, in compliance with D As shown in Figure IV-1, SCE s recorded expenses for 01 in FERC Account 0.00 were more than the authorized amount by $. million. This variance was the result of the reorganization that moved Mailing Operations to Billing from IT. Mailing Operations activities were previously included within the IT O&M request authorized in the 01 GRC. Figure IV-1 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account 0.00 (01 $ 000) $0,000 $, $,0 $,000 $,1 $,01 $0,000 $1,000 $,000 $,000 $0 01 Request 01 Authorized Variance 01 Recorded 1 c) Billing Services Test Year Forecast Figure IV-0 shows the forecast O&M expenses for Billing Services activities. Details regarding the forecast are described below.

99 (1) Determination of Test Year Estimating Method The 01 Base Year activities for Billing are described in Section IV.B.1 of this chapter. Labor expenses steadily decreased from 0 through 01 and, therefore, the Last Recorded Year is the appropriate basis for the Test Year forecast as it reflects the most recent activities undertaken by Billing. In addition, the adjustments proposed below are calculated specifically in the context of 01 activity levels and recorded O&M expenses. This includes, for example, streamlining work in 01, relative to Base Year recorded adjusted O&M expenses. As a result, the Last Recorded Year, combined with the adjustments detailed below, is the appropriate basis for forecasting Test Year labor expenses. Overall, Billing non-labor expenses have decreased from 0 to 01 and have remained stable for 01 and 01, as described in Section IV.B..a) above. The Last Recorded Year accurately reflects the expense level associated with Base Year activity levels and the adjustments proposed below are calculated specifically in the context of those activity levels and Base Year recorded O&M expenses. For these reasons, the Last Recorded Year is the appropriate basis for forecasting Test Year non-labor expenses. Policy Adjustments and Service Guarantees are recorded as Other O&M expenses. Because there can be wide year-to-year variances attributed to Policy Adjustments, neither the Last Recorded Year expenses nor the five-year linear trending method is an appropriate indicator of future year expenses for this component. Instead, the five-year average was used to forecast the 01 Test Year expenses for the Policy Adjustment component of Billing expenses. The decision to use Last Recorded Year as the basis for the Test Year O&M labor expense forecast for Billing Services is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have been relatively stable for three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For Billing Services, labor expenses have been relatively stable as the year-to-year labor expense variances have been less than percent for the period 01 through 01. The decision to use Last Recorded Year as the basis for the Test Year O&M non-labor expense forecast for Billing Services is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For Billing Services, overall nonlabor expenses have generally trended downward over the period The decision to use the five-year average as the basis for the Test Year O&M Other expense forecast for Billing Services is consistent with the direction provided in D and D.-1-0, wherein the (Continued)

100 () Test Year Adjustments SCE s forecast of Test Year O&M expenses for Billing reflects increased expenses due to customer growth, program changes, and CS Re-Platform net expenses, offset by reduced expenses associated with Operational Excellence initiatives. These adjustments are described in detail below and summarized in Table IV-1. The resulting O&M forecast is shown in Figure IV-0 and Figure IV- illustrates the relative levels of the 01 Base Year expenses to the 01 Test Year forecast and the forecast adjustments used to arrive at the forecast cost for SCE s Billing Services in 01. Table IV-1 Billing Test Year O&M Adjustment Summary (Constant 01 $000) Line Description No. Labor Non-Labor Other Total 1 Customer Growth $ $1 $1 Program Changes Policy Adjustments ($) ($) Service Guarantees $ $ Net Energy Metering $1 $1 $ CCA Processing $ $ $1, CS Re-Platform Expenses $1,00 $ $, CS Re-Platform Benefits ($) ($) Operational Excellence Electronic Billing ($1,) ($1,) 1 Increased Vendor Partnering ($1,) ($1,) 1 Support Function Reduction ($) ($0) ($1,) 1 Total Test Year Adjustments $ $ $1 $ Continued from the previous page CPUC stated that if costs have shown significant fluctuations from year to year, an average of recorded expenses is the appropriate basis for estimating Test Year expenses. For Billing Services, other expenses have varied significantly over the period

101 (a) Customer Growth The number of customers served in SCE s service territory is expected to increase by. percent from 01 to 01. The Billing group is directly impacted by customer growth as more meter data will be processed and more bills will be generated for new customers, creating additional routine operational work in usage and billing process oversight, exception processing and manual billing. To reflect the cost impact that customer growth will have on the volume of billing related processes, SCE applied an adjustment of $1,000 (. percent) to the labor and non-labor components of the 01 Base Year adjusted recorded costs. (b) Program Changes There are four program changes that require a forecast adjustment to determine the Test Year forecast. Each program change is discussed below. (i) Policy Adjustments As noted above, SCE uses the five-year average of $,000 as the Test Year forecast for the Policy Adjustment component of Billing expenses. This results in a downward adjustment of $,000 from the recorded Base Year level for the Policy Adjustment component of this account ($0,000 - $,000 = $,000). (ii) Service Guarantee RSO forecasts incremental funding of $,000 for SCE s Service Guarantee program. This includes $,000 in service guarantees for accurate and timely first bill, as discussed earlier in this chapter (Table IV-1), and $,000 for MSO missed appointments service guarantee, as discussed in Section III.E.1 of this exhibit. This amount was determined using the fiveyear average from 0 to 01 for this service guarantee as calculated in Table III-. SCE proposes to include this forecast in rates as a reasonable and effective cost of providing service. Refer to WP SCE-0 Ch. I-VI, p. 1 regarding the customer growth O&M forecast adjustment for FERC Account Note, customer growth was not applied to the Other O&M expense category where Policy Adjustments are recorded. Refer to WP SCE-0 Ch. I-VI, p. 1 regarding the policy adjustment O&M forecast adjustment for FERC Account

102 (iii) Net Energy Metering As the cost of solar panels go down and concern about climate change increases, Southern California residents are turning to the power of the sun. These customers can produce their own electricity via renewable energy generation and get credits for the generation through SCE s NEM rate. To install renewable generation and receive service on the NEM tariff, customers must complete a NEM tariff application and interconnection application. As more and more residents turn to the power of the sun, the volume of solar interconnection applications continues on a steep upward trend year over year. Applications that are straightforward are processed by an external vendor, with any exceptions returned to the Billing group, who also process the more complex applications. The number of NEM applications received by SCE has grown on average by 0 percent per year since 01. As shown in Table IV-0, the NEM application volume has increased from 1,1 in 0 to 1,1 in 01. In 01, with passage of Assembly Bill (AB), which required the Commission to develop new tariffs to support the growth of rooftop solar, NEM applications increased 0 percent over 01. In 01, NEM applications grew by another percent. Applications continued to grow in 01, but due to the high volumes already established in 01, applications grew at a lower rate of increase ( percent) in 01. Nonetheless SCE still led the nation in MW of solar installed in 01 at 1, MW and connected a new solar customer to the grid every nine minutes. SCE utilized the 01 Retail Sales and Customer Forecast Methodology to develop the forecast for NEM applications for years 01 to 00. SCE s forecast projects a continued increase in applications but, like 01, at a smaller year-over-year growth rate, resulting in an increase of Electricity: Natural Gas: Rates: Net Energy Metering: California Renewables Portfolio Standard Program, Stats. 01 ch. (AB, Perea), effective January 1, 01. Information regarding AB is available at [as of August 1, 01]. See SCE s 01 GRC Retail Sales and Customer Forecast Methodology, Exhibit SCE-0, Vol. 1, Chapter V, Section, pp. -.

103 $,000 above recorded 01 costs to process the increased annual average level of,0 applications from 01 to 00. The forecast also used the 01 cost to process an NEM application. Table IV-0 Net Energy Metering Applications Received and Forecast 0-00 Line No. Description NEM Applications Received 1,1 1, 0,, 1,1,,1,,,0 Year over Year volume N/A 1 1, 1,1 1, 1, 1,1 1,00,1,0 % Year over Year N/A % 0% % % 0% % 1% % % (iv) CCA Processing SCE plans to continue to respond to public entities that are contemplating the formation of a CCA and, as noted in Business Customer Division Section VII.C..c), SCE expects CCA implementations to occur in 01 and 01 resulting in an enrollment of over 00,000 service accounts. To support public entities exploring or participating in CCA, RSO forecasts incremental funding of $1. million to provide program enrollment, additional billing exception activity, and account maintenance. 0 Billing activities include adding CCA billing fees on separate service accounts to generate a utility distribution company (UDC) consolidated billing statement, processing CCA exceptions, increased vendor Value Added Network (VAN) data transmission costs, increased meter data exception processing and interacting with various organizations to help ensure accurate and timely billing. SCE has updated the proposed 01 CCA service fees and Other Operating Revenue to offset this incremental O&M forecast; the OOR updates can be found in Section XI of this volume. (c) CS Re-Platform O&M Expenses As described in SCE-0, Vol., SCE plans to implement the Customer Service Re-Platform capitalized software project in 00. CS Re-Platform costs for RSO include two components: (1) RSO supplemental staff costs and () RSO staff augmentation contractor Refer to WP SCE-0 Ch. I-VI, p. 1 for additional details regarding SCE s NEM enrollment O&M adjustment. 0 Refer to WP SCE-0 Ch. I-VI, p. 1A for additional details regarding the CCA O&M adjustment.

104 costs. Temporary staff in RSO will be required to maintain the legacy billing system while SCE employees train on the new SAP billing platform. SCE forecasts incremental Test Year expenses of $. million to train temporary staff and to maintain the billing processes under the legacy system while SCE staff learns the new SAP-based system. (i) RSO Supplemental Staff SCE Labor The incremental labor cost forecast of $.00 million for supplemental SCE labor in RSO is due to an additional full-time employees (FTEs) at an average monthly rate of $,0 needed to supplement RSO employees over a 1-month period. For two months from June through July 01, the supplemental RSO staff will be trained on the legacy system to handle credit, billing, collection and payment processes while RSO staff is trained on the new SAP-based CR&B module and associated applications for five months from August to December 01. The RSO supplemental staff will also be trained in phases during this four-month period. Additionally, when the new system goes live in early 00, the average handling time is expected to increase 0 percent due to the learning curve associated with the new system and business processes. As a result, a ten percent increase in exception volume is expected. The supplemental staff will also be trained on the new SAP system to support the increase in handling time and exception volume. The Test Year forecast is based on levelized expenses for this GRC period (01-00) and equals $1.00 million. 1 (ii) RSO Staff Augmentation Contract Services The incremental cost forecast of $.00 million for contract services in RSO is due to an additional FTEs at an average monthly rate of $,01 needed to supplement RSO employees over a 1-month period. For two months from June through July 01, the contract RSO staff will be trained on the legacy system to handle credit, billing, collection and payment processes while RSO staff is trained on the new SAP based CR&B module and associated applications for five months from August to December 01. The RSO contract staff will also be trained in phases during this four-month period. When the new system goes live in early 00, the average handling time is expected to increase 0 percent due to the learning curve associated with the new system and business processes, and a ten percent increase in exception volume is expected. The contract staff will also be 1 Refer to WP SCE-0 Ch. I-VI, p. regarding the expected RSO Supplemental Staff expenses for the CS Re-Platform project.

105 trained on the new SAP system to support the increase in handling time and exception volume. The Test Year forecast is based on levelized expenses for this GRC period (01-00) and equals $,000. (d) CS Re-Platform O&M Benefits SCE expects operational efficiencies will be enabled by improved technology, automation of processes, and the corresponding reductions in FTEs in future rate cases (further described in SCE-0, Vol. 0). SCE forecasts the benefits charged to FERC Account 0.00 from implementing the new billing services system to total $,000, as improvements to the billing system reduce transaction handling and processing time. (e) Operational Excellence Over the next three years, RSO forecasts $.1 million in Operational Excellence savings in FERC RSO plans to achieve this through (1) electronic billing, () increased partnering with vendors, and () reduction of support functions within Billing Services. These initiatives are described further below. (i) Electronic Billing RSO s electronic billing initiative will continue to migrate customers to its online billing and increase postage savings as described in Postage testimony for FERC 0.0. As part of the benefits of increased customer enrollment in electronic billing, RSO expects to save $1. million by reducing printing, inserting, and mailing costs by the end of 01. This cost savings is calculated based on saving $0. per mailing multiplied by the 1. million total cumulative new ebilling transactions forecast by the Test Year. The increased forecast customer enrollments is contingent on the Digital Customer Self-Service capitalized software project being Refer to WP SCE-0 Ch. I-VI, p. regarding the expected RSO Staff Augmentation expenses for the CS Re-Platform project. The CS Re-Platform benefits included in SCE s 01 Test Year forecast are proposed, contingent upon approval of the corresponding CS Re-Platform project costs. Should the Commission not adopt the proposed CS Re-Platform costs in this FERC activity, the corresponding benefits must also be removed from the Test Year forecast. Refer to WP SCE-0 Ch. I-VI, p. regarding the expected benefits for the CS Re-Platform project. Refer to WP SCE-0 Ch. I-VI, p. 1 regarding the Operational Excellence reduction associated with E- Billing.

106 approved by the Commission. See SCE-0, Vol. for details on the Digital Customer Self-Service project. (ii) Increased Vendor Partnering RSO forecasts savings resulting from partnering with vendors to perform selected work functions. Beginning in 01, RSO started to transition simple transaction work, with low to medium complexity, to an external vendor. For example, in 01 vendors will perform Net Energy Metering application processing for accounts smaller than kw, saving $,000. RSO plans to continue to expand vendor partnering opportunities through 01, which can maintain service levels and reduce costs for customers. By the 01 Test Year, RSO forecasts saving $1. million in labor costs from partnering with vendors. (iii) Support Function Reduction RSO plans to reduce Test Year support expenses that record in FERC Account The Operational Excellence initiative is forecast to save $1. million in labor and non-labor by streamlining, prioritizing, and eliminating selected support functions. () Billing Services Forecast Summary As shown below in Figure IV-, by the 01 Test Year SCE expects $. million in O&M expenses for FERC Account 0.00, an increase of $0. million or three percent as compared to Base Year O&M expenses of $.0 million. Refer to WP SCE-0 Ch. I-VI, p. 1 regarding the Operational Excellence reduction associated with vendor partnering. Refer to WP SCE-0 Ch. I-VI, p. 1 regarding the Operational Excellence reduction associated with support function.

107 Figure IV- Billing Services Comparison of 01 Base Year to 01 Test Year FERC Account 0.00 (Constant 01 $000) $,000 $0,000 $,000 $,0 $1 $,001 $, ( $ ) ( $,1 ) $, $0,000 $1,000 $,000 $,000 Program Changes Policy Adjustments ($) Service Guarantee $ NEM $ CCA $1, Total Program Changes $,001 Operational Excellence Electronic Billing ($1,) Vendor Partnering ($1,) Support Function ($1,) Total Program Changes ($,1) $- 01 Recorded Customer Growth Program Changes CS Re-platform CS Re-platform Benefits Operational Excellence 01 Forecast C. Credit and Payment Services [FERC Account 0.00] The Credit and Payment Services function is described in Section IV.C.1 below. The O&M expenses associated with this function are recorded in FERC Account The recorded and forecast O&M expenses associated with this function are described in Section IV.C. below. 1. Credit and Payment Services Functions and Base Year Operating Results Credit and Payment Services consists of credit policy development and enforcement, customer verification, fraud prevention, customer risk assessment, collection activities, and the overall management of credit-related operations to minimize arrearages and uncollectible expense. A primary goal of the Credit group is to mitigate loss of revenue by acquiring adequate security for newly-established and higher-risk existing accounts and to pursue collection of unpaid balances. These processes have been prescribed by the Commission and implemented in accordance with SCE s established tariffs, Rules and for Credit Services. The Payment Services function is responsible for oversight associated with providing SCE customers with convenient, efficient, and cost-effective payment options. While SCE customers can continue to pay their electric bill through the U.S. mail, they also have seven electronic payment

108 options and can pay in-person at an Authorized Payment Agency (APA) or SCE Rural Office. In total, SCE posts over 0 million customer payments annually. As discussed below, the groups work together to manage customer receivables to keep SCE s uncollectible expense as low as possible by providing convenient payment options, and implementing credit and payment policies designed to prevent service disconnections. The primary activities within Credit and Payment Services include the following: a) Credit Services SCE s Credit activities are performed daily by Customer Service Representatives (CSRs) in the CCC, in SCE s Rural Offices, Field Services personnel located throughout SCE s service area, and Customer Assistance programs administered by SCE s Consumer Affairs Organization. The credit function in the utility industry is unique; there is a delay, on average, of 0 to 0 days from the time service is rendered until disconnection can take place. Typically, residential customers disconnected for nonpayment owe payments in excess of two months worth of service. The credit risk assessment function begins with the identification of customers at risk of non-payment to prevent uncollectible expense. This process occurs when a new applicant applies for service. The new customer risk assessment includes obtaining positive identification in the form of a social security number and a credit score that is based upon the customer s individual credit history. This process is used to determine whether a security deposit is required to establish credit and also prevent identify theft in compliance with the Federal Trade Commission Red Flag Rules. Once an assessment is completed, higher-risk customers are secured by selecting various forms of approved securities, such as cash and non-cash deposits and payment guarantees. For large commercial accounts, the Credit group conducts a financial analysis at the time a new service is established and continues to regularly monitor the customer s financial status for any material change. Analyses consist of reviewing publicly available financial statements and credit scores to determine credit worthiness. If there is a material change in the customer s financial or credit status, the Credit group will negotiate security either by cash deposit or non-cash security options. Refer to WP SCE-0 Ch. I-VI, pp. 1-1 for a description of SCE s collection path and time-line. See for Red Flag Rules (FACTA).

109 In the 01 Base Year, there were approximately 1,000 residential customers, and 1,000 non-residential customers, disconnected for non-payment. Of the residential customers disconnected, percent reconnected with percent of the customers reestablishing service on the same day (within hours) by bringing their past due payments current. 0 SCE continues to manage residential CARE disconnects to a reasonable level. In 01 CARE disconnects as a percentage of the population was. percent. 1 Since the Residential Disconnect OIR Settlement Agreement, SCE has adopted several measures that became effective April 1, 01. Many of the measures will sunset on December 1, 01, while some may remain ongoing (to be determined prior to sunset date). As requested in the Settlement Agreement, a series of payment arrangement pilots were implemented and the results shared with consumer advocate groups at the bi-annual compliance meeting. Changes to the OORs associated with FERC Account 0 and a portion of the FERC Accounts 1 and became effective January 1, 01. Additionally, cash deposits have moved towards normal levels as a result of the Settlement Agreement, which now allows SCE to re-establish all residential customers at time of reconnect. SCE s uncollectible expense for 01 was still $. million as reflected and discussed in FERC Account 0. b) Collection Activities Collection activities include tracking, monitoring, and follow-up action on delinquent active and closed accounts. In addition, written notifications and SCE s IVR capability in the CCC provide outbound final call notifications to our past due customers. SCE s goal is to collect past due revenue while helping customers avoid disconnection. SCE has several options to help customers avoid disconnection, such as meaningful customer contact and communication, energy conservation educations, outreach programs, bill payment assistance, and financial assistance. Additionally, customers who fail to pay a closing bill on time may be subject to credit bureau placement, which results Refer to WP SCE-0 Ch. I-VI, p. 1 regarding disconnection volumes for the period Refer to WP SCE-0 Ch. I-VI, p. 1 regarding the 01 disconnection and reconnected within hours data. 1 Refer to WP SCE-0 Ch. I-VI, p. 1 regarding the CARE disconnection rate. See D for information on the Residential Disconnect OIR Settlement Agreement. Refer to WP SCE-0 Ch. I-VI, pp. -1 for information on the measures that are sunsetting. Refer to WP SCE-0 Ch. I-VI, p. 1 regarding Cash Deposits.

110 in a negative attribute on their credit file. Unpaid closed-account balances remain visible when a customer attempts to reestablish services with SCE and the Credit group continues to monitor these balances to attempt collection. Closed-account collection activities include a manual and automated skip-trace process, credit bureau placement, and contracted agencies to collect unpaid balances. c) Payment Services Payment Services activities include providing SCE customers with convenient, efficient, and cost-effective payment options. Approximately two-thirds of SCE s customers paid their bill through an electronic payment option in 01, the other third of customers used the U.S. mail or paid in-person at an APA or SCE Rural Office. These options are described further in the next section. (1) Payment Posting As shown below in Table IV-1, the volume of payments processed decreased by 1.1 million from 1. million in 0 to 0. million in 01. For the same time period, Mail-In payments decreased by 0 percent, In-Person APA and Rural Office payments decreased by percent, and Electronic Payments increased by percent. The overall reduction in payment processing from 1. million payments in 01 to. million in 01 was due to the GHG allowance revenues received as part of California s Cap-and-Trade program, which significantly offset the impact from customer growth. These GHG allowance revenues were applied as credits to residential customer bills in 01 (a $0.00 credit in April and October) and as a result, for some customers, no monthly payment was required due to a net bill credit. In 01, GHG credits were applied to customer bills, but at a lower amount (a $.00 credit in April and October), resulting in fewer bills with net bill credits, and an increase in the number of payments posted over 01. Table IV-1 Payment Posting Volume 0 01 (In 000s) Line No. Description Mail-In Payments 1,01 1,0 1, 1,1 1, In-Person Payments y Agencies,,,0,0, Rural/Local Offices 0 0 Electronic Payments:,, 0, 0,1,0 Total 1, 1, 1,, 0, 0

111 As of 01, Mail-In payments account for 1. million payments or percent of all payments received. As customers continue to become familiar with the convenience and security of electronic payment options, SCE expects a continued movement from Mail-In and In-Person payment options toward electronic payment options. The volume of APA payments has decreased by. million from 0 to 01, or percent, as a result of customers migrating to electronic payment options. APAs collected. million payments in 01, which represents eight percent of SCE s total payments collected. The number of APAs decreased slightly over recent years, going from 1 in December 01 to in December 01, a 1 percent decrease. For Rural Office payments, the volume continues to decline steadily each year. Over the 0-01 period, Rural Office payments have decreased by percent. As a result of the continued decline in Rural Office payment transactions, SCE is planning to seek Commission approval in late 01 to close its Rural Office locations. In preparation for closing the Rural Offices, 1 additional APA locations have been added to the APA network near the closing Rural Office locations to continue the convenience and availability of In-Person payment for customers who prefer this payment channel. () Cost Per Payment As shown in Table IV- below, the average cost per payment has decreased 0 percent from 0 cents per payment in 0 to 1 cents per payment in 01. Customers continue to migrate towards electronic payment options, most of which are provided at no cost to customers. The impact of customer growth continues to increase costs, but at a lower rate than the offsetting lower costs from electronic payment transactions and lower transaction volume from the GHG credit, which is expected to end in 00. Table IV- Average Cost Per Payment for Payment Service Recorded 0 01 Line No. Description Total Payment Services Costs (Constant 01 $000) $,0 $, $, $,0 $,1 Total Number of Payment Processed (in 000s) 1, 1, 1,, 0, Average Cost-Per Payment (Constant 01 $) $0.0 $0.1 $0.1 $0.1 $0.1 1

112 () Payment Posting Timeliness As shown in Table IV- same-day payment postings have continued to average above percent over the last five years. Next-day payment postings for APAs are nearly 0 percent. SCE continues to maintain superior performance in the area of payment posting timeliness. Same Day % Table IV- Payment Posting Timeliness Recorded Next Day % Same Day % Next Day % Same Day % Next Day % Same Day % Next Day % Same Day % Next Day % Line No. Description 1 Mail-In Payments 0 n/a 0 n/a 0 n/a 0 n/a 0 n/a APAs Overall () APA Network American Disability Act (ADA) Compliance SCE annually surveys ten percent of its APA network, including at a minimum four new APAs, to confirm ongoing compliance with the ADA requirements. Table IV- shows the 01 survey results of SCE s ADA Compliance. As of December, 01, all APA locations are compliant with ADA requirements and have provided documentation of compliance through either a Standard Letter or Declaration Letter Agents. Three of these are approved Exception Agents that are ADA compliant. The access issues for SCEs APA and the need to comply with established public access standards and related ADA transactional elements were specifically addressed in the 01 GRC. Over the last few years, SCE has added more chain APA locations that are typically covered via a declaration letters as many large chains prefer to manage ADA requirements on their own. Refer to WP SCE-0 Ch. I-VI, p. 1 regarding APA exception agents. See D.1--01, pp. -, for the Settlement Agreement between DisabRA and SCE regarding mutually acceptable outcome to certain access issues.

113 Table IV- 01 APA / ADA Compliance Results Line No. APA Network Compliant 1 Standard Agents 1 Declaration Letter Agents 0 Approved Exception Agents* Total Percentage 0% * Approved by Center for Accessible Technology 1 SCE s website provides a locational listing of accessible APAs, which is updated as changes are made to the APA network. () Electronic Payment Options Electronic payment options have become the most preferred payment option among SCE customers, comprising two-thirds of all payments in 01. These options and the volume for each are shown in Table IV-. Electronic payments have increased by over. million payments from million in 0 to over million in 01, a percent increase due to the convenience provided by these options. See on.sce.com/apalocator for SCE s APA locator.

114 Table IV- Electronic Payment Options Volumes Recorded 0 01 (In 000s) Line No. Electronic Payments Electronic Funds Transfer,1,0 1,01,0, Direct Payment,0,,01,1,0 QuickCheck 1,1 1,,,0 1, On-line Bill Payment,1,,,1,0 Electronic Data Interchange Pay-by-Phone 0 1,0 Credit/Debit Card ,,0 Electronic Payments Total,, 0, 0,1, () In-Person Services Rural Offices SCE operates business offices (also known as Rural Offices: Arrowhead, Barstow, Bishop, Blythe, Catalina, Kernville, Mammoth, Ridgecrest, Shaver Lake, Tehachapi, and Yucca Valley). These offices provide customers an option to pay their bill in-person, inquire about their bill, make deposits, and conduct other transactions such as turn on/turn offs and reconnections/disconnections. All Rural offices are located at SCE service centers where local distribution system maintenance and construction work is coordinated. Due to the declining and low volumes of payments processed in Rural Offices, SCE plans to request Commission approval to close all business offices through an Advice Letter to be filed in late 01. After receiving Commission approval to close some or all of the offices, SCE will submit updated testimony to this GRC that will include the forecast reduction for the office closures.. Analysis of Recorded and Forecast O&M Expense Credit and Payment Services O&M expenses are recorded in FERC Account This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments

included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for Credit and Payment Services are shown in Figure IV- and discussed below.

115 included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for Credit and Payment Services are shown in Figure IV- and discussed below. a) Historic Variance Analysis for Credit and Payment Services As shown in Figure IV-, Credit and Payment Services recorded adjusted costs declined percent from $. million to $1. million due to the use of the Remote Service Switch (RSS) in 01 and other efficiencies of work functions further discussed below. Figure IV- Credit and Payment Services Recorded 0-01 / Forecast FERC Account 0.00 (Constant 01 $000) Labor expenses decreased by $. million, or percent, from $1. million in 0 to $.1 million in 01. The largest decrease in labor over the five year period was between 0 Refer to WP SCE-0 Ch. I-VI, pp. -1 for the recorded and forecast O&M expenses for FERC Account 0.00.

116 and 01. The decrease of approximately $.0 million from $1. million in 0 to $. million in 01 was the direct result of implementing the RSS for credit-related disconnects and reconnects (ESC systems approached full deployment at the end of 01). RSS implementation eliminated approximately. percent of field disconnects and reconnects in 01. Labor continued to decrease from 01 to 01 by $0. million as a result of reducing operations support and field-credit-related work. Expenses increased slightly by $0. million from 01 to 01 primarily due to an increase in field-credit-related work. Non-labor expenses include materials, vehicle costs for field-credit-related work, customer payment vendor services, contingent worker labor, and accounts receivable vendor services. From 0 to 01, non-labor expenses decreased by $. million, or 1 percent, from $. million in 0 to $. million in 01. Similar to labor, the largest decrease in non-labor expenses over the five-year period was between 0 and 01. The $. million decrease from 0 to 01 was the direct result of implementing the RSS for credit-related disconnects and reconnects (ESC systems approached full deployment at the end of 01). Expenses decreased an additional $1. million from 01 to 01 due to lower mail-in payment volume (with the increase in electronic payment options) caused by the GHG credit allowance, and continued process efficiencies and streamlining of work functions across RSO. b) Comparison of 01 Authorized and Recorded O&M Expenses Figure IV- compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 expenses recorded in FERC Account 0.00 in compliance with D As shown in Figure IV-, SCE s recorded expenses for 01 in FERC Account 0.00 were less than the authorized amount by $.1 million. This variance was the result of GHG credits issued to residential customers that reduced the number of payments received and other credit-related activities.

117 Figure IV- 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account 0.00 (01 $ 000) $0,000 $1,000 $1,000 $1,000 $1,000 $,000 $,000 $,000 $,000 $,000 $0 $1, $1, 01 Request 01 Authorized $,1 $1, Variance 01 Recorded 1 c) Test Year Operating Expectations for Credit and Payment Services Figure IV- shows the forecast O&M expenses for Credit and Payment Services activities. Details regarding the forecast are below. (1) Determination of Test Year Estimating Method The 01 Base Year activities for Credit and Payment Services are described in Section IV.C.1 above. Although labor expenses steadily decreased from 0 through 01 and then remained stable between 01 and 01, the Last Recorded Year is the appropriate basis for the Test Year forecast as it reflects the most recent activities undertaken by Credit and Payment Services. In addition, the adjustments proposed below are calculated specifically in the context of 01 activity levels and recorded O&M expenses. This includes, for example, the lower level of credit-related field work and lower mail-in payment volumes in 01, relative to Base Year recorded adjusted O&M

118 expenses. As a result, the Last Recorded Year, combined with the adjustments detailed below, is the appropriate basis for forecasting Test Year labor expenses. Overall, Credit and Payment Services non-labor expenses have decreased from 0 to 01 as described above. The Last Recorded Year accurately reflects the expense level associated with Base Year activity levels and the adjustments proposed below are calculated specifically in the context of those activity levels and Base Year recorded O&M expenses. For these reasons, the last recorded year is the appropriate basis for forecasting Test Year non-labor expenses. 0 () Test Year Adjustments SCE s forecast of Test Year O&M expenses for Credit and Payment Services reflects increased expenses due to customer growth and CS Re-Platform, offset by reduced expenses associated with CS Re-Platform benefits and Operational Excellence initiatives. These adjustments are described in detail below and summarized in Table IV-. The resulting O&M forecast is shown in Figure IV- and Figure IV- illustrates the relative levels of the 01 Base Year expense to the 01 Test Year forecast and the forecast adjustments used to arrive at the forecast cost for SCE s Credit and Payment Services in 01. The decision to use Last Recorded Year as the basis for the Test Year O&M labor forecast for Credit and Payment Services is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have been relatively stable for three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For Credit and Payment Services, labor expenses have been relatively stable as the year-to-year labor expense variances have been less than percent for the period 01 through The decision to use Last Recorded Year as the basis for the Test Year O&M non-labor forecast for Credit and Payment Services is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For Credit and Payment Services, overall non-labor expenses have generally trended downward over the period 0-01.

119 Table IV- Credit and Payment Services Test Year O&M Adjustment Summary (Constant 01 $000) Line No. Description Labor Non-Labor Total 1 Customer Growth CS Re-Platform Expenses 0 CS Re-Platform Benefits () - () Operational Excellence Increased Vendor Partnering (0) (0) Support Function Reduction () () (1) Total Test Year Adjustments () () 1 (a) Customer Growth The number of customers served in SCE s service territory is expected to increase by. percent from 01 to 01. The Credit and Payment Services group must therefore support increasing credit and payment activities, including generating more bills to new customers. While managing this increasing workload, the Credit and Payment Services group expects to maintain high performance, meet customer needs, post payments in a timely manner, and adhere to established credit rules and policies to keep uncollectible expenses to a minimum. This increase in credit and payment activities supports an upward adjustment of $,000 to the labor and non-labor components of the 01 Base Year recorded adjusted costs. 1 (b) CS Re-Platform O&M Expenses As described in SCE-0, Vol., SCE plans to implement the Customer Service Re-Platform capitalized software project in 00. CS Re-Platform costs for RSO include two components: (1) RSO supplemental staff costs and () staff augmentation contract services. Temporary staff in RSO will be required to maintain the legacy credit, collection, and payment system while SCE employees train on the new SAP billing platform. SCE forecasts incremental Test 1 Refer to WP SCE-0 Ch. I-VI, p. 00 for details supporting the customer growth adjustment for FERC Account 0.00.

120 Year expenses of $,000 to train temporary staff and to maintain the credit, collection, and payment processes under the legacy system while SCE staff learns the new SAP-based system. (i) RSO Supplemental Staff SCE Labor The incremental labor cost forecast of $00,000 for supplemental SCE labor in RSO is due to an additional eight FTEs at an average monthly rate of $, needed to supplement RSO employees over a 1-month period. For two months from June through July 01, the supplemental RSO staff will be trained on the legacy system to handle credit, billing, collection, and payment processes while RSO staff is trained on the new SAP based CR&B module and associated applications for five months from August to December 01. The RSO supplemental staff will also be trained in phases during this four-month period. When the new system goes live in early 00, the average handling time is expected to increase 0 percent due to the learning curve associated with the new system and business processes. As a result, a ten percent increase in exception volume is expected. The supplemental staff will also be trained on the new SAP system to support the increase in handling time and exception volume. The Test Year forecast is based on levelized expenses for this GRC period (01-00) and equals $,000. (ii) RSO Staff Augmentation Contract Services The incremental labor costs forecast of $0,000 for contract services in RSO is due to an additional five FTEs at an average monthly rate of $,01 needed to supplement RSO employees over a 1-month period. For two months from June through July 01, the contract RSO staff will be trained on the legacy system to handle credit, billing, collection, and payment processes while RSO staff is trained on the new SAP-based system and associated applications for five months from August to December 01. The RSO contract staff will also be trained in phases during this four-month period. The average handling time is expected to increase by 0 percent due to the learning curve associated with the new system and new business processes, in addition to which a ten percent increase in exception volume is expected. The contract staff will also be trained on the new Refer to WP SCE-0 Ch. I-VI, p. 01 for additional information on the O&M expenses associated with the CS Re-Platform project. Refer to WP SCE-0 Ch. I-VI, p. 01 for additional information on the Supplemental Staff expenses associated with the CS Re-Platform project. 0

121 SAP system to support the increase in handling time and exception volume. The Test Year forecast is based on levelized expenses for this GRC period (01-00) and equals $1,000. (c) CS Re-Platform O&M Benefits SCE expects operational efficiencies will be enabled by improved technology, automation of processes, and the corresponding reductions in FTEs in future rate cases (further described in SCE-0, Vol. ). SCE forecasts the benefits charged to FERC account 0.00 from implementing the new billing services system to total $,000, as improvements to the billing system reduce transaction handling and processing time. (d) Operational Excellence Over the next three years, RSO forecasts $1,000 in Operational Excellence savings in FERC 0.00 for two initiatives: increased vendor partnering and streamlining work processes. Beginning in 01, SCE started to transition simple transaction work including customer verification and skip tracing functions to an external vendor. RSO s vendor partnering will maintain or improve service levels and reduce costs for customers. Credit and Payment Services will continue to enforce SCE policies and practices and achieve performance standards with vendor partners. For the 01 Test Year, RSO forecasts saving $0,000 in labor costs through vendor partnering. Credit and Payment Services plans to reduce Test Year support expenses that fall in FERC This Operational Excellence initiative is forecast to achieve Refer to WP SCE-0 Ch. I-VI, p. 01 for additional information on the Staff Augmentation expenses associated with the CS Re-Platform project. The CS Re-Platform benefits included in SCE s 01 Test Year forecast are proposed, contingent upon approval of the corresponding CS Re-Platform project costs. Should the Commission not adopt the proposed CS Re-Platform costs in this FERC activity, the corresponding benefits must also be removed from the Test Year forecast. Refer to WP SCE-0 Ch. I-VI, p. 0 regarding the expected benefits for the CS Re-Platform project. Skip tracing is the process of locating customers who have past due amounts on closed accounts. Refer to WP SCE-0 Ch. I-VI, p. 0 regarding Operational Excellence reductions associated with vendor partnering for FERC Account

122 $1,000 in labor and non-labor savings by streamlining, prioritizing, and eliminating selected support functions. () Credit and Payment Services Forecast Summary As shown below in Figure IV-, SCE expects $1.1 million in O&M expenses in the 01 Test Year for FERC Account 0.00, a decrease of $0. million or one percent as compared to Base Year O&M expenses of $1. million. Refer to WP SCE-0 Ch. I-VI, p. 0 regarding the reduction associated with the Support Function Operational Excellence initiative.

123 Figure IV- Credit and Payment Services Comparison of 01 Base year to 01 Test Year FERC Account 0.00 (Constant 01 $000) $1,000 $1,000 $1, $ $ $ $1 $1,1 $1,000 $1,000 $,000 $,000 $,000 $,000 $,000 $- 01 Recorded Customer Growth CS Re-platform CS Re-platform Benefits Operational Excellence 01 Forecast 1 D. Postage [FERC Account 0.0] This section describes the Postage function as described in Section IV.D.1 below. The O&M expenses associated with this function are recorded in FERC Account 0.0. The recorded and forecast O&M expenses associated with this function are described in Section IV.D. below. 1. Postage Function and Base Year Operating Results RSO mails SCE s bills, associated notices, reminders, and correspondence. In 01, SCE sent over million billing statements and.1 million notices, reminders, and correspondence at a total postage expense of $0. million. SCE reduces postage costs by using bulk mail discounts and by using a residual mail contract for mail volumes that are too small to qualify for a volume discount. The billing group monitors bill length and the number of bill inserts in an effort to manage the postage costs.

124 As of June 01, over 1. million customers, or percent, receive their bills electronically as opposed to mailed. In recent years, mailing costs have been lowered significantly by encouraging customers to convert to electronic billing. SCE continues to explore options to encourage customers to receive their bill electronically to reduce postage and other paper-statement-related costs. a) Operating Results for Postage As shown in Table IV- below, RSO reduced mailings by percent, from. mailings per customer in 0 to.0 mailings per customer in 01. This reduction corresponds to the increase in on-line electronic billing transactions that began in 01 and increased to. million on-line billing electronic transactions in 01. Table IV- Mailings Per Customer 0-01 Recorded and Forecast (In 000s Except For Mailings Per Customer) Line Recorded Forecast Topic No Customers,,0,,00,0,0,,1 Mailings N/A N/A,,,1,0,,1 On-line Billing Transactions N/A N/A 1,,0,,1,1 1, Mailings less On-line Billing,1,1,1 1, 0, 0, 1,0 1,1 Mailings / Customer Year Average. -Year Average. Note - Mailings include bills, notices and customer correspondence 1 The postage rates in effect and a breakdown of recorded mailings by type for each year from 0-01 are shown in Table IV-. Due to its bulk mailing operations, SCE receives postage discounts for six types of mailings: 1 1 -Digit Presorted mailings, -Digit Presorted mailings, Customers can elect to have their bills mailed through an electronic means (e.g., ) or mailed through the United States Postal Service (USPS). In accordance with SCE Tariffs, Rule 1 (Definitions), Customer s Mailing Address(es): The physical and electronic mailing address specified in a customer s application or contract, or any other address subsequently given to SCE by the customer, to which any bill, notice, or other communication is to be mailed.

125 Automated Area Distribution Center (AADC) mailings, Mixed AADC mailings, Non-Manifest 1st Class, and Summary First Class Overweights. Mail that does not qualify for the maximum postage discount because of insufficient volume is known as residual mail. To minimize the postage expense for residual mail, SCE uses a presort-contractor that combines SCE s residual mail with similar pieces of mail from other larg -volume companies on a daily basis. This qualifies such mail for a discounted rate, which would otherwise not be available.. Analysis of Recorded and Forecast O&M Expense Postage O&M expenses are recorded in FERC Account 0.0. This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for Postage are shown in Figure IV- and discussed below. 0 a) Historic Variance Analysis for Postage The recorded adjusted costs shown below in Figure IV- were derived after analyzing the recorded costs for this activity and adjusting them to reflect ongoing operations. The decline in postage expense from $. million in 0 to $0. million in 01 is the result of increased mailings for new customer growth that were more than offset by increased participation in the electronic billing program. Without increased customer participation in electronic billing options, actual postage costs would have been significantly higher. 0 Refer to WP SCE-0 Ch. I-VI, pp. 0-1 for the recorded and forecast O&M expenses for FERC Account 0.0.

Figure IV- FERC Account 0.0 Postage 0 01 Recorded and 01-01 Forecast (Constant 01 $000) 1 Postage expense in 01 was $0. million,

126 Figure IV- FERC Account 0.0 Postage 0 01 Recorded and Forecast (Constant 01 $000) 1 Postage expense in 01 was $0. million, $. million below the 0 recorded level of $. million. The decrease in postage expense over the five year period was the net result of increases in mailings for customer growth that were more than offset by increased customer participation in the electronic billing program.

127 Table IV- Postage Rates and Total Expense by Type of Mailing FERC Account 0.0 Recorded (Nominal $) Forecast (01 $) Line No. Type of Mailing Postal Rate Category Digit Digit AADC (Automated Area Distribution Center) Mixed AADC (Automated Area Distribution Center) Misc 1st Class Misc 1st Class Overweights Full 1st Class Overweights Full 1st Class Overweights (Over oz) Non-Manifest 1st Class Non-Manifest 1st Class Overweights Summary 1st Class N/A N/A N/A N/A N/A N/A N/A N/A 1 Summary 1st Class Overweights Late Notices Misc Pieces Weighted Average Postal Expense (Nominal $000) In 01 ($000s) 1 Digit $, $1, $1, $1, $1, $1, $1, $1, 1 Digit $, $,0 $, $,0 $,1 $,01 $,01 $, 0 AADC (Automated Area Distribution Center) $ $ $ $1 $ $ $ $ 1 Mixed AADC (Automated Area Distribution Center) $1 $1 $ $1 $ $ $ $0 Misc 1st Class $ $. $.1 $.0 $.0 $.0 $.0 $.0 Misc 1st Class Overweights $. $ $ $ $1 $1 $1 $1 Full 1st Class Overweights $ $ $ $1 $ $ $ $ Full 1st Class Overweights (Over oz) $.1 $. $. $. $. $. $. $. Non-Manifest 1st Class 1 $ $ $ $0 $ $ $ $0 Non-Manifest 1st Class Overweights $, $1 $ $ $ $.0 $.0 $.0 Summary 1st Class N/A N/A N/A N/A N/A N/A N/A N/A Summary 1st Class Overweights $ $ $1 $ $ $0 $ $1 0 Late Notices $ $ $ $ $ $1 $ $ 1 Misc Pieces $ $0 $0 $ $ $ $ $ Prepaid Meter Postage -$1 $ $ $ $ $1 $1 $1 Other Mailings $ $ $1 $1 $1 $1 $1 $1 Other Postage related activities $0 $ $ $1 $ $0 $0 $0 Sub-total $1,1 $0,00 $1,1 $0,1 $0, $1, $1, $0,1 Online Billing Productivity Adjustment N/A N/A N/A N/A N/A -$1, -$, -$, Total $1,1 $0,00 $1,1 $0,1 $0, $1, $1,0 $1,0

128 b) Comparison of 01 Authorized and Recorded O&M Expenses Figure IV- compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 expenses recorded in FERC Account 0.0 in compliance with D As shown in Figure IV-, SCE s recorded expenses for 01 in FERC Account 0.0 were less than the authorized amount by $0. million or 1. percent. This variance is within normal operating expectations. Figure IV- 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account 0.0 (01 $ 000) $,000 $0,000 $0, $0, $0, $ $1,000 $,000 $,000 $0 01 Request 01 Authorized Variance 01 Recorded a) Test Year Operating Expectations for Postage Details regarding the forecast are below. Figure IV- shows the forecast Postage O&M expenses for mailing activities.

129 (1) Determination of Test Year Estimating Method The estimating method for postage is based on the postage study in Table IV-, which provides the forecast postage expenses for The postage study forecast uses the Last Recorded Year number of mailings per customer of.0 that reflects the Base Year level of customer participation in electronic billing. The number of mailings per customer three- and five-year averages of. and. were not used because they do not reflect the higher Base Year level of customer electronic billing participation. The postage study shows the applicable postage rates and postage expenses by type of mailing in Table IV-. In view of the factors driving the postage expense and continued efforts to maintain these expenses at the lowest possible levels, the 01 recorded adjusted expenses reflect a mix of mailing types and represent Test Year expectations. Therefore, SCE selected the Last Recorded Year estimating method as the basis for the 01 Test Year forecast, with adjustments for customer growth, 01 postage rate decrease, and increased electronic billing enrollments described below. 1 () Test Year Adjustments for Postage Figure IV- illustrates the relative levels of the 01 Base Year expense to the 01 Test Year forecast and the adjustments used to arrive at the forecast for SCE s postage expense in 01. There are two forecast adjustments described below: Program Changes and Operational Excellence. (a) Program Changes Program Changes for Postage Expenses reduced the 01 forecast by $,000 and includes the USPS April 01 postage rate reduction, customer growth, and other postage-related activities. Each of these Program Changes is discussed below. Postage expense is directly impacted by customer growth as additional customers increase the number of mailings and associated postage expense. The number of 1 The decision to use Last Recorded Year as the basis for the Test Year O&M non-labor forecast for Postage is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For Postage, overall non-labor expenses have generally trended downward over the period 0-01.

130 customers served in SCE s service territory is expected to increase by. percent from 01 to 01. To reflect the cost impact that customer growth will have on the volume of mailings and postage expense and postage-related activities, the forecast number of customers was used in the postage study. In April 01, the USPS reduced postage rates by a weighted average of $0.01 per mailing. The reduced postage rate decreases the Test Year postage expense in FERC Account 0.0 by $0,000. This reduction was calculated based on using the April 01 postage rates applied to the recorded 01 mailing volumes by type of mailing class compared to the 01 postage expense. The 01 postage expense forecast is based on the current April 01 USPS postage rates. (b) Operational Excellence SCE forecasts Test Year postage savings of $. million through a customer engagement campaign to automatically enroll SCE epayment, Direct Pay, and Credit Card customers to electronic billing. These initiatives to increase participation in electronic billing also include several customer promotions to increase customer awareness and participation. For example, the EV Sweepstakes initiative in Line of Table IV- refers to a campaign where all SCE customers enrolled in electronic billing will be eligible to win an electric vehicle. This campaign will be promoted on the SCE website, with banner ads, , and direct mail. The New Initiatives in Line of Table IV- refer to efforts by SCE to offer electronic billing at the time of ordering new service or making a credit card payment. The Digital Customer Self-Service capitalized software project, described in testimony at Exhibit SCE-0, Vol., is essential to increase customer enrollment in electronic billing through digital options like mobile-based platforms and My Account on SCE.com. The electronic billing program is designed so that customers can easily opt out of electronic billing at any time if they choose. Table IV- below shows the forecast number of new Ebilling transactions for Refer to WP SCE-0 Ch. I-VI, pp. 1- regarding SCE s postage study. Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding postage expenses and program changes for FERC Account

131 01-01 and the 1. million in additional customers expected to participate in Ebilling by the Test Year. Table IV- SCE Planned Electronic Billing Program Initiatives Forecast New Customer Ebilling Transactions and Enrollments Line No. Description Default SCE epay Customers,01, 1,1, - Sweepstakes - 0,000 0,000 Default Credit Card Customers,1 1, - Default DP Customers,1,0 - Offer Paperless to remaining -,000 1,000 ipad Promotion 1,,0 - Marketing,0 00,000 New Initiatives,0 1,0,1,1 Default EFT Customers,000 1,,000 - Total Yearly New Ebilling Transactions and Enrollments,1,,,0 1,,1 Total Cumulative New Ebilling Transactions,1,,1, 1,, 1 Weighted Average Postage Rate $ 0. $ 0. $ 0. 1 Postage Savings $ 1,,0 $,,1 $,, 1 Postage Savings ($000) $ 1, $, $, 1 Estimated Number of New Ebilling Customer Enrollments based on.0 mailings per year, 1,1,1 1,0, (1) Postage Forecast Summary As shown below in Figure IV-, by the 01 Test Year SCE expects a decrease of $,1 million or. percent as compared to the 01 Base Year O&M expenses of $0. million. 1

132 Figure IV- Postage Expense Comparison of 01 Base Year to 01 Test Year FERC Account 0.0 (Constant 01 $000) $,000 $0,000 $0, $ $1,0 $1,000 $, $,000 $,000 $- 01 Recorded Program Changes Operational Excellence 01 Forecast 1 E. Uncollectible Expenses [FERC Account 0] Uncollectible Expenses are described in Section IV.E.1 below. The O&M expenses associated with this function are recorded in FERC Account 0. The recorded and forecast O&M expenses associated with this function are described in Section IV.E. below.

133 Description of Uncollectible Expense FERC Account 0 records SCE s expenses for all revenue components of uncollectible customer accounts. Historically, expenses recorded in this account are authorized based on an estimate of the uncollectible expense factor, which is expressed as a percent of SCE s total revenue. Once determined, this authorized rate of uncollectible factor is applied to Test Year generation and distribution revenues in the GRC proceeding and is also applied to revenue components litigated in other ratesetting proceedings before the Commission or the Federal Energy Regulatory Commission (FERC). Uncollectible expense is the only activity recorded in FERC Account 0. SCE s forecast for Account 0 includes that portion of recorded revenues subsequently determined to be uncollectible. Because all receivables are recorded as revenue when the sale is recorded, revenues are overstated by the amount that will not be collected due to customers failure to pay. To avoid this overstatement of revenues (and a corresponding overstatement of assets), a provision for the uncollectible portion is retained as a credit balance in the General Ledger - Provision for Uncollectible Accounts. This provision for uncollectible expense is estimated each month because the actual uncollectible expense is not known until the uncollectible expenses are written off. Typically, uncollectible revenues are written off approximately days from the date a closing bill remains unpaid. Thus, FERC Account 0 records the provision for uncollectible expenses; it does not record SCE s actual uncollectible expense. For estimating purposes in this proceeding, the recorded levels in FERC Account 0 have been adjusted to reflect actual uncollectible expense for each year. The application of the uncollectible expense factor for revenues determined in other proceedings is described in SCE s Preliminary Statement for each authorized revenue related recovery mechanism, such as the Base Revenue Requirement Account Preliminary Statement, Paragraph YY..e. In addition to the distribution and generation revenue requirement being litigated in this rate case, the uncollectible factor is applied to the other public purpose revenue component which is litigated independently. For purposes of calculating the FERC Account 0 uncollectible factor, the associated dollar amounts described in this section are expressed in terms of gross revenue.

134 . Operating Results for Uncollectible Expense Table IV-0 shows SCE s 01 authorized level for uncollectible expense, and the actual recorded uncollectible expense for 01, which does not include any impacts from the Residential Disconnect OIR. Table IV-0 Uncollectible Factor and Expense 01 Authorized Versus. 01 Recorded (Nominal $s) Line No. Description SCE 01 Authorized SCE 01 Recorded Variance 1 Uncollectible Factor 0.% 0.1% 0.0% Gross Revenue N/A $1. B N/A Uncollectible Expense N/A. M N/A The 01 recorded level of 0.1 percent of SCE s gross revenue ($. million uncollectible compared to $1. billion in revenue) was under the 01 authorized level of 0. percent by 0.0 percent. This is likely due to the return to standard collection practices following the end of the Disconnect OIR, as well as generally improved economic conditions that resulted in more customers paying their electric bills. Although some provisions of the Residential Disconnect OIR have been in effect from 00 to 01, SCE received approval in the 01 GRC decision to recover $1. million in uncollectible expense attributable to the OIR. This additional expense was due primarily to the accumulation of more bills because of longer and more lenient payment arrangements, and the waiving of deposits.. Historic Variance Analysis for Uncollectible Expense Figure IV- below illustrates 0 years of historical uncollectible factors and shows the variability of the uncollectible factor over time, from a high of 0. percent in 1 to a low of 0. Refer to WP SCE-0 Ch. I-VI, pp. - for the recorded and forecast O&M expenses for FERC Account 0. In SCE s 01 GRC (A.1--00), the Commission approved, and SCE recovered, $1. million, of which, the uncollectible expense recovery was $1. million. See D.1--01, pp.,.

135 percent in 00. Over the last five years, the factor has gone from a high of 0. percent in 0 to a low of 0.1 percent in 01. The historic pattern of recorded levels of uncollectible expense over the last 0 years is erratic, and the 0-, 1-, and -year averages are heavily influenced by the two extremely low uncollectible factors occurring in 00 at 0.1 percent and 00 at 0. percent. The historically low levels of uncollectible expense recorded in 00 and 00 resulted from excessive credit availability through sub-prime lending. Subsequently, uncollectibles expense increased in 00 with the economic downturn from consumer de-leveraging of the massive amounts of credit. The increase from 0 to 01 was primarily due to the Residential Disconnect OIR. Percentages do not include any OIR uncollectible expenses. See Brookings Papers on Economic Activities, Fall 00 Conference Draft, Making Sense of the Subprime Crisis, Kirsopher Gerardi, Federal Reserve Bank of Atlanta, et al, p., available at [as of August 1, 01].

Figure IV- History of Recorded Uncollectible Factor 1 through 01 1.

136 Figure IV- History of Recorded Uncollectible Factor 1 through Test Year Operating Expectations for Uncollectible Expense Figure IV-0 below illustrates SCE s proposed Uncollectible forecast factor of 0.1 percent for its 01 Test Year based on the most recent five-year average recorded expense after removal of the uncollectible expenses resulting from the Residential Disconnection OIR. Calculating the uncollectible factor over this five-year period, versus using a -year average, removes the aberrations that occurred during the credit crisis and economic downturn, and is more representative of recent experience. SCE calculated the impact of the Test Year OOR forecast change on the uncollectible factor and found no material impact and, thus, did not include a forecast adjustment for this item.

analysis shown above in Figure IV- and Figure IV-0, SCE

137 Figure IV-0 Uncollectible Factor Five-Year Average 0 through 00 1 a) Uncollectible Forecast Summary Consistent with the analysis shown above in Figure IV- and Figure IV-0, SCE requests an Uncollectible expense of 0.1 percent in this 01 GRC proceeding.

138 V. CUSTOMER CONTACT CENTER [FERC ACCOUNT 0.00] This chapter describes SCE s CCC, its Base Year activities, and its Test Year O&M expense forecast. A. Overview of the CCC The CCC handles 1. million inbound contacts annually, and is responsible for fulfilling customer requests for service, addressing credit and billing inquiries, identifying usage patterns, supporting SCE.com, and discussing energy solutions and products (e.g., Budget Assistant). The CCC also responds to emergency calls regarding outages, damaged equipment, and disconnection of service for non-payment hours a day, seven days a week. 0 To handle this variety of inbound and outbound transactions, SCE employs over 0 Customer Service Representatives (CSRs) and support personnel in the CCC. In addition, for over a decade, the CCC has successfully used a contract call center provider to assist with service establishment and transfer of service, credit arrangements, outage calls, and, most recently, service establishment and transfer of service calls. CCC O&M expenses are recorded in FERC Account The 01 Test Year O&M forecast for this FERC Account totals $. million, an increase of $. million relative to Base Year recorded adjusted expenses. This forecast reflects the costs associated with ongoing CCC activities, expected customer growth, program changes necessary to support the TOU period adjustment and default CPP, and increased CCA activity. The customer growth and program adjustments are described in detail in Sections V.C..b)(). In addition, the CCC Test Year forecast includes incremental costs and benefits associated with the CS Re-Platform program described in Sections V.C..b)()(c). Finally, SCE has reduced the CCC Test Year forecast through ongoing efforts to improve operational efficiencies as described in Section V.C..b)(). 0 Beginning August 01, live agents are available to handle non-emergency customer requests and inquiries Monday through Friday, :00 a.m. to :00 p.m., and Saturday from :00 a.m. to :00 p.m. The CCC is closed on Sundays. The IVR and SCE.com are available to handle routine customer requests and inquiries /. See Advice 1-G/1-E, Update to Various Gas and Electric Forms to Reflect the Revised Customer Contact Center Operating Hours filed on March 0, 01, effective on April 1, 01.

139 B. CCC Functions and Base Year Operating Results This section describes the CCC s functions and its Base Year operating results. The functions performed by the CCC include handling inbound calls through IVR and CSRs, making outbound calls, providing echannel services to handle communications for customers using and web chat, and operations support. These functions are critical to SCE s ability to respond to customer requests for service, information regarding their accounts, and SCE programs. Historical CCC activity levels for the period 0 through 01 are summarized in Table V-1 below. Table V-1 CCC Functions and Activity Levels 0-01 Line No. Function Inbound Calls Live Agent Call Volume Handled,0,,,0,1,,1,,1,0 IVR Call Volume Completed,1,1,0,1,,1,1,,, Total Call Volume 1,, 1,0, 1,, 1,,1 1,,0 Outbound Calls Outbound IVR Credit Calls,,,1,,,,,0,0, Outbound IVR Unplanned Outage Calls, 0,1 0,,0 1,1 Outbound IVR Planned Outage Calls,,,,1,1,,,1,, Other Communication Channels echannel Service Orders 0, 0, 1,01 1,,1 Web Chat - 1,0 0,, 1, 1 Inbound Correspondence 1, 1,,0 0, 1, 1 Outbound Correspondence 1,1,,,1 0, 1 Outbound Brochures,1,,, 1,0 1 Billing Inquiry Investigations Completed,, 1, 1,, 1 Teletypewriter (TTY) Inbound Call Handling Inbound calls include customer requests and inquiries (e.g., service establishment and transfer of service, payment arrangements, billing inquiries, and credit extensions), reports of power outages, energy solutions, new programs and services (e.g., dynamic pricing, time-of-use (TOU), net energy metering, and plug-in electric vehicle rate options), as well as calls from local police and fire agencies. Through SCE s toll-free numbers, the CCC handled over 1. million live agent (CSR) and IVR inbound calls in 01 an increase of. percent over 01 and 1. percent over 0. In 01, live-agent call volumes decreased by. percent compared to 01, while IVR-completed call volume

140 increased by percent. This shift was primarily due to the increase in customer use of the IVR self-service channel for billing and payment transactions. Additionally, changes in the CCC s hours of operation have increased customer utilization of self-service channels during periods when the CCC does not take routine calls. With the increase in routine customer service transactions successfully handled through IVR and web self-service options, the remaining complex calls and interactions are handled by the CSRs. The CCC also implements SCE s commitment to serving customers with special needs or who are more comfortable dealing with SCE in languages other than English. To serve these customers, SCE employs a combination of technology, specially trained CSRs, and vendor services. Specifically, the CCC handles inbound calls through in-house bilingual representatives in six languages: Spanish, Cambodian, Chinese (Mandarin and Cantonese), Korean, and Vietnamese. Since 00, the CCC has used a vendor translation service to support customer inquiries in over languages. SCE serves customers with speech and hearing disabilities through Teletypewriter (TTY). 1 CSRs provide information regarding special rates and programs for which customers with special needs may qualify (e.g., Medical Baseline, CARE, FERA, and enlarged format bill). Average Handle Time (AHT) is the average amount of time spent by a CSR in handling each customer call. The AHT grew four percent from 0 to 01 as the simpler calls related to routine customer service transactions migrated to self-service platforms. As a result, complex customer calls related to electric service, new SCE programs and services, and stricter credit policies are handled by CSRs. In 01, AHT increased as a result of new products and offerings that required a higher level of engagement on each call. The CCC also experienced a significant increase in call volume due to an SCE.com upgrade, which impacted customers ability to sign-in to My Account on SCE.com. This resulted in increased call length and response times. Recognizing this, the CCC implemented process improvements that reduced AHT in 01 to seconds. 1 D.1--01, Decision on Test Year 01 General Rate Case for Southern California Edison Company, approved a settlement agreement between SCE and DisabRA. This settlement agreement requires training and refresher training regarding procedures on handling TTY calls. See 01 SCE/DisabRA Settlement Agreement, Section IV.C for more information.

141 Line No. Table V- CCC Performance Metrics 0-01 Performance Metric Average Response Time (ART) seconds seconds seconds seconds seconds Service Level Goal (% within 0 seconds, weeks/year) weeks 0 weeks 1 weeks weeks weeks Average Handled Time (AHT) by CSRs sec 0 sec sec sec. 0 sec The CCC continues to use the IVR and automated call-routing technologies to deliver calls to the appropriate CSR. These technologies enable SCE to meet SCE s Commission-adopted service-level goal of answering percent of calls within 0 seconds, 0 percent of the weeks in a calendar year, as shown in Table V-, in a cost-effective manner. For the 01 GRC period, the CCC will continue to leverage the IVR and call-routing technologies and enable additional self-service functionality to address increased customer call volume. The CCC will continue to use automated call-routing technologies to make sure the customers with complex issues are assisted by trained and knowledgeable CSRs, who can educate customers about their options and resolve complex issues that are not suitable for self-service. For the 01 GRC period, the CCC expects total call volume to increase because of customer growth, increased CCA activity, and program changes to implement new TOU periods and default CPP.. Outbound Customer Communications The CCC also utilizes the IVR system to place outbound calls. Customers can receive these outbound calls in English or Spanish. The CCC made approximately.1 million outbound IVR call attempts in 01 related to credit and collections and outage notifications. Of these outbound call attempts, approximately. million informed customers of potential service disconnections for nonpayment, available payment options, and resources available for obtaining payment assistance. Maintenance notification outbound call attempts increased from. million in 01 to. million in See D.-0-0, p. 1.

142 primarily due to variations in the number of maintenance outages, average number of affected customers per outage, and the number of attempts necessary before the customer answered. In 01, SCE added notification calls to improve customer awareness of changes and cancellations during scheduled maintenance outages and to improve customer satisfaction with the overall outage process.. echannel Services The CCC uses echannel services such as mobile communications and web chat services to meet the needs of customers who prefer the digital platform. The echannel services group include CSRs who respond to and online web requests for service, credit and billing inquiries, payment options, rate questions, SCE.com password resets, and technical support for SCE.com and SCE s Mobile Applications. The number of s received by the CCC decreased due primarily to system automation and improvements to SCE.com. The CCC processed nearly,000 s in 01, a 1 percent decrease compared to 01. The group also responded to over 1,000 calls for SCE.com web support. In 01, the echannel Services group engaged in 1, customer web chats prompted from the chat button offered on several SCE.com pages. This 1 percent decrease from 01 is a result of the short-term redeployment of our CSRs from web chat to assist with significantly increased inbound call volumes.. Operations Support Operations support includes functions performed by CSRs that cannot feasibly be performed as part of the inbound customer call and are more efficiently processed offline. Operations support functions include field dispatch, billing inquiries, and mail correspondence. The field dispatch function is performed by a group of CSRs who are trained to coordinate and dispatch fields service orders and trouble orders with field representatives. The group processes turn-offs, monitors medical baseline customers through outages, and manages other offline service requests. Field dispatch also handles time-sensitive orders, monitors and responds to the TTY In 01, responsibility for the management of SCE s Outage Communications efforts was centralized in BCD. During the Historic period, recorded costs associated with outage notifications were in FERC Account SCE plans to complete the operational transition of outage notifications with the deployment of ONI described in SCE-0, Vol.. Forecast period increases in notification costs are included in the BCD Test Year forecast presented in Section VII.E.. 1

143 used by hearing- or speech-impaired customers, and has dedicated TTY specialists available hours a day, seven days a week. Customers can contact these CSRs via a special toll-free number that is listed on the back of SCE s bill and other customer communications. In 01, SCE handled 1 TTY system-assisted calls. The billing inquiry function is performed by a group of CSRs who are trained to resolve complex billing inquiries that require billing research, consumption and rate analysis, and customer education. In 01,, customer-billing inquiries were resolved, a decrease of percent since 0, primarily due to improved usage and billing accuracy from ESC meters that eliminated inquiries driven by manual meter reading errors. However, the complexity of billing inquiries has increased, lengthening CSRs interaction with our customers, thus reducing CSR productivity from. to 1. billing inquiries per hour. This increased complexity in billing inquiries is driven, in part, by new tools such as Budget Assistant (which helps customers manage their monthly electricity usage) and the amount of intervalusage data that is available on SCE.com. Because this data is more complex, these calls require more time for CSRs to discuss customers usage patterns and help identify solutions to their energy-usage and billing inquiries. Today, the CSR and customer have 0 monthly data points of hourly interval usage available on the web that enables the CSR to assist the customer in pinpointing exactly when during the month the customer s usage increased and how to troubleshoot the cause. In addition, CSRs take more time to educate our customers about usage during specific hours of the day and guide our customers to the right mix of rates, products, and energy solutions to reduce their energy bills. The mail correspondence function includes customer requests for itemization of billing statements, maintenance of customers accounts, letters of credit, payment, research requests, bill disputes, and submissions of supporting documentation in response to previous calls. From 0 to 01, mail correspondence from customers decreased by approximately 0,000 pieces. Outbound letters include responding to billing inquiries, providing payment option information, letters of credit, and fulfilling customer requests for brochures and other information. Because of brochure revisions, system automations, and implementation of capabilities, outbound correspondence and brochure quantities decreased by approximately,000 pieces from 0 to 01. Budget Assistant is an online tool for residential and small business customers that provides projected next bill information. More information about Budget Assistant is presented in Section IX.D.1.b). 1

144 C. Analysis of CCC Recorded and Forecast O&M Expenses O&M expenses associated with CCC activities are recorded in FERC Account This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for the CCC are presented in Figure V-1 and are discussed below. Figure V-1 Customer Contact Center FERC Account 0.00 (Constant 01 $000) 1. Historical Variance Analysis The total recorded adjusted expenses from 0 to 01 steadily declined from $1. million to $. million, a reduction of $. million, or 1 percent. The most significant variance is a reduction of $. million, or 1 percent from 01 to 01. Refer to WP SCE-0 Ch. I-VI, pp. -1 for the recorded and forecast O&M expenses for FERC Account

145 1 1 1 In 01, the CCC reduced O&M labor expenses by $.1 million, just under percent, due to reduced CSR and supervisor staffing levels and the implementation of IVR enhancements to enable customers to make payment arrangements and extensions without speaking to a CSR. O&M non-labor expense increased by nearly seven percent over the period of 01 through 01 from increasing usage of the contract call center provider.. Comparison of 01 Authorized and Recorded O&M Expenses Figure V- compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account 0.00 in compliance with D As shown in Figure V-, SCE s recorded expenses for 01 in FERC Account 0.00 were less than the authorized amount by $. million. This variance was driven by a number of initiatives proposed in SCE s 01 GRC that were not implemented in 01, including a wage increase for CCC CSRs, hiring additional supervisors, and not fully implementing webchat. In addition, SCE was able to contain growth in Average Handle Time (AHT) and further reduce O&M expenses below the levels expected in SCE s 01 GRC. SCE plans to implement a CSR wage increase in 01. 1

146 Figure V- Customer Contact Center Recorded Versus Authorized Summary of 01 O&M Forecast (Constant 01 $000) $0,000 $0,000 $, $1,1 $, $0,000 ($,) $0,000 $0,000 $,000 $0 01 Request 01 Authorized Variance 01 Recorded O&M GRC Activity 01 Requested (A) 01 Authorized (B) 01 Recorded (C) Authorized vs. Recorded (C-A) CCC & Phone Bills $, $1,1 $, ($,) 1. CCC Test Year O&M Forecast Table V- shows the forecast O&M expenses for CCC activities. Details regarding the forecast are below and summarized Figure V-. a) Determination of Test Year Estimated Method As shown in Figure V-1, labor expenses have declined each year in the historical period from $. million in 0 to $. million in 01. For labor expenses, the Last Recorded Year is the appropriate basis for the Test Year forecast as it most accurately reflects current CCC 1

147 1 1 1 operations. In addition, the adjustments proposed below are calculated relative to 01 activity levels and recorded labor O&M expenses. As a result, the Last Recorded Year, combined with the adjustments detailed below, is the appropriate method for forecasting CCC Test Year labor expenses. Non-labor expenses increased in each of the years between 01 through 01 for reasons described in Section V.C.1. As a result, the Last Recorded Year is the appropriate basis for developing the Test Year forecast as it most accurately reflects current CCC operations and the adjustments proposed below are calculated relative to of 01 activity levels and recorded non-labor O&M expenses. Therefore, the Last Recorded Year, combined with the adjustments detailed below, is the appropriate method for forecasting CCC Test Year non-labor expenses. b) Test Year Adjustments SCE s forecast of Test Year O&M expenses for CCC reflects increased expenses due to customer growth and program changes offset by reduced expenses associated with Operational Excellence initiatives. These adjustments are described in detail below and summarized in Table V-. The resulting O&M forecast is shown in Figure V-1 and Figure V-. The decision to use Last Recorded Year as the basis for the Test Year O&M labor forecast for CCC is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For CCC, labor expenses have declined in each of the years in the historical period. The decision to use Last Recorded Year as the basis for the Test Year O&M non-labor forecast for CCC is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For CCC, non-labor expenses have increased in each of the years 01 through 01. 1

148 Table V- CCC Test Year Adjustments (Constant 01 $000) Line Description No. 1 Customer Growth Program Changes CCA Support TOU Period Adjustment & Default CPP CS Re-Platform Program Changes Subtotal CS Re-Platform Benefits Operational Excellence Sourcing Service Level & Occupancy IVR - QuickCheck 1 IVR - Payment Arrangements / Payment Extensions 1 CSOD Support 1 Operational Excellence Subtotal 1 Total Test Year Adjustments Labor Non-Labor Total $1 $0 $0 $ $0 $ $ $0 $ $, $, $,00 $,1 $, $, ($) $0 ($) ($1,00) $0 ($1,00) ($1) $0 ($1) ($) ($) ($0) ($1,1) ($) ($1,) ($1,1) ($1) ($1,) ($,0) ($) ($,) $ $,1 $, 1 (1) Customer Growth SCE s customer growth is forecast to increase by. percent from 01 to 01. This adjustment is based on the cumulative annual increases as projected in SCE s March 01 Annual Retail Sales Forecast. The CCC is impacted by customer growth as SCE s increasing customer population is expected to lead to more inbound phone and online requests, including new service establishment requests, all other inbound inquiries, and outbound IVR calls related to credit and collections. To reflect the impact that customer growth will have on cost, SCE forecasts increased labor 1

149 and non-labor expenses of $1,000 and $0,000, respectively, in the Test Year for a total increase of $0,000. () Program Changes Providing customer support for programs and services and emerging contact channels requires empowered employees capable of handling complex transactions; guiding customers to the right mix of rates, products, and services; and maintaining SCE s service levels. As described below, SCE requires additional resources to support the activities below, including the CS Re-Platform program. (a) Community Choice Aggregation (CCA) As described in Chapter VII of this volume, SCE expects CCA activity to increase. During the Base Year, SCE observed that customers impacted by the formation of Lancaster Choice Energy contacted the CCC with questions. Based on this experience, CCC expects customer questions related to CCAs contemplating formation to increase call volume and web chat in the Test Year. Due to the complexity of these types of calls, the CCC expects the CSRs to spend more time per call to answer questions about these programs. SCE forecasts that this increase in activity will require seven additional FTEs in the Test Year at an annual labor expense of $, (b) Time-of-Use (TOU) Period Adjustment and Default Critical Peak Pricing (CPP) As described in Chapter X of this exhibit, D obligates SCE to investigate and propose (as warranted) new default Time-of-Use periods (including updated CPP periods) for all customer classes. 1 In addition, D recognizes that changes to TOU periods and CPP period, if any, be implemented at the same time customers are migrated to default CPP (if they are not on CPP already). SCE expects that implementing such changes will impact Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding the customer growth O&M expense adjustment for the CCC. 1 Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding the CCA O&M expense adjustment for the CCC. 1 See D , p. 1. See D , p. 1. 1

150 operations beginning in 01. The default CPP requirement of D will affect over 0,000 small and medium commercial and industrial (C&I) and large agricultural service accounts. Additionally, potentially changing TOU periods, as discussed in D , will impact customers that take service on a TOU rate. As mentioned in Section (i) above, the complexity of calls and potential changes in TOU periods will result in additional call volumes and CSRs spending more time per call to answer questions about the programs and implementation. As a result, SCE forecasts a Test Year increase of $,000 for the CCC. (c) CS Re-Platform Project As described in SCE-0, Vol., the Customer Service Re-Platform capitalized software project is planned to be implemented in 00. Benefits impacting the CCC are described in Section (iii). Costs associated with implementing the CS Re-Platform project consist of Staff Training and Augmentation as described below and result in a Test Year adjustment of $. million. (i) CCC Supplemental Staff SCE Labor The incremental labor cost forecast of $1.00 million for CCC is estimated based on the need for an additional 1 FTEs at an average monthly rate of $,. These FTEs are necessary to supplement CCC employees over a 1-month period from June 01 through December 00. For three months from June through August 01, supplemental CCC staff will be trained on the legacy system to handle calls while CCC staff is trained on the new SAP based CR&B module and associated applications for four months from September to December 01. The CCC supplemental staff will also be trained in phases during this four-month period. Additionally, when the new system goes live in January 00, the average handle time is expected to increase percent for a 1-month period through December 00 due to required switching between systems to retrieve data in the old system and to manage calls utilizing the new SAP-based system. The supplemental staff will also be trained on the new SAP system to support the increase in handling time combined with a five percent Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding the TOU Period Adjustment and Default CPP O&M expense adjustment for the CCC. Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding incremental costs associated with the CS Re-Platform project.

151 increase in call volume. The forecast costs for the 01 Test Year is based on a three-year average is $. million. (ii) CCC Staff Augmentation Contract Services The incremental labor cost forecast of $. million for contract services in CCC is due to an additional FTEs who are expected to handle incremental calls resulting from the change over to the new system. The cost for contract services in CCC is based upon an average increase of approximately 1,00 calls per month at a cost of $1. per call to supplement CCC employees over a 1-month period from June 01 through December 00. For three months from June through August 01, contract CCC staff will be trained on the legacy system to handle calls while CCC staff is trained on the new SAP-based system and associated applications for four months from September to December 01. The CCC contract staff will also be trained in phases during this four-month period. Additionally, when the new system goes live in January 00, the average handle time is expected to increase percent for a 1-month period through December 00 due to required switching between systems to retrieve data in the old system and to manage calls utilizing the new SAP-based system. The contract CCC staff will also be trained on the new SAP system to support the increase in handling time combined with a five percent increase in call volume. Calls handled by contractor staff are typically less complex and the costs for contractors in CCC is volume-based. The forecast costs for the 01 Test Year based on a three-year average is $. million. (iii) CS Re-Platform Benefits With the implementation of the CS Re-Platform, customers will receive notifications (e.g., high bill, outage) on a proactive basis, and correspondence, complaints, and escalations handled by the CCC will decline. With these benefits, the CCC expects to realize $,000 in savings. The CS Re-Platform benefits included in SCE s 01 Test Year forecast are proposed, contingent upon approval of the corresponding CS Re-Platform project costs. Should the Commission not adopt the proposed CS Re-Platform costs in this FERC activity, the corresponding benefits must also be removed from the Test Year forecast. Refer to WP SCE-0 Ch. I-VI, p. regarding the expected benefits for the CS Re-Platform project.

152 () Operational Excellence SCE forecasts $. million in Operational Excellence savings in the Test Year to be achieved by implementing cost reduction initiatives, including increasing the number of calls contained in the IVR, increasing the use of the contract call center provider for live-agent calls, and reducing administrative and support staff levels. These initiatives are described below. (a) Channel Optimization The CCC s Channel Optimization initiative includes enhancing the Service Level and Occupancy (industry standard metrics that refers to the percentage of calls handled within 0 seconds and the percentage of time CSRs spend handling incoming calls versus being available to answer incoming calls). This will improve customer experience and reduce customer wait times. SCE expects these efficiencies will reduce O&M expenses in the CCC by $1,000. In addition, increasing self-service utilization by shifting Quick Check, Payment Arrangements, and Payment Extensions to the IVR will improve the CCC s ability to plan for call center volume fluctuations and match CSRs to incoming call patterns, improving operational efficiency and decreasing necessary FTEs. SCE forecasts that these IVR improvements will increase the percentage of calls handled by IVR from percent in 01 to percent in 01, allowing CSRs to focus on more complex calls. Combined, these IVR improvements are forecast to reduce Test Year O&M expenses by $.0 million by eliminating approximately 1 FTEs. In total, SCE forecasts a $. million reduction in Test Year CCC O&M expenses for the Channel Optimization initiatives described above. (b) Sourcing For well over a decade, the CCC has sourced a percentage of its live-agent calls with one or more contract call centers. The CCC plans to increase its live-agent call sourcing from 0 percent in 01 to 0 percent in 01. Migrating greater volumes of routine live-agent calls, such as outages, credit, turn-ons, turn-offs, and weekend and after-hour calls to our contract call center will allow SCE to maintain service levels and reduce costs by reducing FTEs. By sourcing 0 Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding SCE s Channel Optimization adjustment. 1

153 percent of calls by end of 01, SCE forecasts that the contract call center provider will handle,00,0 calls, decreasing the Test Year forecast by $1.00 million. (c) CSOD Support Function Initiative The CCC plans to reduce Test Year support expenses that fall in FERC This Operational Excellence initiative is forecast to save $1.1 million in labor and $1,000 in non-labor by streamlining, prioritizing, and eliminating selected support functions to achieve a total of $1. million decrease in the Test Year. c) Test Year Forecast Summary As shown below in Figure V-, SCE forecasts $. million in O&M expenses for FERC Account 0.00, an increase of $. million or seven percent compared to Base Year O&M expenses of $. million. Refer to WP SCE-0 Ch. I-VI, p. for additional details concerning SCE s Sourcing adjustment. Refer to WP SCE-0 Ch. I-VI, p. for additional details concerning the CSOD Support Function adjustment. 1

154 Figure V- Customer Contact Center Comparison of 01 Base Year and 01 Test Year FERC Account 0.00 (Constant 01 $000 $0,000 $,0 $0,000 $, $0 $ ($,) $, $0,000 $0,000 Program Changes CCA Support $ CPP/TOU $ Total Program Changes $ Operational Excellence CSOD Support ($1,) CCC Sourcing ($1,00) IVR QuickCheck ($0) IVR PA/PE ($1,) SLO ($1) Total Operational Excellence ($,) $0,000 $,000 CS Re-Platform Staff Training & Augmentation $,00 Benefits ($) CS Re-Platform (net) $,0 $0 01 Recorded Customer Growth Program Changes CS Re-Platform (net) Operational Excellence 01 Forecast 1

155 VI. CSOD CAPITAL This chapter addresses the CSOD capital requirements from 01 through 00 and relates only to MSO operations. The MSO capital requirements include the meters needed to meet growth and replacement expectations for all SCE customers, structures and improvements such as meter tool kits, and specialized equipment and meters. The largest component of the MSO capital requirements is related to meters, which represent approximately percent of the total CSOD capital forecast. The capital forecast requirements are shown in Table VI-. Table VI- Capital Requirements (Nominal $ millions) A. Meter Capital This section sets forth the capital requirements for meters and meter-related work and describes the basis for the meter volume forecasts by type of work and by customer class. This section also identifies the cost for the meters and meter-related work and multiplies this cost by the forecast volumes to arrive at a forecast for meter capital. For 01, SCE requires $. million in meter capital. 1. Meter and Meter Related Work MSO forecasts the volume of meters for 01 through 00 needed to meet expected customer growth and to replace defective or damaged meters for all of SCE s residential, commercial, industrial, and agricultural customers. MSO develops the meter volume forecasts for meters such as the ESC meter, the RTEM meters, and the legacy non-communicating electromechanical meters. The following sections describe the different types of meters by type of work and describes how meter volume estimates were developed. Refer to WP SCE-0 Ch. I-VI, pp. 1- for additional detail regarding CSOD capital expenditures. 1

156 a) Growth and Replacement Meter Installation Capital (Residential, Commercial, Industrial and Agricultural) This section describes the new customer growth meter requirement as well as the replacement meter requirements for residential, commercial, industrial, and agricultural customers. (1) Growth Meters As a result of the successful deployment of ESC in 01, the ESC meter is the standard meter that is used to serve customers with demands under 00 kw. For this forecast period, the ESC meter will be used for all new growth meter installations for all customers with demands under 00 kw. The only exception is for those customers who opt out of ESC metering pursuant to D For those customers, SCE will provide conventional electromechanical (legacy) meters. () Replacement Meters Replacement meters are used to replace damaged meters for customers with demands less than 00 kw. Similar to the new customer growth meters, the only exception to the ESC meter is for customers that have opted out of ESC metering pursuant to D In those instances, SCE will provide an electromechanical non-communicating meter as the replacement meter. b) Opt-Out (Legacy) Meter Capital Legacy meters include the former conventional electromechanical noncommunicating meters used prior to the ESC deployment for customers with demands under 00 kw. Because of the requirements of the Commission-approved Opt-Out Program, SCE needs to continue an inventory of conventional electromechanical meters for customers electing to opt out of the ESC program. 1 Refer to WP SCE-0 Ch. I-VI, pp. - for additional details regarding the growth meter capital forecast. Refer to WP SCE-0 Ch. I-VI, pp. - for additional details regarding the replacement meter capital forecast. 1 Refer to WP SCE-0 Ch. I-VI, p. for additional details regarding the Opt-Out- (Legacy) meter capital forecast. 1

157 c) Real Time Energy Meters (RTEM) Maintenance SCE s largest customers with demands in excess of 00 kw typically require more complex metering systems that are beyond the scope of the ESC program. RTEM meters are interval data recorder (IDR) meters that are needed to accommodate the most complex rates and billing options. SCE is replacing older RTEM meters with advanced communications using Radio Frequency (RF) technology meters. The RF technology includes the pre-installed radio transmitter within the meter, improving communications for customers with 00 kw demand or greater. 1 d) Meter-Related Projects (1) Cell Relay Communication and Maintenance The Broadband Global Area Network (BGAN) device provides communication of customer billing, meter event, and performance data via satellite signal in remote areas where cellular communication service is unavailable. A BGAN device provides communication of data for one or multiple meters in remote areas to SCE s billing and data services systems. 1 () Cell Relay Replacement Cell relays work in conjunction with smart meters to collect interval data from customers and relay that data back to the Network Management System (NMS). One cell relay device can transmit data for up to 00 smart meters. As approved in D.0-0-0, the Edison SmartConnect cell relays have an expected useful life of seven years before the device begins to fail at an increasing rate. Factors impacting the useful life of a cell relay include the availability of product support by the cell relay vendor and the risk of technological obsolescence. Under SCE s support agreement with its cell relay vendor, the vendor must provide support so long as the product is not at its end-of-life date (i.e., when the vendor announces the product is discontinued due to market demand, shifts in technology, or a change in focus and investment) and SCE is technically current (i.e., not more than two system updates behind the current product release). An example of a shift in technology that can impact the technological 1 Refer to WP SCE-0 Ch. I-VI, pp. - for additional details regarding the replacement RTEM capital forecast. 1 Refer to WP SCE-0 Ch. I-VI, pp. - for additional details regarding the cell relay maintenance and replacement capital forecast. 1

158 obsolescence of the ESC communication network is the impact of growth in data traffic motivating cellular carriers to sunset G and redeploy G network infrastructure to add capacity to G/IPV networks. The cellular carriers plan to redeploy G infrastructure is an example of the obsolescence risks associated with the ESC G cell relays (the majority of which were installed from 0 to 01). To mitigate these risks, SCE plans to replace cell relays at or near the end of each cell relay s seven-year useful life. SCE will work with vendors to plan the transition of these obsolete cell relays to the next generation of communication devices. As shown in Table VI-, the cell relay replacement project is forecast to cost $1. million to replace the current (ESC) communications network with, cell relays. The cell relay replacement program is anticipated to span three years, beginning in 01 and ending in () PCAN Meter Replacement Pole-Mounted Canister (PCAN) meters house the utility s kwh meter and the meter test components under a single meter cover. These meters are typically used for agricultural accounts, mounted on a pole eight to 1 feet from the ground, and may be placed higher or at eye-level as needed. The PCAN meters were installed before. These meters are now obsolete and are a safety concern for FSRs to read each month because of the difficulty of accessing the meters. In its 01 GRC, SCE proposed, and the Commission approved, a plan to replace these meters between 01 and 01, however SCE reallocated resources to other priorities associated with ESC, and thus will begin PCAN replacements in Historical and Forecast Meter Volumes To determine the meter capital requirements for 01 through 00, MSO develops a forecast of meter volumes by customer class for each type of work (e.g., new customer growth, replacement, opt-out). Table VI- provides the 0 through 01 historical and forecast volumes for meters and meter-related work. 1 Refer to WP SCE-0 Ch. I-VI, pp. - for additional details regarding the cell relay maintenance and replacement capital forecast. 1 Refer to WP SCE-0 Ch. I-VI, p. 0 for additional details regarding the PCAN replacement capital forecast 1

159 Table VI- Recorded and Forecast Meter Volumes 1 Line Recorded Forecast Type of Work No Residential Growth 1,, 1,, 1,1,1 1,, 1,0 1,0 Residential Replacement,1,,,,0,1,1,1,1,1 C&I Growth, 01, 1,,,1,,,, C&I Replacement, 1,0 1,,1,1,1 1,1 1,1 1,1 1,1 Agricultural Growth Agricultural Replacement 0 1, 1, 0 1, 1,1 1,1 1,1 1,1 Opt-Out (Legacy) Replacement - -, RTEM Maintenance 1, 1, 1,1 1 1,000 1,000 1,000 1,000 1,000 Cell Relay & Communication Maintenance ,000 1,000 1,000 1,000 1,000 Cell Relay Replacement ,000,000, PCAN Meter Replacement Total 0,1 1,01,0,1,, 0, 1,1,, The 0 through 01 historical volumes shown in Table VI- for growth and replacement meters continues to be influenced by the ESC meter deployment, ESC meter inventories remaining at the conclusion of the ESC deployment period, and the ESC meter warranty for meters that are reaching the five-year in-service period. These factors combined do not allow the 0 through 01 historical meter volumes to be a reasonable indicator of meter volumes for the 01 GRC period. Meter volumes for new customer growth from 01 through 00 for residential, commercial and industrial (C&I), and agriculture customers are based on the customer growth rate forecast of approximately 0. percent per year from SCE s 01 Retail Sales and Customer Forecast. The replacement volume forecast for residential and non-residential replacement meters is based on the total O&M and capital volume three-year replacement average from 01 through 01, which represents post-esc deployment and steady-state operations. Also, SCE includes an adjustment to allocate future O&M projections for meters still covered under warranty to determine the required Replacement Capital Volume. 1 As shown in Table VI-, the volume forecast for residential replacement meters during the 01 GRC period is higher than historical replacement volumes because over 0 percent of the ESC 1 Residential replacement figures (line ) includes PEV meters. Cell relay replacement figures (line ) includes communication devices. 1 Refer to WP SCE-0 Ch. I-VI, p. 1 for additional details the impact of meters replaced under warranty on the meter capital forecast. 1

160 meters that were installed in the early portion of the ESC deployment period have now been in service for more than five years. Failed or damaged ESC meters that are five years or older are not expected to qualify for replacement under warranty because the existing meters as a group are not expected to exceed the 0. percent contractual failure rate required for warranty repair. The C&I replacement volume forecasts are based on a three-year historical replacement average of 1, meters. The Agricultural meter replacement volume shown in Table VI- is forecast using the three-year recorded average of 1, meters per year. Opt-Out replacements are expected to be driven by opt-out customer turnover, as existing opt-out customers decide to revert back to ESC meters, and as existing ESC-metered customers choose to opt out of their ESC meter. Consistent with the plan adopted by the Commission in D.1--01, SCE will replace a total of 0 of these meters with ESC meters starting in 01 and ending in 00. The RTEM replacement meter expenditure forecast is based on the three-year replacement average from 01 through 01, which represents steady-state operations. Based on customer growth and SCE s past experience of customers moving into and out of the Opt-Out Program, SCE forecasts the need for 0 electromechanical meters per year for 01 through 00 based on the last two-year average. We did not include 01 in the estimate because it was the first year after ESC deployment, when customers questioned the new technology and chose to optout at a higher rate.. Historical Expenditures The historical and forecast metering equipment capital expenditures are shown in Table VI- and forecast requirements are discussed more fully in the following sections. Table VI- Metering Equipment Recorded 0 01 and Forecast (Nominal $ millions) Line Recorded Forecast Class of Plant No Metering Equipment $. $. $ 1. $. $ 1. $ 1.0 $. $. $. $. Metering capital expenditures averaged $1.0 million from 01 through 01. These meter volumes and expenditures do not include the nearly five million ESC meters installed through 01, the cost of which was recovered through the ESCBA. Because approximately,000 meters

161 1 were left in inventory at the end of 01, the normal growth meter requirement pattern was disrupted, with a portion of the growth meter requirement from 0 through 01 being filled from inventory. Thus, the recorded meter volumes and capital expenditures in 0 through 01 do not reflect typical meter capital requirements. Meter capital expenditures trend with customer growth over time but may fluctuate slightly from year-to-year because meters bought in one year may be installed in a subsequent year.. Forecast Requirements Our total capital forecast expenditures and volumes for new and replacement metering installations are summarized in Table VI- below. These expenditures were calculated by applying the forecast volume of new meter sets and replacements per year (01-00) to the expected cost per meter. The meter capital forecast reflects an overall increase in volume and pricing from 01 to Table VI- Meter Capital Expenditure Forecast (Nominal $ Millions) Line No. Type of Work Volume Cost Volume Cost Volume Cost Volume Cost Volume Cost 1 Residential Growth,1 $. 1, $.0, $. 1,0 $. 1,0 $. Residential Replacement,1 $.,1 $.,1 $.,1 $.0,1 $.1 C&I Growth,1 $., $., $.0, $.1, $. C&I Replacement,1 $.1 1,1 $.1 1,1 $. 1,1 $.0 1,1 $. Agricultural Growth $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.0 Agricultural Replacement 1, $ 0. 1,1 $ 1.1 1,1 $ 1. 1,1 $ 1.1 1,1 $ 1. Opt-Out (Legacy) Replacement 0 $ $ $ $ $ 0.00 RTEM Maintenance 1,000 $ 1.0 1,000 $ 1. 1,000 $ 1.0 1,000 $ 1. 1,000 $ 1. Cell Relay & Communication Maintenance 1,000 $ 1.1 1,000 $ 1. 1,000 $.0 1,000 $.0 1,000 $. Cell Relay Replacement - $ - - $ -,000 $.1,000 $., $. PCAN Meter Replacement $ $ $ $ $ 1. 1 Total, $ 1.0 0, $. 1,1 $., $.,0 $ B. Specialized Equipment (CCS-00-SE-CO-MS-00001, CCS-00-SE-CO-MS-0000) 1. Project Description SCE s forecast for the specialized equipment for MSO is budget-based and considers the age and condition of the equipment. Recorded amounts for the specialized equipment capital 1 Refer to WP SCE-0 Ch. I-VI, pp. - for additional details regarding SCE s meter capital forecast. Residential replacement figures (line ) includes PEV meters. Cell relay replacement figures (line ) includes communication devices.

162 expenditures for Customer Service are shown in Table VI-. Specialized equipment items forecast from 01 through 00 are described in the sections that follow. Table VI- MSO Specialized Equipment Recorded 0-00 and Forecast (Nominal $000) Line No. Class of Plant 0 01 Recorded Forecast Specialized Equipment $ 1 $ 1 $ $ () $ $ 0 $ $ 1 $ 0 $ Specialized Equipment Scope and Cost Forecast a) Hand-Held Meter Diagnostic Devices FSRs need new Electric Metering Services (EMS) devices to interrogate smart meters to extract data. EMS devices were purchased to continue to provide FSRs the capability of interrogating both legacy meters (including those used by opt-out customers) and smart meters that cannot be read over the air. This tool is mobile and provides FSRs with the ability to collect the reads in a safe and reliable manner. These tools were initially purchased within the ESCBA in 01, and have a three-year warranty period; however, SCE plans to utilize these devices through 01, which will extend the use of the devices for up to five years. After five years of extended usage, the devices must be replaced to maintain the current technology of both the operating system and metering tools as well as prevent the end of their useful life. The replacement devices are expected to cost approximately $, dollars per unit with an average of three units per service center resulting in a 01 forecast expenditure of $,000. b) Tool Kits Meter technician tool kits consist of equipment needed by field meter technicians to perform their duties, including testing and troubleshooting meters during installation and verifying integrity of service. New tool kits are needed for new field meter technicians, and replacement kits are needed to replenish aging equipment. The capital expenditure forecast is approximately $00,000 for Refer to WP SCE-0 Ch. I-VI, pp. - for additional details regarding Hand-Held Meter Diagnostics. 1

163 each year from 01 through 00, for a total of $1. million over the five-year period. This is based on the historical five-year average spend for tool kits. 1 C. Structures and Improvements 1. Meter Shop/Training Room Upgrade The Structures and Improvements forecast includes upgrades for the Meter Shop s training room, training equipment, and test stations that will need to be redesigned, updated, and expanded to properly train staff on the new and emerging technologies that our field employees are expected to understand. This training room will also be utilized for general training purposes, such as safety awareness for the Meter Shop. In the 01 GRC, SCE proposed similar improvements to the Meter Shop but was not able to implement such improvements as the original location proposed for these structures was no longer available for improvements. The availability of the location for the Meter Shop improvements has been resolved so that the necessary improvements can be made beginning in 01 and concluding in 01. Table VI- below shows the forecast expenditures of $,000 in 01 and $,000 in 01, for a total request of $1.1 million. 1 Table VI- Structures and Improvements Expenditure Forecast (Nominal $000) Line Recorded Forecast Class of Plant No Structures and Improvements $ - $ - $ - $ - $ - $ - $ $ $ - $ D. Comparison of 01 Authorized and Recorded CSOD Capital Expenses Figure VI- compares the requested and authorized capital expenditures from SCE s 01 GRC with the 01 recorded CSOD capital expenditures in compliance with D As shown in Figure VI-, recorded CSOD capital expenditures fell $. million below the authorized amount. 1 Refer to WP SCE-0 Ch. I-VI, pp. 0-1 for additional details regarding Tool Kits. 1 Refer to WP SCE-0 Ch. I-VI, pp. - for additional details regarding structure and improvement expenditures. 1

164 The variance is primarily due to SCE deferring the replacement of PCAN meters to 01. This was necessary to shift resources to ESC-related priorities. In addition, in 01, costs to replace meters that were covered under warranty were charged to O&M rather than capital. Finally, SCE deferred the purchase of specialized tool kits, and thus spent less than forecast in 01. Figure VI- Comparison of 01 Authorized and 01 Recorded CSOD Capital Expenditures ($000),000 0,000 $,1,000 0,000 1,000 $1,1 $1,,000 ($,) ($1), Request 01 Authorized Meters Variance Specialized Equipment Variance 01 Recorded Meters Specialized Equipment Line No. 1 Capital Category Structures and Improvements 01 Requested (A) 01 Authorized (B) 01 Recorded (C) Authorized vs. Recorded (C-B) $, $1, 1, ($,) Specialized Equipment $1 $1 ($1) Total CSOD Capital $,1 $1,1 $1,1 ($,) 1

165 VII. BUSINESS CUSTOMER DIVISION [FERC ACCOUNT 0.00] This chapter addresses the activities performed by the Business Customer Division (BCD) of SCE s Customer Service organization. Historical and forecast O&M costs associated with BCD operations are discussed in Section E. The capital expenditures and other operating revenues (OOR) managed by BCD are presented separately in Chapters VIII and XI, respectively. A. Overview of Business Customer Division (BCD) The activities performed by BCD are core to serving SCE s non-residential customers with programs and services. BCD also plays an essential role in engaging and educating customers to better manage their energy usage. These activities, performed by the Account Management Services, Technical Services, and Energy Education Center groups within BCD, are described below. The O&M expenses associated with these activities are recorded in FERC Account BCD s Test Year O&M forecast is based on its Base Year recorded adjusted O&M costs with four types of adjustments. First, SCE forecasts growth in the number of customers served. Because SCE will provide Account Management services to more customers in the Test Year, SCE forecasts an increase in BCD O&M expenses of $0,000. Second, SCE forecasts program changes totaling $1.0 million, including: (1) increased number of outage communications provided to residential and non-residential customers by BCD s Outage Communications team and () increased labor and nonlabor costs necessary to support CCA activities. Third, SCE forecasts a Test Year reduction in BCD O&M expenses of $0,000 associated with implementing the CS Re-Platform capitalized software project. Overall, the increased BCD O&M expenses associated with program changes and customer growth are more than offset by BCD Operational Excellence efforts. Specifically, in 01, SCE undertook an initiative to assess BCD operations and identify opportunities for improving efficiencies throughout the organization. The changes identified through this effort were implemented in October 01, and reduce Test Year O&M expenses by $. million. Combined, these forecast adjustments result in a Test Year forecast of $1.0 million, a reduction of $. million below the Base Year recorded adjusted O&M expenses. 1

166 B. Account Management Services The Account Management group provides services and information to nearly 00,000 non-residential customers with nearly 00,000 service accounts. 1 Of these, BCD account managers focus primarily on,00 non-residential customers associated with,000 non-residential service accounts. These customers account for approximately 0. billion kwh in sales, or percent of total sales. The information provided involves utility and energy-related matters that have financial or operational impacts on our customers businesses including, for example, information related to billing, tariffs, outages, and distribution service requests. Account managers also provide marketplace education, promotion and delivery of demand response programs, and assistance in understanding and assessing the feasibility of distributed generation. 1 This section describes the manner in which Account Management resources were assigned to customers and the services that Account Management provided in Account Management Services Resource Assignment Account Managers are assigned to a designated group of medium to large customers to serve as the first point of contact for customer communications and information. Customers are assigned to Account Managers based on several factors, including SCE programs, complexity of rates, service arrangements involving customer substations or advanced metering or interconnection requirements, geographical location, and type of industry. Many of our customers are subject to mandatory time-of-use (TOU) rates and are defaulted to the Critical Peak Pricing (CPP) program. 1 Consequently, these customers require a better understanding of how the CPP rate works to determine if CPP or another rate option best meets their needs. Many demand response programs and rates are targeted to these customers, such as the Base Interruptible Program (BIP), Capacity Bidding Program (CBP), and Demand Bidding Program (DBP). These activities require trained, dedicated resources to best serve customers energy-related needs. 1 Refer to WP SCE-0 Ch. VII-X, p The Account Management Services function also assists customers with identifying and implementing energy efficiency measures. The costs of these activities are charged to energy efficiency programs and collected through the Public Goods Charge and are not included in this General Rate Case request. 1 Currently, non-residential customers > 00 kw (excluding Agricultural and Pumping customers) are required to be defaulted to CPP. 1

167 BCD also has a group of Account Managers that use mass-market customer outreach through ethnic, faith-based, and community forums, special business events, strategic business organizations, and special customer events to effectively reach customers.. Account Management Services Activities The services and information that BCD s Account Management group provided to customers in 01 is described in this section. a) Rate Analysis Information and Education Approximately, or nearly 1 percent, of SCE s electric rates apply to the non-residential customers served by BCD, so these customers have a wide range of rate and billing options to meet their business needs. 1 BCD fulfills the important role of assisting customers in understanding the impact that available rate options may have on their operations, as well as helping them make informed decisions about their energy usage, available demand response programs, costs, and rate choices. As an example, a customer had a generator that was underperforming according to its standby agreement with SCE. An analysis performed by BCD personnel demonstrated that running the generator at full capacity would reduce the customer s bill by about 0 percent. Account Managers help customers make informed energy usage decisions by conducting account energy usage reviews and by explaining tariff requirements and other factors, such as firm service levels and voltage levels. More complex rate analyses are performed by BCD s Rate Analysis & Data Solutions (RA&DS) team to give customers a more detailed view of their rate options for business decision-making purposes. b) Billing and Metering Inquiries Large and midsized customers frequently have questions related to billing and metering. These questions are due in part to the variety of available metering, billing, rate options, and programs and include issues involving energy charges, usage calculations, billing factors, metering operations, and accuracy. 1 Refer to WP SCE-0 Ch. VII-X, pp. -. 1

168 c) Credit Issue Information Account Managers serve as key contacts for educating customers on the rules surrounding credit policies and the need to keep accounts in good standing. This may include negotiating deposits and financial security arrangements with financial decision makers. SCE s credit administrators and financial analysts depend on BCD Account Managers to facilitate communications with customer decision makers and provide specific knowledge of the customer to help make determinations on credit issues and the appropriate actions to be employed. Moreover, because of their ongoing relationships with customers, Account Managers interact with customers senior financial officers to explain late payment charges, security deposits, and other issues related to financial risk, and assist in developing solutions in these situations. d) Power Quality Information Account Managers often initiate and help coordinate analysis of transmission and distribution system power quality delivered to the customer, and can help solve problems discovered from that analysis, whether the problem lies with SCE s equipment or the customer s equipment. In some cases, unsafe situations are also uncovered, and Account Managers provide information to facilitate safe operating conditions. Power quality information is increasingly important for customers as contemporary, computerized controls at customer facilities are more sensitive than older electro-mechanically controlled equipment. e) Energy Advisor BCD Account Managers develop and deliver important and timely information on a wide range of energy-related issues to assist customers in making informed business decisions. Account Managers not only advise customers, but also coordinate SCE resources such as field engineering, interconnection, and planning groups that assist customers in the assessment and implementation of larger energy projects. For example, a producer of fine mined chemical products needed assistance with its energy management. The BCD Account Manager led a joint effort with SCE field engineering and the customer s in-house engineering and operations staff to develop a process that enabled the customer to save energy while expanding its product lines. The BCD Account Manager and SCE field engineer developed the energy usage baseline for this customer based on historical usage patterns, estimated the new energy usage based on expected product expansion, and provided the cost of implementing the process to help the customer evaluate the benefits of the project. 1

169 In another example, a BCD Account Manager worked with a large municipal customer installing a large, complex set of energy solutions that included co-generation, solar, and energy efficiency measures. The Account Manager helped coordinate the service planning efforts and assisted with the complex process of becoming a generator, which included getting the customer on the net energy metering (NEM) rate tariff and explaining the interconnection process and rules. f) Demand Response Information As outlined in the state s Energy Action Plan II, adopted by the California Public Utilities Commission and the California Energy Commission, energy efficiency and demand response are the highest priority in the loading order to meet increased electrical demands, ahead of traditional generation or supply resources. Account Managers require training so that they can educate customers about new and modified demand response programs. This training requires up-to-date program materials, fact sheets, case studies, and rate analyses. Seminars developed and delivered by BCD employees familiarize customers with program changes and new program options to help them better evaluate and understand how programs and technologies apply to their operations. Once trained, Account Managers make on-site customer visits to explain demand response programs, conduct site evaluations to identify potential benefits to operations, and answer customer questions. As an example, a BCD Account Manager worked with a plastic pipe manufacturer, who actively participates in DR programs, to evaluate the costs and benefits of continuing to participate in the Base Interruptible Program (BIP). The customer was particularly concerned with high costs associated with halting production during one of its manufacturing processes to produce a long plastic pipe. The customer s production line shutdowns typically required 1- hours to restart and considerable scrapping of materials. The Account Manager, working in conjunction with SCE rate analyst specialists, provided the customer with rate and incentive credit information based on both previous participation and forecast costs to facilitate the customer s decision making. 1

170 g) Outage Communications 1 Another important service SCE provides to its customers is timely and accurate communications during maintenance and repair power outages. 1 When a repair outage occurs, non-residential customers often contact SCE s Customer Contact Center, BCD s Outage Communications team, or their Account Managers with questions about the outage and restoration status. Now, customers can sign-up to receive outage alerts for both maintenance and repair outages that provide the estimated restoration time and the status of the outage. This service was expanded to include residential and small business customers at the end of 01. Coordinated maintenance and repair outage information is critical to non-residential customers because they may need to alter production or work schedules or send employees or students home for the duration of the outage. These customers often request more detailed information than what is provided in the automated outage alerts to fully prepare for and understand the impact of outages on their businesses. The BCD Outage Communications team delivers this extra support by communicating thousands of events and updates each month. BCD also reviews new service accounts to identify customers that provide essential use services. In addition, in compliance with D.-0-01, BCD coordinates the annual recertification process to confirm the continued eligibility of existing essential use customers. Essential use customers are those non-residential customers that provide essential public health, safety, and security services. Sections of distribution or sub-transmission lines serving essential use customers who either do not have adequate back-up generation or are within a category that is exempt regardless of the status of back-up generation (i.e., hospitals and skilled nursing facilities) are exempt from rotating outages. BCD also works with customers to better understand how they are impacted by maintenance outages. For example, in 01, a hospital requested that SCE reschedule a maintenance 1 In 01, responsibility for the management of SCE s Outage Communications efforts was centralized in BCD. During the Historic period, recorded costs associated with outage notifications were in FERC Account SCE plans to complete the operational transition of outage notifications with the deployment of ONI described in SCE-0, Vol.. Forecast period increases in notification costs are included in the BCD Test Year forecast presented here. 1 In the past, the terms planned and unplanned outages were used to refer to maintenance and repair outages.

171 outage because the hospital had not received outage approval from the Office of Statewide Health Planning and Development (OSHPD). The BCD Account Manager successfully coordinated with the hospital and OSHPD to obtain approval for the maintenance outage and was able to conduct the maintenance outage as originally scheduled. h) Economic Development Services SCE s Economic Development Services (EDS) team works with BCD s Account Management group, as well as local, regional, and state representatives, to identify and assist in the retention and expansion of at-risk businesses. EDS also assists in the attraction of new businesses in growth industries to replace the recorded net losses of manufacturing facilities due to either closure or migration out of SCE s service area. EDS also continues to administer and monitor the effectiveness of new rate options that meet the needs of large, energy-intensive, at-risk business customers. The Economic Development Rate (EDR) is a rate designed to provide reduced electricity costs when a customer can successfully demonstrate that, if not for the EDR, either alone or in combination with other incentives, that customer would not expand operations, would not establish operations in SCE territory, or would close its business or relocate outside of California. The latest EDR program, which was approved in April of 01, has signed contracts with customers as of July 1, 01. EDS s activities benefit California economically and help lower overall rates for SCE s customers. An Economic Impact Analysis model was used to determine the cumulative direct, indirect, and induced economic impacts of EDS activities in 01. The 01 operations resulted in the retention and creation of over 1,000 jobs in California and associated economic output of over $ billion. 1 Additionally, the incremental taxes, fees, and licenses collected at the state, county, and city levels resulted in a cumulative fiscal impact of over $0 million. 1 At-risk businesses are identified based on many factors including producing products or services sold in-state that face competition from products or services produced out-of-state facilities facing potential business closure, and facilities having viable relocation or expansion opportunities outside of California. See D The Economic Impact Analysis model is similar to other generally-accepted economic impact models, such as those developed by Minnesota IMPLAN Group, Inc. and the Regional Economic Models, Inc. SCE s (Continued)

172 In addition, since 1, as demonstrated through the application of the Ratepayer Impact Mechanism (RIM) test, EDS has provided a direct benefit to all SCE customers by helping to reduce rates by minimizing stranded investment in assets and increasing recovery of fixed revenue requirements. 1 A RIM test yielding a positive net present value and a benefit-to-cost ratio greater than 1.0 indicates the program is beneficial and cost-effective to all ratepayers by lowering rates and bills. Based on the methods and assumptions set forth in the CPUC Standard Practice Manual and related approaches noted above, EDS s 01 Adjusted Base Year program yields a net present value of $. million and a benefit-to-cost ratio of 1., demonstrating the EDS program is beneficial and costeffective for all ratepayers. C. Technical Services The Technical Services group provides the Account Management Services group with a higher level of technical and specialized expertise than exists within the front line Account Management group. In addition, the Technical Services group also includes the Customer Choice Services group, maintains SCE s Customer Relationship Management system, and coordinates SCE s customer-facing street lighting activities. These activities for the Technical Services group delivered in 01 are described below. 1. Rate Analysis & Data Solutions BCD s Rate Analysis & Data Solutions (RA&DS) team supports the Account Management group by performing rate analyses for individual customers and by comparing multiple complex rate options for large groups of customers impacted by changes in rates or demand response rate options. Technical Services also constructs rate models and load aggregation models to compare Continued from the previous page Economic Impact Analysis model uses 0 IMPLAN multipliers, other relevant inputs, and project-specific inputs to determine direct, indirect, and induced impacts. Refer to WP SCE-0 Ch. VII-X, pp SCE included only the economic and fiscal impacts of projects at risk for closure or out-of-state relocation. Projects that were not at risk to leave California were excluded from the analysis in order to demonstrate only the net impact on California. 1 Refer to WP SCE-0 Ch. VII-X, pp. 1- for details on the calculation of the RIM test for EDS. 1

173 proposed rates to existing rates and to compare bill impacts on individual service accounts or groups of service accounts on multiple proposed rates in mass. Rate analysis activity performed during the 0-01 period is summarized in Table VII-0. The rate analysis activities range from customer-specific ad-hoc requests to determine best applicable rate options to proactive mass rate comparisons and bill impacts when rates change significantly due to changes in natural gas costs. Rate analysis also includes situations where adjustments are made in rate design, such as SCE s GRC Phase proceedings in 01 and 01. Account Managers and SCE s Customer Programs and Services (CP&S) organization leverage these rate analyses to educate customers about their most beneficial rate options. As customers face rate changes, they want to better understand their usage patterns, as well as the potential cost impacts of shifting operations to maximize the benefits of Dynamic Pricing rates and demand response programs. In 01, BCD s RA&DS team began performing mass bill impact analyses for residential customers in response to SCE s Residential Rate Reform OIR (RROIR). RA&DS performed. million proactive mass bill-impact analyses in 01, with a similar level of effort expected in 01. In addition to these activities, the RA&DS team will be conducting proactive mass bill-impact analyses for over 00,000 non-residential customers who will be impacted by new TOU periods and will default to SCE s CPP rate option per D RA&DS s strategy for addressing anticipated volume increases of future rate-analysis-related activities will heavily rely upon improvements to current processes. All performed rate analysis, independent of the size or complexity of the effort, entails to some degree the acquisition and normalization of usage data and the calculation and validation of the results. Line No. Year Table VII-0 Rate Analyses Performed for Customers by Year Customer Requested Rate Analyses Proactive Reports (Mass) Rate Bill Impacts Comparison Reports Reports Overall Total 1 0,000,000 0,000,000 01,000 1,000 -, ,000 1,000 1,1,000,,000 01,000,000,000 1,01,000 01,000 1,000,0,000,01,000 1

174 Engineering and Design Solutions The engineers and technical specialists within Engineering and Design Solutions (E&DS) provide targeted technical support to customers through on-site visits and evaluations at customer facilities, recommendations regarding energy and technology solutions, and assistance with energy and cost calculations for customers considering equipment or operational changes. This team provides assistance in more complex technical situations that often exceed the account manager s level of expertise. Field engineers routinely provide energy modeling and savings estimates for large-scale, multi-measure, and multi-site projects involving equipment replacement or operational changes, combined with information on various rate and demand response program options, to give customers the information they need to make informed decisions about their electrical service and usage.. Education and Communications The Technical Services group also supports Account Management customer education, training, and consulting efforts, described in Section VII.B. above, by developing and hosting the Electricity Outlook customer information and education seminars at our Energy Education Centers (EECs), and by assisting in developing other BCD publications. 1 Electricity Outlook information and education seminars are marketplace updates organized to provide in-person presentations to groups of non-residential customers. These forums are held twice a year at our Irwindale and Tulare Energy Education Centers, and are also available through an online webinar. customers participated in the May 01 seminar. Electricity Outlook seminars combine regulatory, legislative, and rate updates with information about new utility programs and rates, as well as updates on the availability, benefits, and incentives of various programs. 1 Outage Schools are another form of customer outreach that provides information to customers, media representatives, and employees about SCE s processes for maintenance and repair outages. Outage Schools provide insights into why maintenance outages are essential to healthy 1 BCD publications include the SCE Power Bulletin, which provides timely information to non-residential customers about marketplace issues, rates, tariffs, programs, products, and services. Refer to WP SCE-0 Ch. VII-X, pp. - an example SCE Power Bulletin. 1 Refer to WP SCE-0 Ch. VII-X, pp. 0- for a copy of SCE s May, 01, Electricity Outlook seminar presentation. 1

175 infrastructure, how we keep customers informed of the status of outages, and our commitment to safe, reliable power. In 01, customers participated in Outage School seminars.. Customer Choice Services The Customer Choice Services (CCS) group facilitates Energy Service Provider (ESP) and Community Choice Aggregator (CCA) participation in the Direct Access (DA) and Community Choice Aggregation markets in the SCE service territory and provides appropriate oversight of ESPs and CCAs day-to-day interactions with SCE. Both ESPs and CCAs are primarily responsible for procuring and providing for the electric power needs (including ancillary services) of their customers, helping ensure that resource adequacy and Renewable Portfolio Standard requirements are met for those customers, and scheduling and settling with the California Independent System Operator (CAISO). Although the Commission suspended DA for new customer enrollment in September 001, SB 1 partially re-opened DA in 00 on a limited basis to retail non-residential customers. In 0, the Commission issued D.-0-0 to revise the new rules in accordance with SB. Community Choice Aggregation was enabled by AB, 1 which was signed into law in September 00, allowing cities, counties, and Joint Power Authorities (JPAs) whose governing boards have elected to act as CCAs to purchase and sell electricity on behalf of utility customers within their service areas. a) Description of Customer Choice Services The key functions performed by the CCS group are account management, contract management, and operational service support enabling ESPs and CCAs to conduct business in SCE s territory. CCS maintains relationships by assigning Account Managers to each ESP and CCA, similar to our relationships with medium and large non-residential customers that have more complex needs, rates, and service arrangements. The Account Managers act as a single point of contact and have access to other SCE personnel to resolve service-related issues. Because communication and operational issues 1 Energy: Rates, Stats. 00 ch. (SB, Kehoe), effective October, 00. Information regarding SB is available at [as of August 1, 01]. 1 Electrical Restructuring: Aggregation, Stats. 00 ch. (AB, Migden). Information regarding AB is available at [as of August 1, 01]. 1

176 with ESPs and CCAs differ significantly from those of SCE s bundled-service customers, this approach provides services and information tailored to ESP and CCA needs. Responding to information requests and questions from ESPs and CCAs requires specific knowledge and experience to handle tasks such as registration of new ESPs and CCAs, the DA lottery enrollment process, CCA mass enrollment process, DA and CCA switching rules, responding to billing- and credit-related inquires, and the implementation of processes arising from the ongoing regulatory decisions related to Direct Access and Community Choice Aggregation. In 01, CCS continued to perform the contract management, account management, customer service, and support activities described below. b) Electric Service Provider and Direct Access Activities As of December 1, 01, there were 0 registered active and four inactive ESPs operating in SCE s service territory serving, DA service accounts, accounting for. GWh annually, or approximately 1 percent of SCE s total distribution load. The highest-volume activity in CCS relates to transactions involving DA customers returning to bundled service or DA-eligible accounts switching to DA from bundled service. DA customers also have various options to switch between ESPs, relocate service accounts, and add new facilities. As a result, many ESPs continue to request assistance to facilitate these transactions and resolve issues raised by market participants with respect to how these transactions are to be completed within the DA rules. SCE continues to receive supplemental Customer Information Service Requests (CISRs) from ESPs. CCS provides the requested information for these service accounts, including meter number, billing cycle, and load profile. In addition, CCS provides training to existing and new ESPs that currently, or will soon, conduct business with SCE. In 01, CCS worked with four new ESPs to review the regulations, tariffs, and procedures to operate in California, and SCE expects continued interest in the DA market. c) Community Choice Aggregation Activities In October of 01, SCE completed the successful implementation of the first CCA in SCE s service territory, Lancaster Choice Energy, serving,000 service accounts with an opt-out rate of approximately six percent. Since this implementation, SCE has experienced a significant increase in CCA inquiries from counties, cities, and JPAs. Complex data requests for customer information have increased from five detailed reports in 01 to detailed reports in the first five 1

177 months of 01. Based on these inquiries, SCE expects two additional CCA implementations to occur in 01 and 01, bringing the total number of CCAs operating in SCE s service territory to three and resulting in a total enrollment of over 00,000 service accounts. 1 At the end of 01, CCS operations were at capacity and require additional trained personnel as well as optimization of current processes to continue to deliver effective customer care. The expected growth in the number of CCAs operating in SCE s service territory will require additional resources as described in Section VII.E..b)().. Customer Requests for Assistance with Distributed Generation Projects As business customers energy needs continue to evolve, the Strategic Initiatives team provides customers with the support needed to make informed decisions. For many years, customers have expressed interest in self-generation and distributed generation, especially photovoltaic systems. In addition, customers are now expressing interest in combining distributed generation resources with energy storage to create microgrids. The Strategic Initiatives team provides customers with detailed information and analyses to help customers evaluate the cost-effectiveness and feasibility of self-generation projects, so they will be able to make informed decisions about whether these projects could reduce their operating costs or achieve other environmental or societal objectives. The majority of information provided to customers pertains to utility tariffs, rates, customer load and usage profiles, utility and Commission policies, and potential incentives. In addition, the Strategic Initiatives team may provide other information such as economic factors, analysis methods, and equipment characteristics to assist customers in understanding the feasibility of proposed projects. Customers must also be informed and educated about charges established to recover departing load costs and other non-bypassable charges that are the obligations of customers participating in self-generation and distributed generation. Customers rely on SCE for estimates of these costs because they affect overall project economics. While the ultimate decision to proceed with a project rests with the customer, SCE s economic analysis provides the customer with a basis for informed decision-making. When customers, including those whose business is wholesale generation, decide to 1 Refer to WP SCE-0 Ch. VII-X, p.. For the purposes of forecasting the resources required to serve CCAs in the Test Year, SCE forecasts the number of entities that it expects to form CCAs regardless of whether those entities have filed a CCA Implementation Plan with the Commission. SCE includes only those CCAs that have filed an Implementation Plan with the Commission for energy procurement-related forecasts. 1

178 proceed with a project, SCE assists with interconnection, metering, and, if applicable, standby rate administration.. Customer Relationship Management System Customer Relationship Management (CRM) is an automated system to manage customer-related information for improved customer service. This information management system enables BCD and other SCE program managers to provide consistent documentation, tracking, and delivery of customer communications. The CRM system establishes a platform for program managers, account managers, and other Customer Service employees to manage workflow, fulfill work requests, and sort and categorize customer contact attributes to expedite the delivery of outbound customer education and information materials. CRM is the central repository for most program-related interactions, including Integrated Demand Side Management (IDSM)-related interactions, customer names, addresses, and other information. This information helps BCD comply with required customer notifications about rates and programs and maintains records of which customers were notified. CRM maintains copies of all correspondence, interactions, and analyses, and enables BCD personnel to quickly respond to customer inquiries and requests for information.. Street Lighting Solutions BCD is responsible for policy development and customer interface for issues relating to SCE-owned street lights. In this role, BCD coordinates street light functions throughout SCE, including T&D, Finance, and Regulatory Affairs. BCD s Street Light team focuses on several key work areas that impact street lights, street light customers, and broader technology shifts in the industry. BCD fields ad hoc requests in support of account managers and Local Public Affairs team members to help facilitate analysis, technical data, or information. a) Street Light Sales to Customers Prior to August 1, 01, SCE offered LS-1 customers the option of purchasing the SCE-owned street lights located within the customers geographic boundaries pursuant to Section 1 of the California Public Utilities Code. The first step in the process of a customer acquiring SCE-owned street lights was to pay a deposit to offset the cost of SCE s valuation of the street lights to O&M expenses and capital expenditures for street lights are included SCE-0 (T&D), Volume (Distribution and Construction Maintenance). 1

179 be sold. As of June 0, 01, cities paid the required deposit and were considered to be in the street light sales queue. BCD manages the sales process through valuation, communication, contract development, Commission approval, and asset transition. On March 1, 01, the Commission approved the sale of approximately 1,00 street lights to the City of Lancaster. 1 SCE and the City of Lancaster are currently in the transition phase of the process wherein the street lights are operationally transferred to the City of Lancaster. As of August 1, 01, three cities have signed sales agreements with SCE. Several other cities have received street light valuations but have not signed a sales agreement. After the execution of a sales agreement, SCE will initiate the process of securing the necessary regulatory approvals. SCE expects to seek Commission approval for additional customer street light sales by the end of 01. In June 01, SCE notified customers of its intent to cease selling its street lights unless customers had paid a valuation deposit prior to August 1, 01, and closed the street light sales queue as of that date. SCE also placed a time limit for customers to execute the sales agreement following receipt of the valuation. SCE expects to complete the valuations for all customers in the acquisition queue by the end of 01, with all sales agreements executed by the end of 01. Following execution of a sales agreement, the actual transfer of the street lights to the city does not begin until of the Commission approves a Section 1 filing, which can take up to a year depending on the number of street lights to be transitioned to the customer. Customer transition from LS-1 to LS-B tariffs may also take some time after assets have been paid for and transitioned to customer ownership as SCE undertakes internal rate, billing, and mapping changes to finalize the transaction. The number of street lights SCE expects to sell via the process described above is shown in Table VII-1. SCE bases this forecast on its assessment of the likelihood of each city to complete the sale and the expected year in Sales agreements, when completed, are submitted to the California Public Utilities Commission (CPUC) through a Section 1 advice filing or application, seeking approval for the transfer of assets to local government customers from SCE. Section 1 filings help ensure that the process is completed in accord with CPUC direction and no other ratepayers are harmed as a result of the transaction. Section 1 advice letter filings are used where the value of the transaction is less than $ million and Section 1 applications are utilized when the value of the transaction exceeds $ million. 1 See D

180 which the final transfer of ownership will take place. 1 SCE expects that all street light sales will be completed prior to the end of 01. Line No. 1 Table VII-1 SCE Street Light Lamp Sales Description Number of Lamps Sold Cumulative Number of Lamps Sold - 1,,0 1, ,, 1, 1, 1 1 b) AB 1 and SCE s Street Light Upgrade On March 0, 01, SCE filed Advice 1-E-A, proposing the creation of LS-1 option E. 1 SCE expects that the LS-1, Option E, which provides participating customers a monthly bill reduction of 0 to cents for non-decorative fixtures, depending on the wattage, will result in significant customer demand for upgrades from High Pressure Sodium Vapor (HPSV) to the more efficient Light Emitting Diode (LED) street light fixtures. Currently, SCE owns approximately 0,000 street lights. 1 Of these, SCE expects customers to request that approximately 00,000 be upgraded to LED fixtures under LS-1, Option E, by the end of the 01 GRC cycle. 1 SCE expects that replacement work will continue on through the 01 GRC cycle at a similar pace with participation in LS-1, Option E, trailing off after the 01 GRC cycle. The operational and financial implications of these conversions are described in SCE s request for Street Light capital and O&M in SCE-0, Vol.. 1 Refer to WP SCE-0 Ch. VII-X, p. for additional details regarding SCE s street light lamp sales forecast. 1 SCE filed Advice 1-E on June 0, 01 in compliance with AB 1 (Stats. 01 ch. 1, R. Hernandez), Cal. Pub. Util. Code Section., and D Information regarding AB 1 is available at [as of August 1, 01]. 1 Refer to SCE-0, Vol. for additional details on street light inventory. 1 This forecast assumes,000 in 01,,000 in 01, and 0,000 annually in

181 D. Energy Education Centers SCE operates two Energy Education Centers (EEC), one in Irwindale and one in Tulare. The Energy Education Center in Irwindale (EEC-Irwindale) is a 1,000 square-foot complex that includes a conference center that can accommodate over 0 customers and several meeting rooms where educational workshops, seminars, and other events are conducted. The Energy Education Center in Tulare (EEC-Tulare) is a,000 square-foot complex located on ten acres and consists of six buildings, one of which is constructed with energy-efficient materials, demonstrating energy-efficient construction technologies and applications. Due to its close proximity to the largest agricultural counties in the state (Kern, Tulare, and Fresno), it also employs expertise in agricultural energy efficiency applications and demonstrates energy-efficient agricultural irrigation technologies. 1 Both EECs are dedicated to providing residential, commercial, industrial, and agricultural customers with information regarding energy efficiency, demand response, renewable generation, environmental solutions, electric safety, utility programs, electro-magnetic fields, and power quality. The Energy Education Centers are also an essential component of SCE s Workforce Education and Training (WE&T) efforts. These centers provide customers the ability to view actual equipment in operation while receiving information and education and product and service demonstrations by unbiased technical specialists. While annual EEC attendance varies dependent on the programs offered, in 01 the EECs hosted nearly,000 visitors. Historically, operational expenses for the Energy Education Centers have been jointly funded through Public Goods Charges (PGC) and O&M funding. Only the O&M portion of the total operating costs for the Energy Education Centers is included in this GRC application. In addition, during this general rate case period, SCE s Energy Education Centers will require capital funding to meet continued customer demand and to upgrade the facilities, equipment, and capabilities to meet the increased emphasis of the WE&T efforts. The capital forecast for these projects is presented below in Chapter VIII. SCE opened its first EEC in Irwindale, California, in January and hosted approximately,0 visitors in 01. SCE opened its second Energy Education Center in Tulare in February 1. 1 Refer to WP SCE-0 Ch. VII-X, p. - for a detailed description of the EEC-Irwindale and EEC-Tulare facilities.

182 This center serves the customers of the San Joaquin Valley and neighboring areas and hosted approximately,00 visitors in 01. Both facilities offer energy seminars, technology demonstrations, and special events on such varied topics as energy-efficient lighting, daylighting, food service, HVAC, electric safety, and energy management. In 01, the EECs conducted multiple sessions of unique O&M-funded customer classes on such topics as power quality fundamentals, electrical safety, industrial maintenance, and electrical system analysis. In addition to the O&M-funded customer classes, both EECs conducted 1, O&M-funded customer outreach and special customer events attended by, customers. An additional class sessions were presented on energy efficiency topics and were funded through the Public Goods Charge (PGC). 1 These PGC-funded classes are not included in this GRC request. The demand for educational programs and events continues for both EEC-Irwindale and EEC-Tulare. To meet this continued demand, SCE continues to make incremental facility upgrades at each EEC to support hands-on training, workshops, and working displays, and demonstrations for HVAC and foodservice technologies for participants including technicians, engineers, architects, and developers. The EECs evaluate and adjust operations as needed to maintain technological relevance in course offerings, displays, and facilities to keep pace with ongoing market and technology advancements. Upgrades and additions requiring capital are included in SCE s EEC capital forecast presented in Chapter VIII. E. Analysis of BCD Recorded and Forecast O&M Expenses BCD O&M expenses are recorded in FERC Account This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for BCD are shown in Figure VII- and are discussed below. 1 1 Attendance of non-o&m funded classes at both Energy Education Centers totaled over 1,000 in Refer to WP SCE-0 Ch. VII-X, pp. - for the recorded and forecast O&M expenses for FERC Account

183 Figure VII- Business Customer Division Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Analysis of Recorded BCD O&M Expenses As shown in Figure VII-, total recorded adjusted O&M expenses for FERC Account 0.00 have declined from $. million in 0 to $0.0 million in 01, a reduction of over 1 percent. From 0 through 01, BCD labor expenses declined following after we implemented a number of productivity measures, including consolidating Account Management support activities, eliminating vacancies, and the voluntary departure of a number of employees. In 01 and 01, BCD succeeded in filling a number of key vacancies. That, combined with an increase in O&M-funded activities, such as increased support of infrastructure and reliability efforts, increased customer requests for information regarding the impacts of regulatory, legislative and tariff changes, led to an increase in labor expenses in 01 and 01 of $1.0 million and $,000, respectively. The Operational Excellence measures implemented in 01 included a number of activities that reduced non-labor expenses, including, for example, reducing employee meeting and travel expenses by increasing the use of audio and video conferencing, and using web-enabled meetings. 1

184 Combined, these efforts led to a percent decline in non-labor expenses in 01. In 01, SCE conducted extensive training as part of a reassignment of its Account Management staff, which contributed to a $,000 increase in non-labor expenses. Following 01, BCD continued to focus on reducing non-labor expenses resulting in a percent overall decrease in non-labor expenses in 01 compared to 0.. Comparison of 01 Authorized and Recorded O&M Expenses Figure VII- compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account 0.00 in compliance with D As shown in Figure VII-, SCE recorded expenses for 01 in FERC Account 0.00 exceeded the authorized amount by $,000, or just under three percent. This variance is within normal operating expectations. 1

185 Figure VII- 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded Expenses for FERC Account 0.00 (01 $ 000) $,000 $0,000 $0, $0, $ $0,0 $1,000 $,000 $,000 $0 01 Request 01 Authorized Variance 01 Recorded O&M GRC Activity 01 Requested (A) 01 Authorized (B) 01 Recorded (C) Authorized vs. Recorded (C-B) Business Account Services $0, $0, $0,0 $ 1. BCD Test Year Forecast Figure VII- shows the forecast O&M expenses for BCD activities. Details regarding the forecast are below. a) Determination of Test Year Estimating Method The 01 Base Year activities for BCD are described in Sections B through D of this chapter. Although labor expenses have varied from year to year from 0 through 01, the Last Recorded Year is the appropriate basis for the Test Year forecast as it reflects the most recent activities undertaken by BCD. In addition, the adjustments proposed below are calculated specifically in the context of 01 activity levels and recorded O&M expenses. This includes, for example, the Operational 1

186 1 1 1 Excellence initiative implemented in late 01, which is quantified relative to Base Year recorded adjusted O&M expenses. As a result, the Last Recorded Year, combined with the adjustments detailed below, is the appropriate method for forecasting Test Year labor expenses. Overall, BCD non-labor expenses have trended downward except for 01 as described in Section VII.E.1 above. The Last Recorded Year accurately reflects the expense level associated with Base Year activity levels and the adjustments proposed below are calculated specifically in the context of those activity levels and Base Year recorded O&M expenses. For these reasons, the last recorded year is the appropriate basis for forecasting Test Year non-labor expenses. b) Test Year Adjustments SCE s forecast of Test Year O&M expenses for BCD reflects increased expenses due to customer growth and program changes offset by reduced expenses associated with the CS Re-Platform project and Operational Excellence initiatives. These adjustments are described in detail below and summarized in Table VII-. The resulting O&M forecast is shown in Figure VII- and Figure VII-. The decision to use Last Recorded Year as the basis for the Test Year O&M labor forecast for BCD is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have been relatively stable for three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For BCD, labor expenses have been relatively stable as the year-to-year labor expense variances have been less than percent for the period 01 through 01. The decision to use Last Recorded Year as the basis for the Test Year O&M non-labor forecast BCD for is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For BCD, overall non-labor expenses have generally trended downward over the period 0-01 with the exception of 01. 1

187 Table VII- BCD Test Year O&M Adjustment Summary (Constant 01 $000) Line Description No. Labor Non-Labor Total 1 Customer Growth $ $1 $0 Outage Communications $0 $ $ CCA Support $0 $1 $ CS Re-Platform Benefits ($0) $0 ($0) Operational Excellence ($,000) ($00) ($,00) Total Test Year Adjustments ($,1) $ ($,) (1) Customer Growth SCE expects the number of customers it serves to grow by. percent from 01 to 01. The Account Management Services group, described in Section VII.B, is directly impacted by this growth in the number of customers requiring Account Management Services. As a result, SCE forecasts a $0,000 increase in O&M expenses relative to the Base Year for the Account Management function. 1 () Program Changes BCD forecasts Program O&M adjustments for program changes totaling $1.0 million for expanded outage communications and CCA support. These program changes are described below. (a) Outage Communications As described in Section VII.B..g), BCD assumed responsibility for the management of outage notifications in 01. With the implementation of the Outage Notification Information (ONI) system, SCE began providing all residential and non-residential customers with timely notifications related to maintenance and repair outages, using the customers preferred and selected means of communication (e.g., phone, text, , or a combination of these). 1 Outage 1 Refer to WP SCE-0 Ch. VII-X, p. for additional details supporting the BCD customer growth forecast O&M adjustment for FERC Account Outage Notification Information (ONI) Releases 1 and a are described in SCE-0, Vol.. Releases 1 and a were implemented in 01. 1

188 notifications can be sent throughout the life cycle of an outage, including rescheduling outages and estimated restoration times. In 01, prior to implementing ONI functionality, BCD sent nearly.1 million outage notifications to large non-residential customers and Medical Baseline residential customers. Most residential customers (other than medical baseline customers) received outage notifications from SCE s CCC. The majority of non-residential customers did not receive outage notifications from BCD or the CCC. By the end 01, SCE expects that over. million residential and non-residential customers will be enrolled to receive ONI outage notifications. When a residential customer enrolls to receive electronic ONI outage notifications, the CCC will no longer send notifications. SCE expects that this growth in customer enrollment will result in nearly 1. million notifications being sent in 01, resulting in an increased Test Year O&M expenses of $,000. In addition, SCE plans to expand its Dear Neighbor communications. SCE will notify customers who may experience increased traffic, lane or street closures, noise, or other inconveniences while SCE is working on large construction projects. This communication may be in the form of a letter, , or through targeted social media communications, either from SCE directly or through communication channels coordinated with affected cities. In 01, SCE sent nearly,000 Dear Neighbor letters to customers. In the Test Year, SCE expects to expand these communications to,000 Dear Neighbor letters, in addition to other communication channels, resulting in a $,000 increase in Test Year O&M expenses. This increase will support SCE s goal of improving outage communications and customer satisfaction. Combined, the increased electronic outage notifications and the expansion of the Dear Neighbor communications result in increased Test Year O&M expenses totaling $, (b) CCA Support Activities SCE will continue to respond to public entities contemplating the formation of a CCA and, as noted in Section VII.C..c), SCE expects two additional CCAs to form in SCE s service territory in 01 and 01, resulting in the enrollment of over 00,000 service accounts 1 Refer to WP SCE-0 Ch. VII-X, p. for additional details supporting the BCD Outage Communications forecast O&M adjustment for FERC Account

189 compared to a single CCA with approximately 0,000 service accounts in the Base Year. 1 As described in Section VII.C. above, BCD s Customer Choice Services (CCS) group maintains a single point of contact with CCAs, responds to information requests, and resolves service-related issues. To accommodate this growth in CCA activity, SCE plans to increase staffing in BCD s CCS group by three FTEs above Base Year levels, which will increase labor expenses by $0,000 and non-labor O&M expenses by $,000 in the Test Year. 1 In addition, BCD forecasts $1,000 in non-labor expenses to perform some of the activities included in SCE s CCA-related OOR forecast. 1 Combined, SCE forecasts $,000 in incremental O&M expenses in the Test Year to support CCA activity. 1 () CS Re-Platform Benefits As described in SCE-0, Vol., the CS Re-Platform program will eliminate the inefficiencies associated with obsolete and disparate applications and systems through implementation of a simplified, modern, integrated suite of Customer Service applications. The transition to a modern digital environment will increase SCE employee productivity and lower costs to provide service. As a result, SCE forecasts a $0,000 Test Year reduction in BCD O&M expenses. 1 () Operational Excellence In late 01, BCD increased productivity and reduced O&M by refining the assignment of Account Management resources and increasing self-service options available to customers. BCD also consolidated and streamlined its account management support function, and 1 Lancaster Choice Energy, the first CCA in SCE s service territory, began serving customers in The $,000 Test Year increase includes $0,000 in labor expenses and $,000 in labor-related non-labor expenses. 1 Costs associated with performing these OOR-related activities are recovered through SCE s CCA OOR fees. Furthermore, if CCA growth exceeds SCE s current forecast of the number of CCAs formed and service accounts impacted, SCE expects that OOR achieved through CCA service charges will be adequate to cover any incremental costs above those included here. 1 Refer to WP SCE-0 Ch. VII-X, pp. - for additional details supporting the CCA Support Activities O&M forecast adjustment to FERC Account The CS Re-Platform benefits included in SCE s 01 Test Year forecast are proposed, contingent upon approval of the corresponding CS Re-Platform project costs. Should the Commission not adopt the proposed CS Re-Platform costs in this FERC activity, the corresponding benefits must also be removed from the Test Year forecast. Refer to WP SCE-0 Ch. VII-X, p. 0 regarding the expected benefits for the CS Re-Platform project. 1

190 combined the EDS group with the Account Management group. As a result, SCE forecasts reducing BCD labor expenses by $. million and non-labor expenses by $00,000. Of this amount, BCD reduced labor expenses an estimated $00,000 in 01, which is reflected in the Base Year recorded adjusted amount. The remaining $. million reduction is reflected in BCD s Test Year O&M expense forecast. c) Test Year Forecast Summary As shown below in Figure VII-, SCE forecasts $1.0 million in O&M expenses for FERC Account 0.00, a reduction of $. million or eleven percent compared to Base Year O&M expenses of $0.0 million. Figure VII- Business Customer Division Comparison of 01 Base Year and 01 Test Year FERC Account 0.00 (Constant 01 $000) $,000 $0,000 $0,0 $0 $1,0 ($0) ($,00) $1,0 $1,000 $,000 Program Changes CCA Support $ Outage Communications Total Program Changes $1,0 $,000 $0 01 Recorded Customer Growth Program Changes CS Re-Platform Benefits Operational Excellence 01 Forecast Refer to WP SCE-0 Ch. VII-X, p. 1 for additional details supporting the BCD Operational Excellence O&M Forecast adjustment to FERC Account 0.00.

191 VIII. BUSINESS CUSTOMER DIVISION CAPITAL SCE must expend capital during this GRC period to support BCD operations for two specific activities. First, capital improvements are required in both of SCE s EECs to maintain safe, effective, and efficient facilities for customer education activities. Second, BCD s field engineering and pump test groups must replace aging test equipment to test customer equipment. For the 01 GRC period, SCE forecasts $1. million in capital expenditures for Energy Education Centers and specialized equipment to support ongoing operations of the Business Customer Division. A. Structures and Improvements Energy Education Centers (CCS-00-SI-BC-CT and CCS-00-SI-BC-AT-00001) As described in Section VII.D, SCE s EECs in Irwindale and Tulare provide residential, commercial, industrial, and agricultural customers with information regarding energy efficiency, demand response, renewable generation, environmental solutions, electric safety, utility programs, electro-magnetic fields, and power quality. The EECs are also an essential component of SCE s WE&T efforts. In 01, SCE hosted nearly,000 visitors at the EECs. The EECs require capital funding to support these activities and comply with Commission directives and other essential statewide initiatives. SCE s capital forecast for these facilities totals $. million for the period 01 through 00 as shown in Table VIII- and described in detail below. In general, EEC capital projects include facility retrofits and upgrades to replace worn or obsolete equipment, improve HVAC systems, and upgrade lighting and HVAC equipment testing facilities.

192 Table VIII- BCD Energy Education Centers Structures and Improvements (Nominal $000) Line Recorded Forecast BCD Capital Forecast No Structures and Improvements (CCS-00-SI-BC-CT and CCS-00-SI-BC-AT-00001) Energy Education Center - Irwindale () Energy Education Center - Tulare () ,0 Total BCD Structures and Improvements 1, () 1 1, 1,1 1, 1,1 1, 1 Table VIII- summarizes the planned EEC capital projects. For the period 01 through 00, EEC-Irwindale capital projects, summarized in Table VIII-, total $.01 million. These projects include classroom and technology center projects totaling $1. million, general facility projects totaling $1,000, and HVAC projects totaling $,000. Capital projects planned for the period at EEC-Tulare, summarized in Table VIII-, total $.0 million. The EEC-Tulare projects include a Zero Net Energy (ZNE) Demonstration Center for $1. million, audio visual system replacements and upgrades totaling $0,000, general facility projects totaling $1,000, and HVAC projects totaling $, Project costs were developed by SCE engineers using a combination of vendor estimates and RS Means construction cost data. 1 The 01 recorded amounts reflect the impact of an accounting adjustment of $,000 for EEC-Irwindale, and a write-off of $,000 for EEC-Tulare. 1 Refer to WP SCE-0 Ch. VII-X for a detailed list of EEC-Irwindale (pp. -) and EEC-Tulare (pp. -1) capital projects. 1 RS Means construction cost data included information from Building Construction Cost Data, RS Means Mechanical Cost Data, RS Means Plumbing Cost Data, and RS Means Electrical Cost data. 1

193 Line No. Table VIII- EEC Irwindale Capital Projects (01-00) (Nominal $000) Project / Description Period Total Amount Audio-Visual Equipment Upgrades 1 equipment Enhance audio-visual systems throughout the facility to increase capabilities for 01- technology-driven delivery of customer program offerings replacing obsolete 01 $ 1 Energy Management Systems Upgrades Enable greater control and tracking of total building energy use of HVAC and Lighting 01 $ 1 Lighting Classroom Rehabilitation 01- Replace outdated and potentially unsafe equipment to facilitate technology-driven 01 program offerings. Update obsolete and insufficient technology exhibits $ 1 Bldgs. 00/00 Entrance Rehabilitation and 00 Lobby Rearrangement Replace and upgrade outdated and failing/aging front entrance doors including enhanced security, safety and ADA measures 01 $ 1 00 Foodservice Technology Center Upgrade 01- Remodel to incorporate food service demonstration equipment to support the growth 01 in the number of EE food service measures $ 0 Convert EMF room to classroom/conference room Convert obsolete EMF displays and convert to a conference room / classroom the space to increase capacity and improve usability 01 $ 00 HVAC Upgrades 01- Replace existing 1 years old A/C package unit to improve efficiency and 01 temperature stability $ 00 Lobby Expansion and Upgrade Expand the lobby of building 00 to improve customer ingress to and egress from the building 00 $ Total $,01 1

194 Table VIII- EEC Tulare Capital Projects (01-00) (Nominal $000) Line No. 1 Audio-Visual Equipment Upgrades Replace obsolete audio-visual equipment throughout the facility to increase capabilities for technology-driven delivery of customer program offerings Energy Management Systems Upgrades Enable greater control and tracking of total building energy use of HVAC and Lighting Tool Lending Library (TLL) Relocation Relocate TLL to a more customer-convenient location Self Service Water Stations Install three new sanitary, self-service water stations to improve customer experience, safety, and cleanliness DC Fast Charging of Electric Vehicles Install permanent DC fast (Level ) chargers to accommodate customer charging of electric vehicles Reception Area Upgrade Upgrade 0 year old reception area to enhance customer experience Edison Building Upgrade Upgrade aging systems throughout the building and increase training space Zero Net Energy (ZNE) Demonstration Center Buildout Build a ZNE Demonstration Center to support the CPUC's long-term ZNE goals HVAC System Upgrades Replace current HVAC system that is nearing the end of its useful life to avoid costly repairs and provide redundancy for critical customer areas Total Project / Description Period Total Amount $ 0 01 $ 1 01 $ 01 $ 01 $ 01 $ 1 01 $ 00 $ 1, 01 $ $,0 1 B. Specialized Equipment (CCS-00-SE-BC-PT and CCS-00-SE-BC-TS-00001) SCE s forecast for the specialized equipment used by Customer Service engineers and pump test specialists is budget-based and considers the age and condition of the existing equipment. Recorded and forecast amounts for BCD s specialized equipment are shown in Table VIII-. Specialized equipment items forecast from 01 through 00 are described in the sections that follow. 1

195 Table VIII- BCD Specialized Equipment (Nominal $000) Line Recorded Forecast BCD Capital Forecast No (CCS-00-SE-BC-PT and CCS-00-SE-BC-TS-00001) Engineering Tools and Equipment - Technical Services Engineering Tools and Equipment - Pump Test 0 1 Total BCD Specialized Equipment Engineers use portable metering equipment to measure electricity use, fluid flow, system temperatures, and other metrics needed to evaluate end-use customer equipment or process changes that may be appropriate for customers seeking better energy management. Engineers also use portable test equipment to measure energy use, temperatures, and other data at customer sites to support their evaluation of energy consumption and performance of existing or new equipment being considered by customers. SCE engineers also place equipment in the Technology Test Centers, which is used to measure energy consumption, temperatures, and other data for verification of equipment performance. SCE forecasts spending $1. million from 01 through 00 for engineering tools and equipment. 1 SCE's pump test and hydraulic services organization uses specialized equipment to perform pump tests at the request of customers. This test equipment is used to gather various measurements such as power, pressure, water levels, and flow of water and other fluids to determine the overall efficiency of customers pumping facilities. Customers use the test results to make informed decisions regarding when and how to renovate or replace equipment to increase efficiency, reduce energy consumption, demand, and annual operating costs. SCE forecasts spending $,000 from 01 through 00 for pump test equipment. 1 1 Refer to WP SCE-0 Ch. VII-X, pp. 1-1 for additional details supporting the capital forecast for engineering tools and equipment. 1 Refer to WP SCE-0 Ch. VII-X, pp. 1-1 for additional details supporting the capital forecast for pump test equipment. 1

196 1 1 The specialized equipment forecasts were developed by SCE engineers using a combination of vendor quotes and engineering estimates. C. Comparison of 01 Authorized and Recorded BCD Capital Expenses Figure VIII- compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded BCD capital expenditures in compliance with D As shown in Figure VIII-, recorded BCD capital expenditures fell $1.1 million below the authorized amount. Capital spending at the EECs account for the majority of this variance. While some of the planned projects were completed, the EEC-Tulare HVAC upgrade (forecast in SCE s 01 GRC at $,000) and EEC-Irwindale Audio-Visual upgrades (forecast in SCE s 01 GRC at $,000) were initiated but only engineering and design phase was completed in 01. In addition, the EEC-Irwindale Solar PV installation at EEC-Irwindale was cancelled after a structural analysis determined that the planned location was unsuitable. Finally, the Electric Vehicle DC Fast Charging facility planned for EEC-Irwindale was completed, but at a significantly lower cost than estimated. 1

197 Figure VIII- Comparison of 01 Authorized and 01 Recorded BCD Capital Expenditures ($000),000 $1, $1, 1,00 1, ($1,001) ($1) $ 0 01 Request 01 Authorized Structures & Improvements Structures & Improvements Variance Specialized Equipment Variance Specialized Equipment 01 Recorded Line No. 1 Capital Category Structures and Improvements 01 Requested (A) 01 Authorized (B) 01 Recorded (C) Authorized vs. Recorded (C-B) $1, $1, $ ($1,001) Specialized Equipment $ $ $ ($1) Total BCD Capital $1, $1, $ ($1,1) 1

198 IX. CUSTOMER PROGRAMS AND SERVICES DIVISION [FERC ACCOUNT 0.00] This chapter describes the activities performed by the Customer Programs and Services (CP&S) Division of SCE s Customer Service organization. Historical and forecast O&M costs associated with CP&S operations are discussed in Section E. A. Overview of CP&S CP&S manages the Consumer Affairs, Customer Satisfaction, Marketing Communications & Digital Customer Experience, Product Development, and Program Management groups. Each of these groups is described in detail below. O&M expenses for these CP&S functions are recorded in FERC Account The 01 Test Year O&M forecast for FERC Account 0.00 totals $. million, a $1,000 reduction relative to Base Year recorded adjusted expenses. This forecast reflects the costs associated with ongoing CP&S activities, cost reductions associated with SCE s ongoing operational excellence efforts to improve operational efficiencies, and the benefits associated with the CS Re-Platform project. This forecast also reflects the program changes necessary to support implementing (1) the Voice of the Customer program, () the TOU Period Adjustment and Default CPP per D , () expanded Renewable Tariffs and Interconnection Programs, () expanded Distributed Energy Resource Contract Management, and () New Customer Product Development activities. These program adjustments are described in detail in Section IX.E.. The program adjustments are offset by efficiencies gained through implementing the CS Re-Platform program and Operational Excellence initiatives described in Sections IX.E..b)() and IX.E..b)(), respectively. B. Consumer Affairs and Customer Satisfaction The Consumer Affairs and Customer Satisfaction organizations receive and gather feedback from SCE s customers to answer customer inquiries, resolve customer complaints, and improve customers experiences with SCE s programs and services. These functions are described in detail below. 1 In its 01 GRC, SCE presented these activities in FERC Accounts 0.00 (Consumer Affairs and Customer Satisfaction), 0.00 (Marketing, Communications and Digital Delivery of Customer Services), and 0.0 (Customer Programs). 1

199 1. Consumer Affairs The Consumer Affairs group handles escalated customer inquiries and complaints transferred from the Commission or received directly by SCE and administers and delivers programs and services to Medical Baseline and special needs customers. 1 Special needs customers include critical care, elderly (seniors), and disabled customers. 1 a) Escalated Customer Inquiry and Complaint Handling Consumer Affairs handles inquiries and complaints received from the Consumer Affairs Branch of the Commission s Consumer Service and Information Division, received in SCE s executive offices, and received by telephone. 1 As shown in Table IX-, Consumer Affairs resolved,00 inquiries and complaints in 01. Table IX- Inquiries and Complaints Resolved by Consumer Affairs Line No. Description Telephone Complaints,0,0,,,0 Informal Complaints 1, 1, 1,00 0 Written Inquiries 0 Total Complaints and Inquiries,0,0,,,00 1 FERC Account 0.00 includes only those costs related to Medical Baseline and special needs customers incurred by the CP&S organization. Many other organizations incur costs related to these customers including, for example, RSO (processing Medical Baseline application see Section IV.B.1.c)), CCC (providing information on rates and programs for which they may be qualified see Section V.B.1) and BCD (providing outage alerts to Medical Baseline customers see Section VII.B..g). 1 For purposes of this testimony, SCE uses physical disability as defined in Cal. Gov t Code 1(k). Refer to WP SCE-0 Ch. VII-X, pp. -1 for a list of programs and services administered by Consumer Affairs. 1 Informal complaints are written complaints transferred to SCE from the Consumer Affairs Branch for resolution. For each Informal Complaint, Consumer Affairs is required to conduct an investigation and provide written resolution to the customer and written documentation to the Consumer Affairs Branch. Consumer Affairs also provides a response to all written inquiries or complaints that are received by SCE s executive offices. Refer to WP SCE-0 Ch. VII-X, p. 1 for additional inquiry and complaint information. 1

200 As shown in Table IX-, the total number of inquiries and complaints declined in 01 and 01. In 01, however, inquiry and complaint volumes increased by about percent compared to 01. This increase in inquiries and complaints was driven by increases in each of the categories shown in Table IX-. Telephone complaints, which make up the largest portion of total complaints, declined in each of the years 01 through 01. However, telephone complaints increased by nearly a third in 01 compared to 01. Though informal complaints and written inquiries declined by 1 percent and percent in 01 and 01, respectively, in 01, the volume of informal complaints and written inquiries increased 1 percent and percent, respectively. SCE attributes the increase in inquiries and complaints in 01 primarily to two factors. The first factor is that until 01, SCE had maintained many of the credit collection and disconnection protections adopted in R after the Residential Disconnect OIR Settlement Agreement was approved. After many of these protections expired in 01, SCE began applying its credit policies for extensions and final call notices, which increased credit-related complaint volumes. Second, complaints related to outages, particularly maintenance outages, increased in 01 as SCE scheduled more maintenance activities on its infrastructure. Table IX- Consumer Affairs Average Complaint Resolution Time Description Complaint Resolution Cycle Time (days) Despite the decline in the total number of inquiries and complaints from 0-01 shown in Table IX-, SCE saw an increase in the average complaint resolution time from days to 1 days during this same period, as shown in Table IX-. In 01, the Consumer Affairs team significantly reduced its cycle time to six days. In 01, however, complaint resolution times increased to nine days due to the significant increases in volume experienced that year. The reductions in investigation time were offset by increased informal complaints and written inquiries received by See D

201 1 1 1 SCE s executive offices. Unlike complaints initiated through telephone calls, informal complaints and written inquiries typically involve more complex outage, billing, and rate issues, taking more time to resolve. b) Outreach Programs Consumer Affairs communicates with SCE s special needs customers, especially those with financial difficulties or medical conditions, in a number of ways. One way is through the Medical Baseline program for customers who require electric-powered medical support equipment in the home. Customers enrolled in Medical Baseline are granted a greater allocation of the lowest-cost electricity (Baseline Allocation) each month. Consumer Affairs works with community-based organizations (CBOs), government agencies, disability and senior organizations, senior centers, and regional centers to educate customers and service providers about SCE rates, programs, and services, as well as to help identify customers who might qualify for Medical Baseline. As shown in Table IX-, enrollment in Medical Baseline has grown steadily from 0 with 1 percent higher total participation in 01 than in 0. 1 Table IX- Historical Medical Baseline Participants by Type Line Medical Baseline Enrollment Category No. 1 Critical Care 1,0 1,0 1,0 1,1 1, Non-Critical Care,,,,0 0, Total,,,,, SCE s Consumer Affairs group also takes special precautions with these customers in the case of an outage. SCE attempts to collect preferred alternate contact information for each Medical Baseline customer through the customer s Medical Baseline application and renewal The Medical Baseline Allocation and eligibility requirements are included in SCE s Preliminary Statement H, paragraph. 1 SCE s Medical Baseline program is administered by SCE s Program Services function as described in Section IV.B.1.c) above.

202 applications. Medical Baseline customers may also request that information be updated when speaking with a call center representative. In an annual letter sent to all Medical Baseline customers, SCE further reminds such customers to update their contact information and plan for emergencies when electricity may not be available. Consumer Affairs provides outage assistance beyond that described above for Medical Baseline customers. For example, during an extended outage, Consumer Affairs may distribute ice, water, flashlights, and safety information to customers who are without power. 1 Historically, these distribution events occur once or twice per year and are usually in a single geographical location. During the Long Beach outages in the summer of 01, SCE set-up local distribution sites where residents could receive flashlights, water, ice, and emergency information regarding outages. SCE Consumer Affairs partners with the Corporate Communications organization to promote awareness of these distribution site locations through social channels such as Facebook, Twitter, and Instagram. During the Long Beach event, SCE also went door to door to senior buildings to provide these supplies to residents who may have been unable to leave their homes to visit the distribution site locations. 1 Further, to prepare for the expected winter El Nino, SCE partnered with various county and community organizations to coordinate emergency preparedness events, focusing efforts on senior communities and customers with disabilities. Consumer Affairs also helps special needs customers avoid credit-related disconnects. Specifically, Consumer Affairs receives advance notice from our Corporate Credit department of special needs customer accounts subject to disconnection. Consumer Affairs attempts to reach these customers to alert them of possible disconnection and tries to secure payment, make 1 SCE defines an extended outage as an outage expected to last 1 or more hours. 1 In the past, SCE has also informed customers of Cool Center and Cooling Station locations. SCE s Cool Centers are operated as a service to assist low-income and senior residential customers, provide respite from the heat, and help them lower their utility bills. SCE s Cool Center Program is funded through SCE s California Alternative Rates for Energy (CARE) and Energy Savings Assistance (ESA) Programs and Budgets Application. See D.1-0-0, OP and D , OP. SCE requests that certain essential use customers normally exempt from rotating outages volunteer to open their business facilities as a public Cooling Station during rotating outages. These geographically dispersed facilities are available to provide relief to customers with temperature-sensitive health conditions whose residences are affected by rotating outages that coincide with extremely high temperatures. 1

203 payment arrangements, or provide information regarding agencies able to aid the customer with bill payment. When we are unable to contact customers through phone or direct mail, we may request that Wellness Checks be performed by local law enforcement or Adult Protective Services. 1 SCE s Consumer Affairs group also oversees a Good Neighbor Program, which aims to connect SCE customers and members of the community with organizations whose mission it is to provide them with social services. SCE employees may refer SCE customers or community members who may need social services to this program.. Customer Satisfaction SCE s Customer Satisfaction group identifies and prioritizes customer service improvement opportunities to meet basic customer service and evolving customer expectations by partnering with operational departments to guide their efforts to take action on improvements needed. Customer satisfaction benchmarking studies, custom research, data analytics, and post-program evaluations all provide insights to inform SCE. SCE uses the JD Power Electric Utility Satisfaction Study to measure customer satisfaction with important aspects of our business such as power quality and reliability, billing and payments, customer service, corporate citizenship, communications, and price. Through the study, we benchmark our performance with, and learn from, the best practices of peer utilities. Utilizing the diagnostic tools provided, we identify improvement opportunities and prioritize efforts on those areas identified by the study as being most important to our customers. When launching a new product or service, or working to improve an existing product or service, SCE may perform custom research and conduct customer experience reviews, such as journey mapping. 1 Custom research can be qualitative or quantitative and enables SCE to incorporate customer feedback into its customer-facing processes. Journey mapping is done from a customer point of view and is used to understand and design end-to-end customer experiences so that SCE can identify and 1 Wellness Checks are in-person visits by local law enforcement or Adult Protective Services personnel to check on the safety and welfare of an individual. 1 Journey mapping is a methodology that enables SCE to (a) identify the steps a customer goes through when interacting with SCE, (b) help identify the most important customer touchpoints that drive satisfaction or pain points, (c) gain a better understanding of its customers emotional perceptions during their interactions with SCE, and (d) identify and prioritize investments for improving the customer experience. 1

204 mitigate potential pain points for customers. Journey maps are informed by market research, customer feedback, operational statistics, and other data points. Data analytics and propensity modeling provide relevant information to customers and support marketing to promote relevant tools and programs by customer segments. Customer segmentation further refines our messaging and targeting to facilitate a positive outcome for both SCE and our customers, whether that means enrolling customers in programs or reaching our diverse customer base through appropriate channels. Post-program analysis gathers feedback from our customers to measure the effectiveness of specific programs or communications. For example, the Customer Satisfaction group led the effort to measure the effectiveness of our Summer Readiness Campaign, which is highlighted in Section IX.C.1.a) of the Marketing & Communications testimony below. In 01, SCE began to explore ways to improve the timeliness, effectiveness, and actionability of customer feedback. Through this effort, SCE identified and, beginning in 01, implemented a Voice of the Customer (VOC) tool. This tool, and the incremental O&M funding necessary to implement it, are described in Section IX.E..b)(1)(a). C. Marketing, Communications, and the Digital Customer Experience The Marketing and Communications group engages customers with information related to programs, services, and rates. This group primarily works with the Customer Satisfaction group to understand customer needs and information, matches customers with SCE programs and solutions, and reaches customers with the right mix of delivery channels using marketing communication campaigns and digital solutions. SCE utilizes a variety of delivery channels (direct mail, bill messages, SCE.com, , social media, community grassroots organizations, events, and third parties, including retailers, distributors, manufacturers, and industry organizations) to educate SCE s diverse customers about programs, services, and rates that could benefit them. The Digital Customer Experience group manages SCE s digital presence and end-to-end customer experience to meet our online customers needs, including providing the daily operational content support for SCE.com. 1. Marketing and Communications In 01, SCE conducted three main types of Marketing and Communication: (1) a comprehensive annual summer conservation campaign, () outreach for specific individual programs, 1

205 such as Paperless Billing, Budget Assistant, plug-in electric vehicles (PEV), and PGC-funded programs, and () rate communications. 1 These efforts are described below. a) Comprehensive Annual Summer Conservation Campaign For 01, SCE conducted an integrated, multi-channel Summer Marketing Campaign aimed at (1) increasing customer awareness of Integrated Demand-Side Management (IDSM) programs and other tips and solutions to help proactively manage energy use and mitigate bill impacts, () driving acquisition and retention in energy efficiency and demand response programs, () raising awareness of on-peak time-of-use (TOU) rates and ways to shift usage (particularly among business customers), () educating customers about the importance of energy conservation and sustained energy management behavior, and () educating customers about how to stay safe during high heat days and respond appropriately in the event of an outage. SCE used a two-phased messaging approach to reach customers over the course of the summer and leveraged multiple channels and languages to reach SCE s diverse customer base. The first messaging phase (implemented May through July 01) focused on increasing customers awareness of programs and services that would help them conserve energy and manage their summer bills. SCE proactively and frequently reminded business customers about on-peak TOU rates, starting June 1, targeting businesses that had transitioned to TOU within the last two years. The second messaging phase (implemented in mid-july through October 01) focused on providing customers with helpful tips to conserve energy (and water, given the drought in Southern California) or shift their energy use during high-heat periods. SCE s Summer Marketing Campaign also cross-promoted online energy management tools such as MyAccount and Budget Assistant to help customers monitor their energy usage. SCE communicated these solutions through a variety of channels, including direct mail, , radio, online display ads, community events, newsletters, case studies, out-of-home ads, and local retail in-store merchandising. Marketing and Communications partnered with SCE s Corporate 1 As directed by the Commission, costs associated with SCE s Charge Ready program are recorded in the Charge Ready Program Balancing Account. (See D , OP, and SCE Advice Letter -E, approved by the Commission on May 1, 01.) No funding for SCE s Charge Ready program is included in this Application. 1

206 Communications department to develop a disciplined Total Market Approach to address the diverse needs of our customer base, as well as for the delivery of mass media channels (radio, out-of-home ads, and online display ads). In parallel, SCE Marketing and Communications partnered with various internal stakeholders including Local Public Affairs, Business Customer Division, Consumer Affairs, and Local Government Partnerships to execute direct-to-customer tactics and manage the successful execution of the overall campaign (community events and the distribution of case studies). 1 Marketing and Communications managed the Summer Campaign, including campaign planning and the production of direct mail, , newsletters, case studies, and local retail in-store merchandising. SCE placed special emphasis on reaching ethnic markets and at-risk communities (e.g., senior citizens and medical baseline customers). Such targeted activities included (1) developing and providing a summer campaign brochure titled Let s Talk Energy: Cool Ways to Use Less to medical baseline and senior customers and to in-language ethnic audiences across SCE s service territory, () conducting outreach to senior citizens through community and faith-based organizations and city partners, and () conducting additional in-language outreach through newspapers and SCE s website. In-language outreach was provided in English, Spanish, Chinese, Korean, and Vietnamese. Based on research conducted post-campaign, percent of residential customers and percent of small business customers surveyed had read or looked at SCE s targeted summer communications. Among those who recalled advertising or communications, percent of residential customers and percent of small business customers reported having taken action to reduce their energy use. 1 b) Self Service and Paperless Billing SCE offers self-service capabilities for customers to use technology to conveniently access information and perform routine tasks without the assistance of a live customer service representative. Customers can self-serve online at SCE.com to turn on, transfer, and turn off 1 Total Market Approach strives to develop a common strategy and message that will appeal to all customers while allowing for message adjustment as needed to best suit SCE s multicultural customers. It leverages varying channels, including grassroots and community organizations and ethnic trade associations to engage with diverse customer segments. Creative materials are ultimately developed to work for all market segments. 1 Refer to WP SCE-0 Ch. VII-X, pp. 1-1 for additional details regarding the results of SCE s 01 Summer Readiness Campaign. 1

207 service (Move Center); check the status of outages, report an outage, or request outage updates (Outage Center); enroll in programs and services such as Budget Assistant and Paperless Billing; obtain usage information (MyAccount); and learn about available rebates and incentives, rates, and other services. To raise customer awareness of the availability of the services described above, SCE has leveraged multiple media channels to optimize, target, and reach SCE s diverse customer base. For example, at the end of 01 and the beginning of 01, SCE began a test and validation approach to reaching customers not enrolled in Paperless Billing. SCE s targeted marketing approach consisted of testing and optimizing a mix of digital display advertising, search marketing, social media (paid and earned), , and direct mail to determine what is most effective in reaching customers. As a result, SCE delivered over,000 new enrollments at a Cost Per Acquisition (CPA) of $1 per enrolled customer through the end of 01. c) Informing Electric Vehicle Consumers of Charging and Rate Options Marketing and Communications outreach efforts enabled customers to make informed decisions about electric vehicle charging options and beneficial electric vehicle rates by providing the appropriate information to both potential and current electric vehicle owners. Education and outreach efforts included messaging to help educate customers about the benefits of charging their vehicles during off-peak hours, environmental benefits, grid reliability, safety, and ways to help minimize energy costs. SCE s electric vehicle messaging was communicated through digital channels including display and video ads, search engine marketing, and content sponsorships. The digital campaign delivered over 0 million impressions in 01. SCE also communicated with potential and current electric vehicle owners through SCE s electric vehicle microsite, social media, printed materials, and outreach at community events. SCE enhanced the online EV Rate Assistant tool, which provides information on how to determine the potential impact to their electric bill when charging from home, to include additional rate options and features, such as the impact of installation costs for adding a second meter. 1

208 d) Rate Communications In 01, SCE educated residential customers particularly those most impacted about SCE s rate changes. SCE s Marketing and Communications strategy provides customers with personalized information on the rate changes, enclosures (mail or ) on potential mitigating programs and services, as well as additional information on SCE.com explaining rate changes and available rate options. SCE s 01 rate communications plan targeted outreach to those customers who were most likely to experience the largest bill impacts from the proposed rate changes. For 01, this included reduced tier price differentials, a new minimum bill amount of $ for CARE, FERA, and medical baseline customers, a $ minimum bill amount for all other customers, and a new flat 1 percent discount for FERA customers. These changes went into effect on October 1, 01, per Advice Letter -E, approved by the Commission on October, 01. Customers deemed to be most impacted by the rate changes received direct postal mail or informing them about the rate changes, anticipated rate impacts, and specific programs and tools available to help mitigate high bill impacts, as well as directing customers to SCE s rate change website for additional information. SCE developed a Rate Reform landing page (on.sce.com/ratechange) to provide customers with comprehensive information about California s residential rate restructuring, how these changes may impact their bills, specific bill impact information based on their current bills, and links to other tools and resources that can help them to better manage their energy costs. Links to information about rate plans provided customers with more information about optional TOU rates. A new bill change look-up tool was developed and launched in early November to provide customers with average bill impacts based on their zip code (tied to baseline region zone), their rate plan, and their current average monthly bill amount. The resulting average bill impact reflected the impact of the residential rate plan changes that were implemented on October 1. SCE will leverage Some of the rate communication activities described were funded with both O&M and the Residential Rate Implementation Memorandum Account (RRIMA). Specifically, activities incremental to those funded by O&M authorized in SCE s 01 GRC were charged to the RRIMA. Additional details regarding RRIMA are presented in SCE-0, Vol. 1, Section IV.F.. 1

209 this tool and future enhancements to communicate average bill impacts for all changes identified in SCE s longer-term rate-reform Marketing and Communications plans through 01. SCE will continue to maintain and update the content provided on this website to help ensure customers are provided with information so they are better prepared to address the coming changes. In addition to the rate communication efforts described above, during 01, SCE conducted additional outreach to Net Energy Metering (NEM) customers to raise awareness of the monthly minimum bill amount, and to landlords to raise awareness about owner authorization agreements.. Digital Customer Experience The Digital Customer Experience group primarily (1) plans and manages the continual growth and evolution of SCE s digital presence and end-to-end customer experience to meet our online customers needs, () designs and develops SCE s digital channels (SCE.com and mobile) using customer feedback to develop new, or to enhance existing, features and functions, including tools to help customers make informed decisions, enroll in programs, conduct self-service transactions, and access their energy usage information, and () provides daily content support of SCE.com digital services. The Digital Customer Experience group performs these services for customer-service-related projects on SCE.com. In certain cases, SCE s performance of these functions will also apply to capitalized software projects described in SCE-0, Vol.. For capital projects, the Digital Customer Experience group will perform web site strategy and design services prior to a project becoming a capital project, and will then assume responsibility for ongoing maintenance of that capital project once it is implemented. SCE also makes its digital tools and content web accessible (Web Content Accessibility Guidelines (WCAG).0 AA-compliant). Continuing the self-service approach described in the 01 GRC, the Digital Customer Experience group delivers capabilities for our growing base of online customers who engage with SCE via digital channels. As our online customers continue to increase in number and breadth of digital device usage, SCE must continue to transform its digital delivery channels to meet evolving customer needs and expectations. Table IX-0 shows customer-adoption statistics for SCE s digital channels and self-service transactions that existed or were enabled in Base Year 01. 1

210 Table IX-0 Key SCE Online Usage Trends in 0-01 Line Metrics No SCE.com Visits 0,,,,,1, 1,,,1,01 Energy Usage Visits,,1,,,,,0,,1 Service Turn On/Off/Transfer Requests 1,0 1, 1, 1,01 0, Online Billing Enrollments [1] 1, 0, 0,, 1, Bills Delivered,,,,,0, 1,1, 1,,1 Payments Transactions [],0,,,,,,1,1,0, Outage Center Pageviews 0,,,,1,0 Mobile App Downloads [] N/A,00,,0,0 Report an Outage,,,00, Password Reset 0,,,,0 0, Notes: 1. Includes only enrollments via SCE.com; does not include enrollment via CheckFree.. Includes electronic payments made through SCE.com only.. SCE's mobile application was released in July, 01. Figures do not include downloads of SCE's Demand Response application Customers increasingly use digital channels for interacting with SCE, including energy usage visits, service turn on/off/transfer, delivery of electronic bills, and electronic payments. As approved in its 01 GRC, SCE implemented several key initiatives. For each of these new initiatives, Digital Customer Experience defined the front-end user experience, measured usability with a multi-step customer research framework, and incorporated feedback to support usability and customer satisfaction. The key Digital Customer Experience initiatives implemented in 01 to meet continual digital channel growth are described below. a) Optimized, Maintained, and Delivered Web Accessible and In-Language Services As part of our ongoing commitment to web accessibility, SCE incorporated accessibility reviews to our standard content production process so that all pages and documents published on SCE.com meet WCAG.0 AA compliance standards. Since 01, we have remediated over 00 documents, continue to conduct annual accessibility audits of all SCE.com content and applications, and require accessibility training for all members of our content production teams. For in-language support, we continue to maintain content in Spanish, Chinese, Vietnamese, and Korean. Since 01, we have translated 00 pages into the aforementioned languages, resulting in about 0 percent of our English website that has an equivalent in-language page.

211 b) Increased Digital Notifications to Support Self-Service Transactions and Engagement Digital Customer Experience partnered with SCE s IT organization to launch a self-service option for residential and small business customers to enroll in Outage Alerts in order to receive alerts via their land line number, text number, or . Customers can manage their contact information and preferences on SCE.com by simply logging in to their SCE.com profile. SCE designed the application using a responsive web-design framework for customer ease of access on the widest range of devices (e.g., smartphones, tablets, laptops). Compliance was also a priority when designing the front-end user interface. Users can easily keep SCE informed of their communication preferences for outage notifications and, when they enroll for voice or text alerts or change the phone number assigned for those alerts, they must accept Telephone Consumer Protection Act (TCPA) terms and conditions. This enables SCE to capture customer consent for contact in accordance with applicable regulations. To date,,000 users have self-enrolled or auto-enrolled (auto-enrolled for e- mail alerts) to receive outage alerts, and,000 updates to contact information and preferences have been completed on SCE.com. c) Mobile-Optimization for Self-Service Mobile traffic has increased over 00 percent, from. percent of SCE s total web traffic in January 0 to 1. in January 01. SCE forecasts that mobile traffic will increase to 0 percent of total traffic by Due to this exponential growth, we have taken a mobile first approach to designing web services and transactions all customer-facing online products and services will be redesigned or developed to facilitate mobile device use. With this mobile first approach, SCE transferred the online end-to-end service of turn on/off/transfer capability (Move Center) to SCE.com. In doing so, SCE redesigned the user interface to responsive so that users can submit their service requests from any device, and the application will auto-format based on the device the customer is using. Also, as part of the upgrade, BCD currently manages outage communications. See Section VII.B..g) for additional information. 1 Refer to WP SCE-0 Ch. VII-X, p. 1 for additional details on the growth in mobile traffic.

212 users now receive near-real time updates on the progress of their service request and a confirmation when it is complete. In the 1 months immediately after the April 01 implementation, the average monthly submission rate increased by 0 percent compared to the 1 months prior to launch. 1 Today, customers rate the online service turn on/off/transfer self-service application as one of the most highly-satisfying customer experiences on SCE.com. In December 01, Digital Customer Experience, in partnership with IT, also upgraded the Report an Outage, Report a Streetlight Outage, and Outage Map applications, using the same responsive design principles as the turn on/off/transfer application. Since then, customers who reported an outage online increased from 1 percent to percent, likely due to enhancements including type-ahead address lookup, which predicts and auto-populates the address the user is entering. This type-ahead address lookup enhancement was in response to user complaints regarding the inability to successfully enter their service address. Customer satisfaction for the Outage Center, which is measured from users responses to a question about their ability to complete the task at hand, has lifted from our lowest point at in July 01 to an average of since launch. Customer satisfaction reached as of May In December 01, only percent of customers reported their outage or used the outage map; in May 01, this rose to percent. Also, in 01, only percent of outage reports were submitted online. Since implementation, we are averaging 1 percent of outage reports submitted online. SCE.com content pages were also converted to responsive design. Previously, users on mobile devices had to navigate a largely mobile-unfriendly experience. With the shift to responsive design, users now navigate a near-seamless content experience that allows for easier consumption of information on mobile devices. D. Customer Program Management The Customer Program Management group develops, implements, and maintains SCE s portfolio of customer programs. This portfolio includes energy information and management programs, 1 For the 1-month period from May 01 through April 01, the average monthly number of self-service turn-ons, turn-offs, and transfers was,. For the 1-month period May 01 through April 01, the average monthly number of self-service turn-ons, turn-offs, and transfers was 1,1, an % increase. Refer to WP SCE-0 Ch. VII-X, p. 1 for additional detail regarding monthly number of self-service turn-ons, turn-offs, and transfers. 1 Customer satisfaction scores are presented on a 0-0 point scale, with 0 being the highest possible score. 1

213 such as Budget Assistant and SCE EnergyManager, SCE s Dynamic Pricing programs, SCE s Renewable Tariffs and Interconnection programs, and SCE s Energy Efficiency (EE) and Demand Response (DR) programs. 1 The Customer Program Management group includes Customer Service s Information Governance group. 1. Energy Information and Management Programs SCE provides customers with a range of tools to enable them to monitor their energy usage and help them understand the relationship between their energy usage and their electric bill. The Energy Management Tools group manages these tools, summarized in Table IX-1 and described in detail below. 1 In accordance with D.1-0-0, recovery of the costs for Dynamic Pricing programs such as CPP and RTP are included in the GRC. CP&S also manages Energy Efficiency (EE) and Demand Response (DR) programs. EE and DR programs are funded through the Public Purpose Programs Adjustment Mechanism or Demand Response Program Balancing Account and are not included in the O&M forecast in this Application. 1

214 Line No. 1 Table IX-1 SCE Energy Information Tools Tool / Data Presented Customer Group Communication Channel(s) MyAccount - 1-minute (non-residential) or 0-minute (residential) interval usage data - Maximum demand (nonresidential) - High temperatures - Electricity Cost (daily and endof-period projection) [1] Budget Assistant - Bill to date - Projected next bill - Maximum demand (nonresidential) EnergyManager - Energy and demand - Cost, usage and billing reporting tools Residential Non-Residential < 00 kw Residential Non-Residential < 00 kw Non-Residential 00 kw SCE.com Text Telephone SCE.com/EnergyManager Note: 1. Daily and end-of-period projections of cost data are not available for non-residential customers. 1 a) My Account Web Presentment of Cost and Interval Usage Data Web presentment of hourly or 1-minute interval usage data is updated daily and available to ESC-metered customers through MyAccount on SCE s website. 1 Using MyAccount, customers can view information such as the previous day s data, all usage data within the current (not yet billed) billing period, historical monthly consumption, and historical monthly with a three-year comparison of recorded usage for the most recent month. Detailed usage information remains available for a rolling -month timeframe. Current and projected usage information is included to help customers better understand their usage patterns and behaviors, as well as the relationship between their usage and 1 Hourly interval usage data is available to ESC-metered residential customers; 1-minute interval usage data is available to ESC-metered non-residential customers. 1

215 rate plan. Additionally, SCE incorporates hourly and daily high-temperature information to help customers understand the relationship between weather and energy usage. SCE provides customers with daily cost information and end-of-bill-period cost projections based on actual and forecast electricity usage to help customers better manage their electricity use. These cost tools have helped transform the customer s experience beyond the basic value of having access to hourly interval data alone. Infusing dynamic projections and rate-specific information provides near real-time billing data and forecasts of potential bill impacts based on each customer s actual usage behavior. With these features, customers can know how much they have spent within the current billing period and how much they are expected to spend in advance of actually receiving their next monthly bill. The Energy Management Tools Team maintains the calculation engine that supports this usage and cost content on MyAccount. As shown in Table IX-0, by the end of 01, there were approximately. million energy usage visits on SCE.com. b) Budget Assistant Budget Assistant is a cost management tool for residential and small business customers. The tool provides projected next bill information, giving customers advance notification of their projected energy costs and enabling customers to align with an established spending target. Customers enroll in the program by (1) setting a desired monthly spending goal, for both winter and summer months, () choosing the frequency of when they will receive updates from SCE, either weekly or only when their projected costs are expected to exceed their spending goal, and () selecting how they want to receive their updates from SCE, either via text message, , or a phone call. The Budget Assistant tool projects the customer s next bill amount, which serves as an early warning system to help customers avoid any higher-than-expected bills. The Energy Management Tools group manages the Budget Assistant program and maintains the bill-to-date and projected-next-bill calculation engine. As of December 1, 01, more than 1,000 customers were enrolled to use the Budget Assistant tool. In 01, SCE sent enrolled participants more than eight million messages containing intra-bill-cycle cost information. c) SCE EnergyManager SCE EnergyManager, a web-based application that displays energy and demand data and provides usage, cost, and billing reporting tools, is offered to customers with demands greater 1

216 than 00 kw. Table IX- below summarizes SCE s EnergyManager usage statistics for the period of In 01, SCE removed customers whose demand had fallen below 00 kw for the previous 1 months, creating a 1 percent decline compared to the 0 customer base. The OOR associated with these fees are addressed in Section XI.H.. The Energy Management Tools group manages EnergyManager tool which includes maintaining the system performance and availability, supporting customers with the questions on how to get access and run usage, cost, and bill manager reports. The Energy Management Tools group also provides training to BCD Account Managers on EnergyManager features. Table IX- EnergyManager Historical Usage Line No. Description CAGR 1 SCE EnergyManager Basic (Free) Customer Base (Free Access) 1,,0,,,1 -.0% Customer Base - Paid Services Hourly Updates % Quarter-Hourly Updates -.% Notes 1. Customer Base is defined by unique customers with access to the service (includes >00kW SA's and some<00kw SA's). Figures shown above reflect the number of customers on 1/1 of the year indicated.. CAGR = Compounded Annual Growth Rate Dynamic Pricing Programs Dynamic Pricing (or time-differentiated) programs and rates include time-of-use (TOU) Rates, Critical Peak Pricing (CPP), also known as the Summer Advantage Incentive program, and Real-Time Pricing (RTP) options. These programs and rates provide pricing signals to customers, prompting them to reduce their energy consumption during on-peak periods or shift their consumption to off-peak periods. The vast majority of residential and business customers are now equipped with meters that will enable their participation in Dynamic Pricing programs. 1 The Customer Program Management group manages SCE s Dynamic Pricing programs, including coordinating efforts 1 In D.1-0-0, the Commission found that Dynamic Pricing rates should be included in the utilities General Rate Cases. SCE complied with this beginning in its 01 GRC (A.1--00). 1

217 throughout SCE to deliver these programs efficiently and educating customers regarding these programs. a) Time-of-Use (TOU) Rates In January 01, SCE began transitioning non-residential customers (except agricultural and pumping customers) with demands of less than 00 kw to mandatory TOU rates in compliance with D Agricultural and pumping customers with demands of less than 00 kw began to be transitioned to mandatory TOU rates in February 01. For residential customers, SCE conducted targeted outreach to educate customers about new optional TOU rates that became effective in January 01. The transition of residential customers to default TOU rates, however, is planned in accordance with D The transition of residential customers to default TOU will be addressed in SCE s 01 Rate Design Window filing. Given that the transition plans are not yet finalized, costs associated with that effort are not included in this GRC. 1 In compliance with the Settlement Agreements adopted in D , SCE will file a Rate Design Window application on September 1, 01, which will address adjusting SCE s TOU periods for all non-residential customers and providing default CPP to commercial and industrial (C&I) customers with demands less than 00 kw and large agricultural customers. Costs for implementing adjusted TOU periods for all non-residential service accounts are included in Section IX.E..b)(1)(b) of this exhibit. As of December 1, 01, approximately 0,00 service accounts were on TOU rates, including over 0,00 residential service accounts. b) Critical Peak Pricing (CPP) CPP provides participants a credit on their monthly on-peak demand or energy charges during the summer months and an energy charge when a CPP event is called. In this application, 1 Incremental costs associated with (1) TOU pilots, () TOU studies, including hiring a consultant or consultants to assist in developing study parameters, () marketing, education, and outreach costs associated with the rate changes approved in this decision, and () other reasonable expenditures as required to implement D are recorded in the Residential Rate Implementation Memorandum Account (RRIMA). See SCE-0, Vol. 1, Section IV.F. for details regarding the RRIMA and SCE s proposed RRIMA ratemaking. 1

218 SCE includes the cost of administering the program, and education and outreach efforts to inform these customers of default CPP rates in compliance with D Prior to deploying the Edison SmartConnect program, CPP program enrollment by customers with demands less than 00 kw was limited to participation on pilot programs. SCE s Edison SmartConnect program, however, enabled these customers to participate in CPP on an opt-in basis. Subsequently, in D , the Commission required SCE to provide default CPP for customers with demands less than 00 kw and large agriculture customers. This Decision requires SCE to file a Rate Design Window application on September 1, 01, which will address the implementation of default CPP for service accounts with demands less than 00 kw and large agriculture customers (as well as potential adjustments to SCE s TOU periods). Costs for SCE s proposal to implement default CPP for service accounts with demands less than 00 kw are included in Section VI.E..b)() of this exhibit. As of the end of 01, there were,0 service accounts with demands greater than or equal to 00 kw on the CPP rate schedule and 1,0 service accounts with demands under 00 kw on the CPP schedule. c) Real Time Pricing (RTP) The RTP rate schedule is a dynamic, TOU-pricing rate for non-residential customers. RTP charges participants for the electricity they consume based on hourly prices driven by the prior day s temperature. Participants may adjust their electricity usage based on the hourly prices within different temperature categories, seasons, and days of the week. RTP rate design is addressed in the GRC Phase proceeding. In this application, SCE includes the cost of administering the program and conducting ME&O activities. As of the end of 01, 1 customers were enrolled in RTP.. Customer Service Information Governance The Customer Service Information Governance group includes Data Exchange, Data Strategy and Management, and Records Management/Compliance. The Data Exchange group manages programs and projects that require a transfer of customer information. These programs include, for example, SCE s Green Button Connect tool (also known as ESPI), which enables SCE to provide a customer s usage data to a third party in an automated fashion when authorized by customers, and the Energy Data Request Program, which provides energy usage data to interested parties including 1

219 academic researchers, government agencies, and the general public. This group also monitors and eliminates unauthorized access of customer data. The Data Strategy and Management group develops and implements policies and processes to govern the appropriate collection and use of data throughout Customer Service. The group is focused on maintaining and improving data quality, increasing data governance maturity, and applying standard practices in master data management. The Records Management and Compliance group oversees Customer Service s efforts to adhere to rules, laws, and regulations. Reviewing critical records facilitates business-record accuracy and proper retention. The Records Management and Compliance group conducts audits to validate that business processes align with compliance controls. The group supports all SCE customer privacy initiatives, as the first line of defense for customer data complaints, and provides internal access controls to support data privacy and safety initiatives.. Renewable Tariffs and Interconnection Programs Customers interested in installing renewable generation must complete a Net Energy Metering (NEM) tariff application and interconnection agreement. The Distributed Generation Programs group supports the NEM tariff application and interconnection agreement process by providing education and training using both printed and electronic informational materials, hosting training classes for contractors, responding to direct customer inquiries, and interfacing with contractors and customers to handle complaints and to resolve any difficulties within the process. 1 Following the successful installation of a customer s renewable generation facility, the group responds to customer inquiries regarding billing, energy credits, and other tariff- or interconnection-related issues. Currently, over,000 customers take electric service under the NEM tariff. SCE s Distributed Generation Programs group also develops the information for the Commission-mandated reporting related to the NEM tariff. 1 SCE s RSO organization, described in Section IV.B.1.c), processes the NEM applications and interconnection agreements. 1

220 Further, this group processes customer applications for the Net Surplus Compensation and Option R (Renewable) rate options. 00 Table IX- Net Energy Metering (NEM) Applications Received by SCE (01-01) Line No. Description NEM Applications Received 1,1 1, 0,, 1, As shown in Table IX-, the number of NEM applications SCE received has grown on average by 0 percent per year since 0. To support this growth, SCE consolidated the actual application processing function into the Revenue Services Organization (RSO) and launched an online NEM application where customers can submit all required documentation via the web. These actions have greatly reduced application processing cycle times. In addition to this growth in NEM application activity, administering the NEM tariffs has grown significantly more complex over the three years. This complexity will continue to increase with the introduction of the new NEM successor tariff in 01, and the expected continued growth in NEM tariff options and customer participation in NEM tariffs.. Distributed Energy Resource Contract Management By 01, the Commission authorized SCE to procure between 1,00 and,00 MW of authorized additional capacity from preferred resources or energy storage to meet long-term local capacity requirements. 01 Customer Service s Distributed Energy Resources (DER) Contract Management group procures behind-the-meter preferred resources, negotiates and settles contracts for preferred resources, schedules and enrolls customers for contracted resources, and completes required regulatory reporting. Currently, the group manages contracts totaling MW of customer-side 00 Net Surplus Compensation is a credit (in the form of bill credit or check) to customers who produce more power than consumed on an annual basis. Option R (Renewable) rate option is a time-of-use rate for customers with installed renewable energy generation systems. 01 D authorized SCE to procure between 0 and 0 MW of electrical capacity in the West Los Angeles sub-area of the Los Angeles basin local reliability area to meet long-term local capacity requirements (LCRs) by 01. D authorized SCE to procure between 00 and 00 MW by 0 to meet local capacity needs. 00

221 preferred resources (e.g., energy efficiency, demand response, distributed generation, and energy storage). As SCE s procurement plan matures, the number of counterparties and contracts will grow and there will be an increased need for independent technical review to validate quality and consistency of contracted amounts.. New Product Opportunities CP&S also identifies, evaluates, and develops new customer programs and services. In 01, CP&S formed the New Product Opportunities group to improve SCE s ability to conduct this activity. SCE anticipates that the future of customer-facing products and services will be influenced by distributed generation, new technologies such as increasingly cost-effective behind-the-meter (BTM) storage, and the proliferation of Distributed Energy Resources (DER). Public policy goals (e.g., transportation electrification, Zero Net Energy standards, and electric vehicle adoption) and technological advancements in solar, storage, and energy management tools are expanding the ways in which SCE can meet customer demand for new programs and services. For example, the growth in NEM applications shown in Table IX- indicates a strong interest from customers in distributed generation. The New Product Opportunities team will support SCE s efforts to identify and develop new customer-facing programs and services to meet these demands. The team will conduct exploratory activities to evaluate new program and service ideas from the perspective of customer value, policy alignment, and financial viability. The team will review programs and services from other leading utilities that may be appropriate for SCE customers. Promising new program and service ideas will be developed into proposals and channeled through the appropriate regulatory approval process. E. Analysis of CP&S Recorded and Forecast O&M Expenses O&M expenses associated with the CP&S activities described above record to FERC Account This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for this activity. The recorded adjusted historical and forecast O&M expenses for CP&S are shown in Figure IX- and discussed below. 0 0 Refer to WP SCE-0 Ch. VII-X, pp. -1 for the recorded and forecast O&M expenses for FERC Account

Figure IX- Customer Programs and Services FERC Account 0.00 (Constant 01 $000) 1 1 1 1.

222 Figure IX- Customer Programs and Services FERC Account 0.00 (Constant 01 $000) Analysis of Recorded CP&S Expenses As shown in Figure IX-, total recorded adjusted O&M expenses for FERC Account 0.00 have declined over ten percent from $. million in 0 to $. million in 01. Labor costs for the period 0 through 01 were relatively stable. In 01, labor costs declined by ten percent as CP&S elected not to fill vacancies to prepare for the Operational Excellence reductions implemented in early 01, as described below. During this same period, non-labor costs declined from $1. million to $1.1 million, or approximately nine percent. Non-labor expenses increased in 01 when they rose by nearly 0 percent compared to 01 as a result of increased marketing expenses associated with implementing TOU pricing for non-residential customers with demands less than 00 kw. In 01, SCE also conducted a more extensive Summer Readiness campaign to address local system issues resulting from the closure of SONGS. Following 01, non-labor O&M expenses declined in both 01 and 01 due to the completion of the education and outreach campaign associated with the 01 TOU 0

223 implementation, reduced Summer Readiness campaign spending, and reduced use of consultants and contract employees.. Comparison of 01 Authorized and Recorded O&M Expenses Figure IX-0 compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Account 0.00 in compliance with D As noted above, the activities recorded in this FERC Account were previously presented in FERC Accounts 0.00, 0.00 and 0.0. As shown in Figure IX-0, the 01 authorized amount for FERC Accounts 0.00, 0.00 and 0.0 exceeded the recorded amount by $,000, or just over two percent. This variance is within normal operating expectations. 0

224 Figure IX-0 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded for FERC Account 0.00 (01 $000) $0,000 $,000 $0,000 $,0 $,0 $, $ $1,000 $,000 $,000 $0 01 Request 01 Authorized Variance 01 Recorded O&M GRC Activity 01 Requested (A) 01 Authorized (B) 01 Recorded (C) Authorized vs. Recorded (C-B) Consumer Affairs & Customer Satisfaction $, $, n.a. n.a Marketing, Education & Communication $1, $1, n.a. n.a Customer Programs And Rates $,0 $,0 n.a. n.a Customer Programs and Services n.a. n.a. $, ($) Total $,0 $,0 $, ($) 1. CP&S Test Year Forecast Figure IX- shows the forecast O&M expenses for CP&S activities. Details regarding the forecast are described below and summarized Figure IX-1. a) Determination of Test Year Estimating Method As shown in Figure IX-, SCE recorded $. million for CP&S activities in 01. As described above, labor costs have exhibited an overall declining trend during the

225 period. The Last Recorded Year accurately reflects the expense level associated with current activity levels and is the appropriate basis for forecasting the Test Year expenses. 0 Similarly, non-labor costs have exhibited a significant downward trend during the 0-01 period. The most recent year accurately reflects expense levels associated with current activity levels and, therefore, the Last Recorded Year was selected as the appropriate basis for forecasting non-labor O&M expenses for this FERC Account. 0 Furthermore, Operational Excellence reductions described below are also forecast relative to 01 recorded adjusted costs. b) CP&S Test Year Adjustments SCE s forecast of Test Year O&M expenses for CP&S reflects increases for program changes reduced by benefits associated with the CS Re-Platform project and expenses associated with Operational Excellence initiatives implemented in early 01. These adjustments are described in detail below and the resulting O&M forecast is shown in Figure IX- and Figure IX-1. (1) Program Changes CP&S program changes implement or support (1) the Voice of the Customer program, () the adjustment to TOU periods and default CPP, () Renewable Tariffs and Interconnection Programs, () Distributed Energy Resource Contract Management, and () New Customer Product Development activities. These program changes are described in detail below and summarized in Table IX-. 0 This is consistent with the direction provided in D and D.-1-0 wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For CP&S, labor expenses have trended downward over the period This is consistent with the direction provided in D and D.-1-0 wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. For CP&S, non-labor expenses have trended significantly downward over the period

226 Table IX- CP&S Test Year O&M Adjustment Summary (Constant 01 $000) Line Description No. Labor Non-Labor Total 1 Program Changes Voice of the Customer (VoC) $0 $ $ TOU Period Adjustment & Default CPP $0 $1,1 $1,1 Renewable Tariffs & Interconnection Programs $ $ $ Distributed Energy Resource Contract Management $0 $ $ New Product Opportunities $1 $ $ CS Re-Platform Benefits ($0) $0 ($0) Operational Excellence ($1) ($,0) ($,) Total Test Year Adjustments ($1) $ ($0) (a) Voice of the Customer SCE plans to improve efficiency, effectiveness, and actionability of customer feedback by implementing a Voice of the Customer (VOC) tool. This tool, which is a software-as-a-service (SAAS), will (1) collect customer feedback in near real-time, () bring together disparate sources of customer feedback for a more holistic (end-to-end) view of the customer experience, and () provide a text analytics function for better insights and improved root cause analysis. This tool consists of three modules: Voice of the Customer, Relationship Survey, and Social Media. Currently, feedback is collected via various methods, often taking months to manually analyze, report, and act upon. Additionally, feedback is not easily compiled or combined in a single location, making it difficult to view the customer experience holistically or identify emerging trends. Using the VOC tool, SCE will collect feedback through surveys sent to all customers who complete a transaction through customer service representatives and self-service channels (IVR and SCE.com). The surveys will measure customer satisfaction, measure ease of completing the transaction, and ask open-ended questions to understand the why behind survey responses. In addition to conducting surveys, the VOC tool will integrate disparate sources of customer feedback, such as our website intercept survey (ForeSee), and the JD Power proprietary study. Over time, SCE will add inputs to the tool, such as social media and Customer Contact Center speech analytics. 0

227 The VOC tool will provide near-real-time reporting, giving SCE organizations access to important, actionable information on a daily basis with the capability to drill down and do their own root cause analysis in a way that is most meaningful for their area of responsibility. This will facilitate prompt action and effective planning for longer-term improvements to the overall customer experience. SCE forecasts incremental non-labor costs of $,000 in the Test Year to implement the basic VOC module, the Relationship Survey Module, and the Social Media module. 0 (b) Implementation of TOU Period Adjustment and Default CPP In SCE s 01 GRC Phase proceeding, the Commission approved SCE s settlement agreements with several parties regarding TOU period and default CPP issues. 0 Specifically, settling parties agreed that SCE s implementation of changes to TOU periods and the defaulting of non-residential customers not already defaulted to CPP should be proposed in a Rate Design Window (RDW) application filed by SCE no later than September 1, In the RDW, SCE will investigate and propose (as warranted) new default time-of-use periods (including updated CPP periods) for all customer classes. 0 The CPP default and potential TOU period adjustments will impact most non-residential customers, with over 00,000 small and medium C&I and large agricultural customers defaulting to CPP. In addition, over 0,000 non-residential customers that are currently on a TOU rate will need to be aware of new TOU periods. SCE must utilize various communication channels 0 Refer to WP SCE-0 Ch. VII-X, pp. 1-1 for additional details regarding the VOC forecast adjustment for FERC Account The Marginal Cost and Revenue Allocation Settlement Agreement provides the primary discussion of the TOU period and default CPP issues. The Residential and Small Commercial Rate Design, Medium and Large Power Rate Group Rate Design, and Agricultural and Pumping Rate Group Rate Design Settlement Agreements incorporated the terms of the Marginal Cost and Revenue Allocation Settlement Agreement. The Commission approved these settlement agreements in D See the Motion of SCE and Settling Parties for Adoption of Marginal Cost and Revenue Allocation Settlement Agreement in A filed on August 1, 01. Customers not already subject to default CPP rates include small and medium C&I customers with demands less than 00 kw and large agricultural and pumping (A&P) customers with demands greater than or equal to 00 kw. 0 See D , p. 1. 0

228 to address the needs of this large and diverse customer base, and will depend on an extensive customer marketing, education, and outreach (ME&O) campaign. The goals of this campaign will be to (1) minimize customer confusion and help customers better manage their utility bills by making them aware of the changes, () help customers understand the TOU period changes and how the CPP program works, and () provide customers with sufficient tools and resources to manage the impact of these changes. Therefore, SCE plans to conduct market research, develop and execute ME&O materials, provide operational readiness and educational training for SCE s account managers and call center representatives, and implement system enhancements to enable default, opt-out, and bill protection processes. 0 SCE considered a number of factors to manage such an extensive change. First, SCE recognizes that market research is needed to track and monitor customer satisfaction and concerns, and identify opportunities to enhance the customer experience. Therefore, prior to implementing these changes, SCE plans to conduct research studies through focus groups, and telephone and on-line interviews to determine optimal program messaging, usefulness, and understandability of communication materials, and customers preferred channels of communication. Further, SCE will leverage the results from earlier campaigns, such as the mandatory TOU transition, to determine the messages and channels that resonate best with the target audience. In addition, SCE plans to collect customer feedback, both during and after the launch of default CPP and TOU period adjustment changes, to identify, track, and improve processes and outreach plans. Second, because the impacted audience includes businesses representing a wide array of industries including, but not limited to, manufacturing, commercial office buildings, industrial facilities, retail, and agricultural a multi-channel, multi-language ME&O plan is needed to facilitate customer awareness and understanding of upcoming rate changes. Such a plan is also needed to facilitate customer awareness of behavioral changes that can help them manage their energy usage and costs. Through this comprehensive ME&O plan, SCE will deploy direct outreach (e.g., direct mail, , bill inserts, outbound calling), mass awareness (e.g., print, radio), online engagement (e.g., SCE.com, social media, search engine marketing), educational materials (e.g., collateral, video 0 System enhancements necessary to implement default, opt-out and bill protection processes are included in the GRC Phase capitalized software project described in SCE-0, Vol.. 0

229 development, customer recognition case studies), grassroots efforts (e.g., events with local Chambers of Commerce and farm bureaus), and in-person meetings where SCE account managers may provide a specialized consulting service on upcoming rate changes for their customers. In addition, SCE will collect and store customers event notification preferences to facilitate customer awareness of CPP event days. While SCE will rely on contact information collected at time of turn-on, it recognizes that customers may prefer to receive event notifications through other channels. Therefore, SCE plans to launch several communication efforts to collect updated customer contact information. The information collected will be delivered through each customer s preferred channels, including automated voic , text messaging, or , to inform customers of CPP events on a day-ahead basis. These notifications will serve as an additional touchpoint under the umbrella of ongoing post-implementation communications to help customers better plan and manage their energy usage during CPP events. Finally, SCE plans to develop training and educational materials for SCE s employees to prepare them to support customer inquiries. SCE will design a curriculum of training materials for BCD Account Managers, Customer Contact Center representatives, and other SCE employees interacting with customers through grassroots events, conferences, and meetings. SCE requires incremental O&M to implement default CPP, execute CPP event notifications measures, and educate customers on CPP and new TOU periods. Therefore, SCE forecasts an incremental $1.1 million of non-labor costs in the Test Year. This amount includes $1.1 million for education and outreach associated with implementing TOU period adjustments and default CPP for accounts less than 00 kw and large agriculture customers, and $,000 for alerts for customers defaulted to CPP. (c) Renewable Tariffs and Interconnection Programs As described in Section D. above, the number of NEM applications processed by SCE has grown significantly since 0. SCE estimates that approximately 0,000 customers will be on the original NEM tariff by the time it closes and is superseded by the successor tariff. SCE expects the participation in NEM tariffs will continue to grow and, by 00, Refer to WP SCE-0 Ch. VII-X, pp. 1- for additional details regarding the O&M forecast adjustment for FERC Account 0.00 for the implementation of the TOU period adjustment and default CPP. 0

230 exceed,000 applications per year for customers enrolling on the NEM successor tariff and its expected multiple derivatives. In addition to the anticipated growth in NEM participation, the administrative requirements have grown in the past few years with the introduction of new options within the NEM tariffs, including, for example, those for military bases and Department of Corrections facilities, multiple meter aggregation, and the NEM successor tariff. SCE expects NEM tariff options will continue to grow, including the addition of another successor tariff in 01 per D SCE forecasts that the labor and non-labor O&M expenses to accommodate the growth in NEM tariff administration activities will increase in this GRC period, resulting in a Test Year forecast increase of $,000. This amount includes $,000 in increased labor, which will fund five additional FTEs. Four FTEs are needed to manage the increased NEM participation and tariff complexities described previously and a project manager is needed to plan and manage execution of education and outreach activities. Additionally, SCE forecasts $,000 in incremental non-labor expenses for education and outreach. With the continued growth of NEM customers, SCE must continue to provide outreach to customers who are considering distributed generation programs and to provide education and training to customers and contractors on the NEM application and interconnection processes. 1 These education and outreach activities are currently funded by the CSI balancing account until the program sunsets at the end of 01. (d) Distributed Energy Resource (DER) Contract Management SCE expects that the DER procurement activity will increase beyond the levels experienced in the 01. SCE anticipates procuring additional customer-side preferred resources to support projects identified in its Distribution Resource Plan (DRP), such as the Preferred Resources Pilot (PRP) Request for Offers, the Integrated Grid Project (IGP), and the Customer Side SCE s NEM tariffs include Schedule NEM Net Energy Metering, Schedule NEM-V Virtual Net Energy Metering for Multi-Tennant and Multi-Meter Properties, Schedule NEM-NEM Tariffs include Schedule BG-NEM Biogas Net Energy Metering, and Schedule FC-NEM Fuel Cell Net Energy Metering. Schedule NEM includes special conditions addressing multiple meter aggregation and separate eligibility for Department of Corrections and U.S. Military facilities. 1 Refer to WP SCE-0 Ch. VII-X, pp. -1 for additional details regarding the Renewable Tariffs and Interconnection Programs adjustment for FERC Account 0.00.

231 Microgrid. 1 In addition, the Energy Storage Procurement Framework and Design Program, which establishes SCE s procurement target as 0 MW of energy storage by 00, will increase DER procurement activity. 1 SB 0 requires the doubling of the efficiency of existing buildings by SCE expects this to lead to an increase in procurement activities across all DERs in the forecast period. SCE also anticipates increased complexity and oversight requirements in DER procurement activity. The Bundled Procurement Plan (BPP), as required by AB, establishes a loading order priority for preferred resource acquisition. 1 To comply with these standards, IOUs must show that their proposed procurement will provide safe, reliable capacity that complies with state policies and is at the least cost to ratepayers. In addition, the Integrated Distributed Energy Resources (IDER) seeks to develop a single, integrated framework for procuring distributed energy resources (DERs) to meet grid reliability needs, which will also increase complexity. 1 SCE forecasts incremental O&M expenses of $,000 in the Test Year for the management and support of additional customer-side DER. This amount includes $0,000 of labor to fund approximately three incremental FTEs and $,000 in non-labor for technical services, travel, and other expenses. 1 (e) New Product Opportunities As discussed in Section II.A., SCE anticipates that the future of customer products and services will be defined by distributed generation, new technologies, and the proliferation of Distributed Energy Resources. In 01, SCE added two FTEs to the New Product 1 SCE filed its Distribution Resource Plan (DRP), as required by Assembly Bill, outlining the deployment of projects to demonstrate the use of DERs to support grid reliability, demonstrate distribution deferral, support grid modernization efforts, as well as foster customer choice. See R See D Clean Energy and Pollution Reduction Act of 01, Stats. 01 ch. (SB 0, de León), effective January 1, 01. Information regarding SB 0 is available at [as of August 1, 01]. 1 See D See R Refer to WP SCE-0, Ch. VII-X, p. 1-1 for additional details regarding the Distributed Energy Resource Contract Management adjustment for FERC Account 0.00.

232 Opportunities group and forecasts an incremental $,000 of labor and labor-related non-labor O&M in the Test Year for two FTEs to support the identification, evaluation, and development of these new customer products and services. 1 () CS Re-Platform Benefits As described in SCE-0, Vol. 0, the CS Re-Platform program will eliminate the inefficiencies associated with obsolete and disparate applications and systems by implementing a simplified, modern, integrated suite of Customer Service applications. The transition to a modern digital environment increase SCE employee productivity and lower costs to provide service. For CP&S, SCE forecasts an associated $0,000 Test Year reduction in O&M expenses. 0 () Operational Excellence SCE forecasts a $. million reduction in CP&S O&M expenses in the Test Year, primarily achieved through reductions in labor and non-labor marketing costs. SCE eliminated nine FTEs in February 01, including the elimination of the marketing support function (three FTEs), a reduction in the layers of management (three FTEs), and other reductions within CP&S. These reductions will reduce labor expenses by $1,000. The remainder of this reduction, $.0 million in non-labor expenses, will be achieved by using lower-cost marketing channels such as digital contact methods (e.g., , social media, and other channels of interaction), reducing overall marketing expenses by reviewing the use of marketing vendors, and using less consultants and contract labor. 1 c) Test Year Forecast Summary For FERC Account 0.00, SCE forecasts CP&S O&M expenses totaling $. million. This forecast includes adjustments totaling $.0 million necessary to support the 1 Refer to WP SCE-0, Ch. VII-X, p. 1 for additional details regarding the New Product Opportunities adjustment for FERC Account The CS Re-Platform benefits included in SCE s 01 Test Year forecast are proposed, contingent upon approval of the corresponding CS Re-Platform project costs. Should the Commission not adopt the proposed CS Re-Platform costs in this FERC activity, the corresponding benefits must also be removed from the Test Year forecast. Refer to WP SCE-0 Ch. VII-X, p. 1 regarding the expected benefits for the CS Re-Platform project. 1 Refer to WP SCE-0 Ch. VII-X, p. 1 for additional details regarding the CP&S Operational Excellence adjustment for FERC Account

233 initiatives detailed above. These increases are offset by O&M expense reductions associated with Operational Excellence initiatives totaling $. million and benefits associated with the CS Re-Platform project totaling $0,000. Figure IX-1 shows the Test Year forecast for FERC Account 0.00 as compared to the Base Year. Figure IX-1 CP&S Comparison of the 01 Base Year to the 01 Test Year FERC Account 0.00 (Constant $000) $,000 $0,000 $,0 ($,) $,000 $, ($0) $, $0,000 $1,000 $,000 Program Changes Voice of the Customer $ TOU Adj. / Default CPP $1,1 DER Contract Management $ Renewable Tariffs $ New Customer Programs $ Total Program Changes $,0 $,000 $0 01 Recorded Program Changes Operational Excellence CS Re-Platform 01 Forecast 1

234 X. OPERATING UNIT MANAGEMENT AND SUPPORT (OUMS) This chapter describes the centralized management and support activities for Customer Service. Section A of this chapter describes the OUMS function and Base Year activities. Historical and forecast O&M expenses associated with OUMS are discussed in Section X.B. and are recorded in FERC Accounts 01 and Costs recorded in FERC Account 01 are for OUMS activities that support the Customer Service Operations Division. Costs recorded in FERC Account 0.00 are for OUMS activities that support other Customer Service activities, including BCD and CP&S. A. Description of OUMS and Base Year Operating Results OUMS provides management support for Customer Service and leads Customer Service business planning activities. Management support activities include executive project support and Customer Service employee communications. Business planning activities focus on development of the Customer Service operating unit business plans to set priorities and key areas of focus over a five-year period. These plans set forth Customer Service strategy, performance goals, and actions to be taken to achieve Customer Service objectives. These plans are also used to inform employees about Customer Service s role in supporting SCE s corporate goals. Communicating the business plans to employees enables them to understand how their individual contributions support these SCE and Customer Service goals. A critical part of the business planning process focuses on implementing the business plans, measuring results, and identifying corrective actions, if necessary. To this end, the Business Planning group develops and manages performance metrics to monitor Customer Service s progress and performance on goals, objectives, and action items identified in the business plan. These performance updates are provided to SCE management and Customer Service employees. Labor expenses for OUMS include labor costs for executive project support (including for employee communications and management meetings), executive administrative support, and business planning support. Non-labor expenses include employee-related expenses such as mileage and training, In SCE s 01 GRC, the Customer Service support functions of Finance Management & Administration, Regulatory & Tariff Program Support, and Training were included in this section. However, in 01, SCE centralized these functions into Corporate Finance, Regulatory Affairs and Operational Services respectively. 1

235 1 1 1 technology software and support, training, and safety. Non-labor expenses also include costs for consulting and contract labor to support company- and Customer Service-wide initiatives. B. Analysis of OUMS Recorded and Forecast O&M Expenses O&M expenses for OUMS are recorded and forecast in FERC Accounts 01 and This section describes the historical O&M expenses, the Test Year forecast method, and the adjustments included in the Test Year O&M forecast for both of these FERC Accounts. The recorded adjusted historical and forecast O&M expenses for OUMS are shown in Figure X- and are discussed below. 1. Historical Variance Analysis As shown in Figure X-, combined O&M labor expenses for OUMS have declined from $. million to $. million, a decrease of nearly 0 percent, over the period from During the same period, non-labor expenses increased from $. million to $. million, an increase of just over 0 percent. On a total labor and non-labor basis, the OUMS recorded adjusted O&M expenses, while varying in the interim years, have remained relatively stable from $.1 million in 0 to $.1 million in 01. Refer to WP SCE-0 Ch. VII-X for the recorded and forecast O&M expenses for FERC Accounts 01 (pp. 01-) and 0.00 (pp. -). 1

The recorded adjusted labor expenses increased from 0 to 01 due to staffing of the CSOD planning function.

236 Figure X- Operating Unit Management & Support FERC Accounts 01 and 0.00 (Constant 01 $000) 1 a) FERC Account 01 The costs recorded in FERC account 01 include activities within the senior vice president s office, Business Planning, and CSOD. The recorded adjusted labor expenses increased from 0 to 01 due to staffing of the CSOD planning function. From 01 to 01 labor expenses declined due to the centralization of many of the business planning activities in Customer Service. In 01, expanded business planning activities resulted in increased labor expenses of $,000. Overall, however, labor expenses in FERC Account 01 decreased in the historical period by over percent primarily due to reduced costs related to planning and performance. Following 01, non-labor expenses 1

237 rose because of increased use of consultants assisting with Customer Service Operational Excellence activities. b) FERC Account 0.00 The costs recorded in FERC account 0.00 include activities within the senior vice president s office, Business Planning, BCD, and CP&S. The recorded adjusted labor expenses from 01 through 01 decreased each year resulting in an overall reduction of 1 percent in this period. This reduction was achieved primarily through attrition, elimination of the business planning rotation program, and continuing efforts to reduce overall support costs. The recorded adjusted non-labor expenses from 0 to 01 steadily declined because of decreased consulting costs. In 01, consulting costs increased about $00,000 primarily because of CP&S planning activities. Following the completion of these efforts, non-labor expenses in FERC Account 0.00 declined in 01 by $1. million, or over percent.. Comparison of Authorized 01 to Recorded Figure X- compares the requested and authorized O&M expenses from SCE s 01 GRC with the 01 recorded expenses in FERC Accounts 01 and 0.00 in compliance with D SCE s recorded expenses for 01 in FERC Account 01 and 0.00 were $. million less than authorized. The amount SCE recorded in these accounts are not comparable to the $1.1 million authorized in the 01 GRC, which included finance and regulatory functions that supported Customer Service. Subsequent to filing the 01 GRC, these functions were consolidated into the Corporate Finance and Regulatory Affairs functions. Refer to SCE-0, Vol. (Regulatory Affairs) and Vol. (Financial Services) for more information regarding the centralization of regulatory and finance functions. 1

238 Figure X- 01 GRC Requested and Authorized O&M Expenses Compared to 01 Recorded for FERC Accounts 01 and 0.00 (01 $ 000) $1,000 $1,1 $1,1 $1,000 $1,000 $,000 $,1 $,000 $,000 ($,) $,000 $,000 $0 01 Request 01 Authorized Variance 01 Recorded O&M GRC Activity 01 - Operating Unit Management & Support 01 Requested (A) 01 Authorized (B) 01 Recorded (C) Authorized vs. Recorded (C-A) $,0 $,0 $,0 ($,) Operating Unit Management & Support $, $, $, ($,) Total $1,1 $1,1 $,1 ($,) 1. OUMS Test Year Forecast Figure X-shows the forecast O&M expenses for OUMS activities. Details regarding the forecast are below and summarized in Figure X-. a) Determination of the Test Year Estimating Method As shown in Figure X-, and noted above, even though labor expenses in FERC Account 01 have exhibited an overall downward trend declining nearly percent over the historic period, they have varied from year to year for the reasons described above. Non-labor expenses, however, have exhibited a clear trend by increasing each year during the historic period. Instead of simply applying previous Commission Decisions specifically, D and D.-1-0 which 1

239 would indicate that an averaging method be used for labor expenses and Last Recorded Year for nonlabor expenses, SCE proposes to use Last Recorded Year for both labor and non-labor expenses with a forecast adjustment developed based on specific Base Year activities as described below. As shown in Figure X- and noted above, the recorded adjusted historical labor expenses recorded in FERC Account 0.00 have declined each year over the period 01 through 01. The Last Recorded Year accurately reflects the expense level associated with current activity levels and is the appropriate basis for forecasting the Test Year expenses. The recorded adjusted historical non-labor expenses for FERC Account 0.00 have declined overall and, with the exception of 01, each year in the historic period. The Last Recorded Year is the appropriate basis for the Test Year non-labor forecast as it reflects the most recent activities undertaken by OUMS recording in FERC Account Further, the Last Recorded Year O&M for FERC Account 0.00 ($. million) is less than the other years during the historical period, and thus less than the three or four year averages. b) Test Year Adjustment As noted in Section Figure X- above, recorded adjusted expenses in FERC Account 01 increased in 01 and 01 due to increased use of consultants to support Customer Service Operational Excellence initiatives. As a result, SCE achieved the O&M reductions reported in Section I.B.1. SCE expects to reduce the use of consultants in this area and forecasts a reduction in Test Year O&M non-labor expenses recording to FERC Account 01 by $1.0 million, or 1 percent of the In D and D.-1-0, the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate basis for estimating Test Year expenses. If, on the other hand, expenses had exhibited significant fluctuations, an Averaging method is the appropriate basis for estimating Test Year expenses. The decision to use Last Recorded Year as the basis for the Test Year O&M labor forecast of FERC Account 0.00 is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate base estimating Test Year expenses. For FERC Account 0.00, labor expenses have declined each year over the period The decision to use Last Recorded Year as the basis for the Test Year O&M non-labor forecast of FERC Account 0.00 is consistent with the direction provided in D and D.-1-0, wherein the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the Last Recorded Year is the appropriate base estimating Test Year expenses. For FERC Account 0.00, non-labor expenses have declined overall and, with the exception of 01, each year in the historic period. 1

240 OUMS Base Year recorded costs. The resulting O&M forecast of $.0 million is shown in Figure X- and summarized in Figure X-. Figure X- Operating Unit Management & Support Comparison of 01 Base Year to 01 Forecast FERC Accounts 01 and 0.00 (Constant 01 $000) $,000 $,000 $,000 $,000 $,000 $, ( $1,0 ) $, $,000 $,000 $,000 $,000 $,0 $,1 $1,000 $0 01 Recorded Program Changes (01) Forecast Refer to WP SCE-0 Ch. VII-X, p. for additional details regarding the OUMS O&M forecast adjustment. 0

241 XI. OTHER OPERATING REVENUES (OOR) A. Introduction Customer Service evaluated the fees to charge individual customers and third parties who receive services that cause SCE to incur additional operational expenses. These services are above the standard operational services provided by SCE. As such, SCE cannot fund these activities through general rates and must charge separately for these services. The revenue received for these services is accounted for as Other Operating Revenue (OOR). These services include service connection charges (fees) for establishing service and reconnecting service following disconnection for nonpayment of bills, returned check charges to offset costs associated with processing checks that are returned from the bank due to insufficient funds, and other services associated with Direct Access (DA), Community Choice Aggregation (CCA), and other special services. Revenue derived from these activities is recorded in FERC Accounts 0, 1, and. This chapter describes the functional subaccounts associated with the FERC Revenue Accounts and the analyses and estimating methods used to forecast SCE s 01 Test Year OOR. Based on SCE s currently authorized fees, SCE s total 01 OOR revenue would be $1. million. However, using SCE s proposed service fees, SCE s total 01 OOR revenue would decrease to $. million. This decrease is primarily the result of SCE s cost studies, which substantiate a reduction in certain service fees. Table XI- presents SCE s annual recorded OOR from 0-01, forecast OOR from based on current fees, and forecast OOR for 01 based on proposed fees.

242 Table XI- Other Operating Revenue Customer Service Recorded 0 01 and Forecast (Nominal $000) Forecast Line FERC Recorded Operating Revenue Proposed Account Name (Currently Authorized Fees) No. Account Late Payment Charge Non-Residential $,1 $, $,0 $, $, $,0 $, $,0 $, 0. Late Payment Charge Residential $,0 $, $,1 $, $,0 $,0 $, $,0 $, 1.1 Returned Check Charge $1, $1, $1, $1,00 $1, $1, $1, $1, $1, 1.00 Reconnection Charge (eliminated in 01) $,1 $, $0 $0 $0 $0 $0 $0 $0 Service Establishment Charge (eliminated 1.0 in 01) $1, $1, $0 $0 $0 $0 $0 $0 $ Connection Charge Residential $0 $0 $, $,0 $, $, $,01 $,01 $,01 1. Connection Charge Non-Residential $0 $0 $,1 $, $,1 $1, $1, $1,0 $,0 1.0 Connection Charge At Pole $0 $0 $1 $1 $1 $ $ $ $ Field Assignment Charge (eliminated in ) $, $,1 $0 $0 $0 $0 $0 $0 $0 Misc. Revenue Recovery Unauthorized 1.0 Use Non-Energy $ $0 $1 $1 $ $ $ $ $ 1.0 Opt-Out CARE Initial $0 $0 $1 $ $ $ $ $ $ Opt-Out NON-CARE Initial $0 $1, $1 $1 $ $ $1 $1 $ Opt-Out CARE Monthly $0 $1 $1 $ $ $ $ $ $ Opt-Out NON-CARE Monthly $0 $ $1,1 $,00 $1, $ $1 $ $ 1.01 Direct Access Services $ $ $ $ $ $ $ $ $1 1. Service Fee Optimal Billing Period $1 $0 $0 $0 $0 $0 $0 $0 $0 1.1 Community Choice Aggregation $ $ $ $1 $0 $1 $,001 $, $1, 1.1 Manufactured Home Billing Service $1 $ $ $ $ $ $ $ $ 1. SCE Energy Manager $1 $1 $1 $1 $1 $1 $1 $1 $1 0. Energy Related Services (ERS) $ $1 $ $ $1 $1 $1 $1 $1 1 TOTAL CS OOR $,0 $,1 $,0 $,0 $, $, $, $1,0 $,1 1 B. Forecast Method for OOR To forecast the 01 Test Year revenues associated with the proposed fee-based OOR activities, SCE: identified the processes and activities associated with each existing service fee; identified the costs associated with each activity of the individual service fees, including updating the service fee cost studies, data analytics, wage rates, and labor loadings; reviewed the historical record of activity levels and actual revenue collected from these activities over the last five years (where applicable); and 1

243 determined the basis or method to estimate the transaction volumes and resulting 01 Test Year revenue forecast for each Subaccount. Table XI- provides SCE s OOR Service Fee Summary, which shows the 01 GRC authorized fees, 01 cost study results, and 01 proposed fees. Proposed fees greater than $.00 are rounded up or down to the nearest dollar amount. Proposed fees greater than or equal to $1.00 but less than or equal to $.00 are rounded to the nearest ten cents. Proposed fees that are less than a dollar are not rounded. Table XI- Other Operating Revenue Service Fee Summary 01 Proposed Fees (Nominal $) Line FERC FERC Account Name GRC Cost Study Authorized GRC No. Acct. Proposed Cost Study Late Payment Charges Non-Residential 0.0% 0.0% 0.0% 0.0% 0. Late Payment Charges Residential 0.0% 0.0% 0.0% 0.0% 1.1 Returned Check Charge $. $.00 $.01 $ Connection Charge Residential $. $.00 $.0 $ Connection Charge Non-Residential $. $.00 $. $ Connection Charge at Pole $1. $1.00 $1. $1.00 Misc. Revenue Recovery Unauthorized Use 1.0 Non-Energy N/A N/A N/A N/A 1.0 Opt-Out CARE Res-Initial (a) $.01 $.00 $.01 $ Opt-Out NON CARE-Res-Initial (a) $1. $.00 $1. $ Opt-Out CARE Res-Monthly (a) $1. $.00 $1. $ Opt-Out NON CARE-Res-Monthly (a) $1. $.00 $1. $ Service Fee Optimal Billing Period N/A $.00 N/A $ SCE Energy Manager N/A $.00 N/A $ Energy Related Services (ERS) N/A N/A N/A N/A 1.01 Direct Access Service Fees - See Section XI.F for 01 Proposed Fees 1.1 Community Choice Aggregation Service Fees - See Section XI.G for 01 Proposed Fees 1.1 Manufactured Home Billing Service - See Section XI.H for Fees (a) Note: 01 Cost Study and authorized fees were based on SCE's Smart Meter Technological Feasibility and Cost Information Compliance proposal and the Commission's Decision authorizing interim fees. C. Residential Service Charges SCE proposes to decrease the Residential Late Payment Charge from 0. percent to 0. percent of the customer s account balance, leave the Residential Service Connection Charge unchanged at $.00, 1

244 1 1 and maintain the Edison SmartConnect Opt-Out fees unchanged. The reasons for these proposals and forecast revenue for each fee is discussed below. 1. FERC Account 0. Residential Late Payment Charge (LPC) This sub-account records the revenues from the LPC for non-care residential customers who fail to pay their bill within 1 days of receipt. In D.0-0-0, the Commission authorized SCE to assess this fee to residential customers with the exception of customers participating in the California Alternate Rates for Energy (CARE) program. SCE sets the fee based on its current incremental cost of capital. Consistent with this approach, SCE proposes to reduce the LPC from 0. percent to 0. percent. Figure XI- provides SCE s annual revenue recorded from 0 through 01 for this charge. To forecast the residential LPC revenue for the years 01 through 01, SCE used a three-year rolling average multiplied by the SCE-estimated customer growth of. percent. 0 This produced a LPC revenue forecast of $. million for Test Year SCE s current authorized return on rate base in the cost of capital proceeding per D Customer growth percentage is based on the Annual Retail Sales Customer Peak Demand Forecast Winter 01 Vintage. 1 Refer to WP SCE-0 Ch. XI, p. 1 for additional details regarding the Residential Late Payment Charge (LPC) Forecast. 1

percent, 01 and forecast 01-01 are at 0. percent, and forecast 01 are at 0. percent. 1. FERC Account 1.

245 Figure XI- FERC Account Recorded Forecast Residential Late Payment Charge Revenue Forecast (Nominal $000) Note: Recorded residential LPC amounts 0-01 are at 0. percent, 01 and forecast are at 0. percent, and forecast 01 are at 0. percent. 1. FERC Account 1.00 Residential Service Connection Charge This sub-account records revenue received from residential customers for service connections (i.e., new service establishment, transfer of existing service, or reconnection after being disconnected for non-payment of a bill). Refer to WP SCE-0 Ch. XI, pp. -1 for the recorded and forecast OOR for the Residential Late Payment Charge. 1

246 The Residential Service Connection Charge is based on a. percent utilization of the ESC meter s Remote Service Switch (RSS) function, while the remaining. percent is performed through a field visit. The cost per connection is derived as a weighted average of the RSS and manual connection costs. SCE conducted a cost study to update activity duration, transactional costs, and loaded labor rates. SCE based the weighted average of RSS connections and manual connections on 01 historical data. Table XI- shows the Residential Service Connection Charge of $.0 that is rounded to $.00. SCE proposes that this fee remain unchanged from the current charge. The Remote Service Switch (RSS) is a power switch within an ESC meter that allows SCE to turn electrical service to a residential customer premise on or off remotely. 1

247 Table XI- FERC Account 1.00 Residential Service Connection Charge Cost Study (Nominal $) Line No. Activity Details (Position) Min. Per Trans. Cost Per Minute Manual/Field Visit % Cost Per Trans. Remote Service Switch (RSS) % Cost Per Trans. 1 MSO-Field Orders Energize Meter Regular Time (FSR). $1. % $. 0% $0.00 (field visit) Time and one half (FSR_OT). $.0 % $.0 0% $0.00 Double Time (FSR_DT).00 $.0 1% $1. 0% $0.00 CCC-Handle Calls SCE Rep $. 0% $1. 0% $1. SCE.com $. 1% $0. 1% $0. Third party vendor $.0 0% $1.1 0% $1.1 IVR $0.0 % $0.01 % $0.01 Payment Processing APA n/a $0. % $0.1 % $0.1 1 Quick Check QC - IVR n/a $0.0 % $0.0 % $0.0 1 Total Cost Per Transaction (Unweighted) $. $ Residential Connections Volume Forecast Manual/Field RSS Total 1 01 Residential Connections Volume Forecast,1 1,, 1,1, 1 % Manual and RSS Volume Split.%.% 0.0% 1 01 Residential (Res) Connection Fee Calculation Manual/Field RSS Total 1 Cost Per Transaction (Unweighted) $. $.0 1 % Manual and RSS Volume Split.%.% 0 Total Res Connection Fee Per Transaction (Weighted) $1.0 $. $ Proposed Fee (Rounded) $.00 1 Figure XI- provides SCE s Residential Service Connection Charge revenue forecast for SCE based this forecast on the two-year average (from 01-01) volume of service 1

248 connections plus. percent estimated customer growth from 01 to 01. This produced a service fee revenue forecast of $.1 million for Test Year 01. Refer to WP SCE-0 Ch. XI, p. 1 for additional details regarding the Residential Service Connection Charge Volume Forecast. Refer to WP SCE-0 Ch. XI, p. 1 for additional details regarding the Residential Service Connection Charge Revenue Forecast. 1

249 Figure XI- FERC Account Recorded Forecast Residential Service Connection Charge Revenue Forecast (Nominal $000) 1. FERC Account 1.0 Opt-Out Program Fee In 01, the CPUC required SCE to modify its ESC program to provide an opt-out option and establish interim fees for this option. Subsequently, in D.1-1-0, the CPUC authorized SCE to Refer to WP SCE-0 Ch. XI, pp. 1- for the recorded and forecast OOR for the Residential Service Connection Charge. D adopted an initial fee of $.00 and a monthly charge of $.00 per month for Non-CARE customers and an initial fee of $.00 and a monthly charge of $.00 per month for CARE customers. 1

250 continue charging the opt-out fees, but only for the first three years after a customer opts out of the smart meter program. SCE does not propose to change the fees authorized in D Table XI- provides SCE s annual revenue recorded from 01 through 01 for this fee. SCE forecasts a decrease in the Opt-Out Program service fee revenues from $1. million in 01 to $1,000 in 01. SCE forecasts a significant decrease in Opt-Out OOR over this period because the majority of Opt-Out customers will reach the end of their three-year fee period. As shown in Table XI- below, the forecast volumes and revenues for the Opt-Out program decline significantly from 01 to 01. Table XI- FERC Account 1.0 Opt-Out Forecast Volume and Revenue (Nominal $000) Recorded Forecast 0* At 01 GRC At 01 GRC Current Fees Proposed Fees Initial Fee Annual Volume Total N/A 1,,0 1, 1, CARE (%),00 1, 0 0 Non-CARE (%) 1,, 1,1 1, Monthly Fee Annual Volume Total N/A,,,1 1,0,1,1 1, CARE (%) 01,1,, 1,0,,0 Non-CARE (%) 1, 0, 1,, 1,, Revenue ($000s) Initial Fee CARE $0 $1 $ $ $ $ $ $ Initial Fee Non-CARE $1, $1 $1 $ $ $1 $1 $1 Monthly Fee CARE $1 $1 $ $ $0 $ $1 $1 Monthly Fee Non-CARE $ $1,1 $,00 $1, $ $1 $ $ Total ($000s) N/A $1, $,0 $,0 $1, $ $0 $1 $1 * Program started in 01 1 D. Non-Residential Service Charges SCE proposes to decrease the Non-Residential Late Payment Charge from 0. percent to 0. percent of the customer s account balance, and proposes to increase the Non-Residential Service Connection Charge to reflect an increase based on the 01 weighted average of manual and RSS See D Refer to WP SCE-0 Ch. XI, pp. -0 for additional details regarding the Edison SmartConnect Opt-Out Forecast by Organization and Activity. 0

251 1 1 connections (explained further in FERC Account 1.). To determine the service charges for non-residential accounts, SCE updated its cost studies. 1. FERC Account 0.0 Non-Residential Late Payment Charge Subaccount 0.0 records revenues collected from Late Payment Charges (LPC) from non-residential customers who do not pay their bill within 1 days of receipt. In D.1-1-0, the Commission authorized SCE to assess a late payment charge to non-residential customers. SCE assesses the rate of the fee based on the current incremental cost of capital. Consistent with this approach, SCE proposes to set the late payment charge for 01 at the current incremental cost of capital, decreasing the charge to 0. percent per month. 0 Figure XI- presents the annual revenue recorded from 0 through 01 for this charge. To forecast the non-residential LPC revenue for the years 01 through 01, SCE used a three-year rolling average plus customer growth of. percent. This produced a forecast of $. million for the 01 Test Year. The calculation is provided in the workpapers supporting this forecast. 1 0 Refer to WP SCE-0 Ch. XI, p. 1 for additional details regarding SCE s incremental cost of capital adopted in D Refer to WP SCE-0 Ch. XI, p. for additional details regarding the Non-Residential Late Payment Charge (LPC). 1

Figure XI- FERC Account 0.0 Non-Residential Late Payment Charge (Nominal $000) 1 Note: Recorded residential LPC amounts 0-01 are at 0. percent, 01 and forecast 01-01 are at 0.

252 Figure XI- FERC Account 0.0 Non-Residential Late Payment Charge (Nominal $000) 1 Note: Recorded residential LPC amounts 0-01 are at 0. percent, 01 and forecast are at 0. percent, and forecast 01 are at 0. percent.. FERC Account 1. Non-Residential Service Connection Charge Sub-account 1. records charges incurred for all non-residential service connections, either resulting from new service establishment, transfer of existing service, or reconnection of services previously disconnected for non-payment of a bill. Non-residential service connections are established using the RSS function where the RSS functionality is available in 00 amp meters, which generally serve only residential and small non-residential (GS-1) accounts under 0 kw. Other service connections are established manually. Refer to WP SCE-0 Ch. XI, pp. -1 for the recorded and forecast OOR for the Non-Residential Late Payment Charge.

253 SCE proposes to increase the service fee from $.00 to $0.00. The proposed service fee is based on the updated cost study that determined the cost per transaction of all non-residential service connections, shown in Table XI-. The most significant cost increase is because the cost of CSR-handled non-residential customer connection calls increased from $. to $.1. The average costs per call were then calculated based on the weighted average percentage of manual and RSS connections. Line No. Activity Table XI- FERC Account 1. Non-Residential Service Connection Charge Cost Study (Nominal $) Details (Position) Min. Per Trans. Cost Per Minute Manual/Field Visit % Cost Per Trans. Remote Service Switch (RSS) % Cost Per Trans. 1 MSO-Field Orders Energize Meter Regular Time (FSR).0 $1. % $. 0% $0.00 (field visit) Time and one half (FSR_OT).0 $.0 % $.0 0% $0.00 Double Time (FSR_DT).00 $.0 1% $1. 0% $0.00 CCC-Handle Calls SCE Rep $. % $.1 $.1 SCE.com $. % $0. $0. IVR $0.0 % $0.00 $0.00 Payment Processing APA n/a $0. 1% $0.1 1% $0.1 Quick Check QC - IVR n/a $0.0 % $0.0 % $0.0 1 Total Cost Per Transaction (Unweighted) $.0 $ Non-Residential Connections Volume Forecast Manual/Field RSS Total 1 01 Non-Residential Connections Volume Forecast,,0, 1 % Manual and RSS Volume Split.%.% 0.0% 1 01 Non-Residential (Non-Res) Connection Fee Calculation Manual/Field RSS Total 1 Cost Per Transaction (Unweighted) $.0 $. 1 % Manual and RSS Volume Split.%.% 1 Total Non-Res Connection Fee Per Transaction (Weighted) $.0 $. $ Proposed Fee (Rounded) $ Figure XI- provides SCE s forecast of the Non-Residential Service Connection Charge revenues based on the authorized rate from SCE s 01 GRC and 01 Test Year proposed rate. There are no recorded costs for this fee prior to 01 because the $ fee was approved in the 01 GRC and not implemented until 01. The reduced $ service fee approved in the 01 GRC reduced revenues by $1. million in 01. The volume of non-residential connections used to forecast the 01 OOR was based on a two-year (01-01) average volume of service connections plus. percent estimated

254 customer growth. Figure XI- below shows the recorded Non-Residential Service Connection Charge OOR for and the forecast for Refer to WP SCE-0 Ch. XI, p. for additional details regarding the Non-Residential Service Connection Charge Volume Forecast. Refer to WP SCE-0 Ch. XI, p. for additional details regarding the Non-Residential Service Connection Charge Revenue Forecast.

255 Figure XI- FERC Account 1. Non-Residential Service Connection Charge (Nominal $000) 1 E. Other Service Charges SCE proposes to maintain the current Return Check Charge and to increase the At-Pole Service Connection charge from $1.00 to $1.00. The reasons and forecast revenue for each fee are discussed below. Refer to WP SCE-0 Ch. XI, pp. - for the recorded and forecast OOR for the Non-Residential Service Connection Charge.

256 1. FERC Account 1.1 Returned Check Charge This sub-account includes customer charges for checks returned to SCE by the bank for insufficient funds. The proposed service fee is based on a cost study that determined the cost per transaction of returned checks. The cost study examined each function performed at its applicable loaded-labor rate and then multiplied this rate by the estimated time required to complete the activities associated with processing a returned check. The result was a cost of $.01 for each returned check, which consists of labor cost of $.0 and non-labor cost of $1. for bank fees and Authorized Payment Agencies (APA) charges. As such, SCE proposes no change to the current $.00 fee. Table XI-0 presents a summary of this cost study for the Returned Check Charge. The service fee was authorized at $.00 per returned check in SCE s 01 GRC.

257 Line No. Table XI-0 FERC 1.1 Returned Check Charge Cost Study (Nominal $) Description CIP Occurrence Average Minutes Per Transaction Cost Per Minute Cost Per Transaction 1 Average Bank Charges $1. Credit Administration (Research and check for payment process for collection) CSR_R.% 0. $1.1 $0.0 In Person Payments APA (Receive and process payments).0% $0. $0. Rural Office (Receive and process payments) CUS.0% 1. $0.0 $0.0 Accounts Receivable (Research and post debit to the customer account) ACA_R 0. $0. $0. Customer Contact Center (Customer Service specialist inquiries and extensions) CSR_A. $0.0 $. Returned Check Total Cost $ Proposed Fee (Rounded) $.00 1 Figure XI- provides the Returned Check Charge revenue forecast for The forecast revenues were calculated using a five-year average (0-01) recorded volume of returned checks plus. percent customer growth from 01 to 01. Refer to WP SCE-0 Ch. XI, p. for additional details regarding the Returned Check Charge Forecast.

Figure XI- FERC Account 1.1 Returned Check Charge Revenue (Nominal $000) 1. FERC Account 1.0 At-Pole Service Connection Charge This sub-account records the revenue from at-pole service connections.

258 Figure XI- FERC Account 1.1 Returned Check Charge Revenue (Nominal $000) 1. FERC Account 1.0 At-Pole Service Connection Charge This sub-account records the revenue from at-pole service connections. At-pole service connections generally occur when normal access to the meter is not available due to factors such as locked gates, indoor meters, or aggressive dogs. The frequency of these charges has decreased due to the use of the RSS capability for residential and non-residential accounts. However, this charge is necessary due to the high cost of providing this service when customers fail to meet the access provisions of SCE s service agreement. Refer to WP SCE-0 Ch. XI, pp. - for the recorded and forecast OOR for the Returned Check Charge.

259 The proposed service fee is based on a cost study that determined the cost per transaction of at-pole service connections. The cost study examined each function performed at its applicable loaded-labor rate and then multiplied this rate by the estimated time required to complete the activities associated with each at-pole service connection. As a result of the cost analysis, SCE proposes to increase the service charge from $1.00 to $1.00 for At-Pole Service Connection as shown in Table XI-1. The most significant cost increase is due to the cost of field visits by SCE personnel. Table XI-1 FERC Account 1.0 At-Pole Service Connection Charge Cost Study (Nominal $) Line Position Activity Details Min. Per Cost Per Manual/Field Visit No. Trans. Minute Cost Per % Trans. 1 Field Visit Non-Labor (Vehicle) Included in wage rate n/a n/a 0% $0.00 TM01A Energize Meter (field visit) Consolidated Transaction Rate 0.00 #N/A 0% $1. CCC-Handle Calls SCE Rep $. 1% $0.1 GCS Rep $.0 % $.0 Payment Processing APA n/a $0. 1% $0.1 Quick Check QC - IVR $0.0 % $0.0 Total At Pole Connection Fee Per Transaction $1. 01 Proposed Fee (Rounded) $1.00 The forecast At-Pole Service Connection revenue for Test Year 01 was calculated based on the forecast volume of 1 at-pole connections expected in 01. Because of the declining volume of At-Pole Connections, the 01 forecast number of at-pole connections is based on the recorded number of 01 connections. Figure XI-0 below shows the forecast At-Pole Service Connection revenue of $,000 for 01 Test Year. Refer to WP SCE-0 Ch. XI, p. for additional details regarding the At-Pole Service Connection Charge Forecast.

260 Figure XI-0 FERC Account 1.0 At-Pole Service Connection Charge 0 (Nominal $000) 1 F. Direct Access (DA) Service Fees Of its 1 existing DA fees, SCE proposes not changing six fees, changing fees, adding three new fees, and eliminating fees, resulting in a total of 1 DA service fees. 1 SCE forecasts revenues 0 Refer to WP SCE-0 Ch. XI, pp. 0-1 for the recorded and forecast OOR for the At-Pole Service Connection Charge. 1 Refer to WP SCE-0 Ch. XI, pp. - for additional details regarding the Direct Access (DA) Service Fees Summary. 0

261 from DA service fees to decrease from $,000 in 01 to $1,000 in 01. The reasons for these proposals and the forecast revenue for each fee are discussed below. 1. FERC Account.01 Direct Access (DA) Service Fees This sub-account records revenue from service fees that SCE provides for DA service. DA service allows customers to elect to purchase electricity and other services from an Electric Service Provider (ESP). In D , the Commission authorized SCE to collect DA service fees. The current DA service fees are contained in SCE s Rate Schedule Energy Service Provider Discretionary Service Fees (ESP-DSF), Energy Service Provider Non-Discretionary Service Fees (ESP-NDSF), Customer Choice Discretionary Service Fees (CC-DSF). a) DA Service Fees Estimation Method SCE conducted cost studies for DA services fees that included labor and non-labor costs. For labor costs, SCE performed a detailed analysis of functions, activities performed, time required to perform such activities (generally, measured in minutes or hours), and identification of the job classification (e.g., analyst, customer service representative) and wage rates (in nominal dollars) for the personnel performing the activities. Labor wage rates included appropriate costs for labor loaders. For non-labor costs, SCE reviewed the appropriate unit costs incurred for items such as automated printing, stationery, envelopes, and postage. As a result of this analysis, SCE identified activities that are no longer performed, activities that take less processing time due to process efficiencies and automation, and new activities required to support its DA services. Fees proposed to be charged on a time and materials basis were not reviewed in the manner described above, as these fees will be appropriately charged based on SCE s level of effort and wage rates to provide such services. For each activity performed, SCE multiplied the labor processing time by the applicable labor rate of the personnel performing each activity to develop the activity costs. For each fee, all of the associated activity costs were then summed to develop the labor costs for the fee. Similarly, for non-labor costs, SCE developed an estimated per unit cost and multiplied by the appropriate volume. SCE then summed the individual non-labor cost components to develop the Refer to WP SCE-0 Ch. XI, pp. - for additional details regarding the wage rates used in the cost studies. 1

262 non-labor costs for the fee. Finally, for each fee, the labor and non-labor costs were summed to develop SCE s proposed DA fee. As a result of the detailed analysis described above and certain fee structure changes (as described below), SCE proposes the following changes to its DA service fees. (1) Direct Access Service Fees No Proposed Changes As shown in Table XI-, SCE is proposing to leave six DA time and material (T&M) service fees unchanged from the current fee. These services will be directly provided to ESPs at cost. Table XI- DA Service Fees Unchanged Service Fees FERC.01 Line No. Fee Description Current Fees Proposed Fees* 1 Special Services Request T&M T&M Investigation and Scheduling Charge T&M T&M Material Handling Charge T&M T&M Dual Socket Adapter Device Charge T&M T&M Dual Socket Adapter Device Installation Charge T&M T&M Billing Set-up and Ongoing Support T&M T&M * T&M: Time and Material () Direct Access Service Fees Proposed Fee Changes As shown in Table XI-, SCE is proposing to update ten DA service fees for reasons described below. SCE proposes these changes to reflect current work processes and labor rates. (a) Operational Efficiencies SCE proposes to reduce the EDI Value Added Network (VAN) Charge, the Meter Data Posting fee, and Involuntary Billing Change Charge because processes have Refer to WP SCE-0 Ch. XI, pp. - for additional details regarding proposed DA service fees. Refer to WP SCE-0 Ch. XI, pp. -1 for additional details regarding the DA Service Fees Unchanged Service Fees. Refer to WP SCE-0 Ch. XI, pp. 1-1 for additional details regarding the DA Service Fees Updated Service Fees.

263 been automated and process efficiencies identified. As a result of SCE s cost study, SCE identified a decrease in labor hours required to perform the activities to support this service. The decreased cost was determined using a cost study that examined the functions needed to be performed at their applicable loaded-labor rate and then multiplied by the estimated time required to complete the activities associated with performing the service. (b) Increased Labor Costs SCE proposes to increase the Interval Data Recorder Meter Test, Engineering Estimate or Job Design, Incomplete Trip Charge, and Pulse Adapter Equipment and Installation Charge. These increases are the result of a higher job classification required to perform these activities, which increases the cost to perform these functions. SCE determined the increased cost using a cost study that examined each function performed at its applicable loaded-labor rate and then multiplied by the estimated time required to complete the activities associated with performing the service. (c) Material Costs As part of SCE s function-by-function study that focused on labor and non-labor costs, SCE evaluated its material costs for such items as automated printing, stationery, envelopes, and postage. Costs for these items have been updated and, as a result, SCE proposes to increase the Consolidated SCE Billing Additional Page Charge fee but also increase the page allowance. Currently, SCE bills DA service accounts $0.0 for additional pages that exceed four pages. As a result of its cost study, SCE determined that SCE does not incur additional costs per statement until after seven pages. As a result, SCE proposes to charge time and material costs for bill statements that are between seven and pages and a $.00 fee for statements that exceed pages. Extra postage and special packaging needed to accommodate additional pages vary depending on the number of pages in the bill statement and, thus, the fee structure will result in the appropriate costs billed to the customer. This fee is necessary to reasonably recover SCE costs from the appropriate ESP. SCE expects that this change will only apply to. percent of statements requested. (d) Proposed Fee Structure Change SCE also proposes to change the structure of the Third Party Return of a SCE Meter Penalty and the Acceptance Testing of Customer-owned Meter Charge to a time and material fee. This will result in the services provided being directly passed on to ESPs at cost. These

264 1 services are unique and can vary by customer and, thus, should be appropriately billed on a time and material basis. reasons described below. Table XI- DA Service Fees - Updated Service Fees FERC.01 (Nominal $) Line Current Proposed Fee Description No. Fees Fees* Reason for Change 1 EDI VAN Charge $ 0.1 $ 0.0 Operational Efficiencies Consolidated SCE Billing - Additional Page Charge $ 0.0 $.00 Materials Cost Meter Data Posting $ 0.1 $ 0.0 Operational Efficiencies Testing Charge: IDR Meter $ 1.00 $ Increase Labor Costs Third Party Return of an SCE Meter Penalty Replacement cost of meter T&M Fee Structure Change Engineering Estimate or Job Design $.00 $.00 Increase Labor Costs Acceptance Testing of Customer-owned Meter Charge $.00 T&M Fee Structure Change Incomplete Trip Charge $ 0.00 $.00 Increase Labor Costs Pulse Adapter Equipment and Installation Charge $.00 $.00 Increase Labor Costs Involuntary Billing Change Charge $.00 $.00 Operational Efficiencies * T&M - Time and material. () Direct Access Service Fees Proposed New Fees As shown in Table XI-, SCE proposes three new DA service fees for (a) Reposting of Usage Data Files Fee Reposting of Usage Data Files is a new proposed fee that would be charged to DAs for processing that occurs when a DA misses a seven-day window to retrieve the meter usage data file(s). This fee replaces an activity that was previously included under the Meter Data Posting monthly per service account fee. Because this fee would apply only to DAs that missed a seven-day-retrieval window, this fee is necessary to reasonably recover SCE s costs from the appropriate ESP. SCE proposes a $.00 per occurrence fee that will cover up to 0 files. Refer to WP SCE-0 Ch. XI, pp. 1-1 for additional details regarding the Direct Access Service Fees Proposed New Fees.

265 (b) Meter Related Fees SCE proposes to eliminate maintenance and meter fees that are specific to IDR meters. IDR meters for DA customers are nearly obsolete due to the deployment of Edison SmartConnect (ESC) meters. See Section XI.F.1.a)() for more information. Therefore, for any remaining customer-owned meters, SCE is proposing a new Meter Replacement Service fee. (i) ESC Meter with Pulse Output Fee SCE proposes a $0.00 service fee for customers that need a pulse output component added to the ESC meter. This fee replaces the current IDR Meter Fees with Pulse Output. The fee was calculated based on each function performed at its applicable loaded-labor rate and then multiplied by the estimated time required to complete the activities associated with performing the service. The service includes contract preparation, engineer job design, installation process, and various metering costs. (ii) Meter Replacement Service Fee SCE proposes a $1.00 service fee for the cost of labor to replace a meter. Meter Replacement Service fee occurs when a customer requests to have its customer-owned or SCE-owned ESC meter or metering facilities replaced with a standard SCE-owned meter. Customers may also request meter replacements when the customer s meter is not compatible with SCE s meter-reading systems. This fee replaces the Meter Replacement with Standard SCE IDR Meter fee, Meter Replacement with Standard SCE Demand Meter fee, and the Meter Removal Service fee. Table XI- DA Service Fees Proposed New Fees for New Services FERC.01 (Nominal $) Line No. Fee Description Current Fees Proposed Fees 1 Reposting of Usage Data Files Fee New $.00 ESC Meter with Pulse Output Fee New $ 0.00 Meter Replacement Service Fee New $ 1.00

266 () Direct Access Service Fees Eliminated As shown in Table XI-, SCE proposes to eliminate DA service fees for reasons discussed below. (a) Fees No Longer Applicable Because of Process Automation SCE proposes to eliminate the Separate Mailing Charge. This fee applies when the ESP requests that SCE provide a separate mailing of mandated legal and safety notices. SCE has automated this process and no longer needs to charge a fee for this service. Development of any other miscellaneous customer notifications will be performed under a service agreement that covers SCE time and materials for the notifications. In addition, SCE proposed to eliminate the Refund Account Credits Due to Overpayment EDI Charge because the process has been automated. (b) Obsolete Technology SCE proposes to eliminate maintenance and meter fees that are specific for IDR meters. IDR meters for DA customers are now obsolete due to the deployment of ESC meters and SCE will no longer provide IDR meters to customers. (c) Obsolete Fees SCE proposes to eliminate the six fees listed on lines - in Table XI- because the fees are no longer being used.

267 Table XI- DA Service Fees Proposed for Elimination FERC.01 (Nominal $) Line Current Proposed Fee Description No. Fees Fees* Reason for Elimination 1 Separate Mailing Charge $ 0. ELM Automated Refund account credits due to overpayment EDI Charge $. ELM Automated Basic I $ 1.00 ELM Obsolete due to ESC Meters Basic I with Pulse Output $.00 ELM Obsolete due to ESC Meters Basic I with Modem $.00 ELM Obsolete due to ESC Meters Basic I with Pulse Output & Modem $ 0.00 ELM Obsolete due to ESC Meters Advanced I $ 1.00 ELM Obsolete due to ESC Meters Advanced I with Pulse Output $.00 ELM Obsolete due to ESC Meters Advanced I with Modem $.00 ELM Obsolete due to ESC Meters Advanced I with Pulse Output & Modem $.00 ELM Obsolete due to ESC Meters Meter Installation IDR $ 0.00 ELM Obsolete due to ESC Meters 1 Meter Installation IDR with Pulse Output $.00 ELM Obsolete due to ESC Meters 1 Meter Installation IDR with Modem $.00 ELM Obsolete due to ESC Meters 1 Meter Installation IDR with Pulse Output & Modem $ 0.00 ELM Obsolete due to ESC Meters 1 Basic I Maintenance Charges Billing Meter - IDR $ 1.0 ELM Obsolete due to ESC Meters 1 Basic I Maintenance Charges Billing Meter- IDR Billing Meter with Pulse Output $ 1.0 ELM Obsolete due to ESC Meters 1 Basic I Maintenance Charges Billing Meter - IDR with Modem $.0 ELM Obsolete due to ESC Meters 1 Basic I Maintenance Charges Billing Meter - IDR with Pulse Output & Modem $.0 ELM Obsolete due to ESC Meters 1 Advanced I Maintenance Charges Billing Meter - IDR $ 1.0 ELM Obsolete due to ESC Meters 0 Advanced I Maintenance Charges Billing Meter - IDR with Pulse Output $ 1.0 ELM Obsolete due to ESC Meters 1 Advanced I Maintenance Charges Billing Meter - IDR with Modem $.0 ELM Obsolete due to ESC Meters Advanced I Maintenance Charges Billing Meter - IDR with Pulse Output & Modem $.0 ELM Obsolete due to ESC Meters Basic I Maintenance Charges Non-Billing Meter - IDR $ 1.0 ELM Obsolete due to ESC Meters Basic I Maintenance Charges Non-Billing Meter- IDR Billing Meter with Pulse Output $ 1.0 ELM Obsolete due to ESC Meters Basic I Maintenance Charges Non-Billing Meter - IDR with Modem $.0 ELM Obsolete due to ESC Meters Basic I Maintenance Charges Non-Billing Meter - IDR with Pulse Output & Modem $.0 ELM Obsolete due to ESC Meters Advanced I Maintenance Charges Non-Billing Meter - IDR $ 1.0 ELM Obsolete due to ESC Meters Advanced I Maintenance Charges Non-Billing Meter - IDR with Pulse Output $ 1.0 ELM Obsolete due to ESC Meters Advanced I Maintenance Charges Non-Billing Meter - IDR with Modem $.0 ELM Obsolete due to ESC Meters 0 Advanced I Maintenance Charges Non-Billing Meter - IDR with Pulse Output & Modem $.0 ELM Obsolete due to ESC Meters 1 Meter Removal Charge $ 1.00 ELM Obsolete due to ESC Meters Meter Replacement Charges with Standard SCE IDR Meter $.00 ELM Obsolete due to ESC Meters Meter Replacement Charges with Standard SCE Demand Meter $ 0.00 ELM Obsolete due to ESC Meters Daily Check for Payment Charge $.0 ELM Obsolete Fees Hourly Rate to Assist ESPs with Rates and Systems $.00 ELM Obsolete Fees Retrieval of Account Information Charge $. ELM Obsolete Fees Routine Account Analysis Charge $ 1.0 ELM Obsolete Fees Complex Account Analysis Charge $.0 ELM Obsolete Fees Resend File/Report Charge $ 1.0 ELM Obsolete Fees * ELM = Eliminate 1 () Direct Access Service Fees - Consolidated into Other Fees SCE proposes to eliminate fees that can be consolidated with other existing fees. As shown in Table XI-, SCE proposes to eliminate two fees and consolidate those

268 charges under the Meter Data Posting Fee and eliminate four fees and consolidate those charges into the EDI VAN Charge. Table XI- DA Service Fees Eliminated due to Consolidation (Nominal $) Line Current Proposed Fee Incorporated Fee Description No. Fees Fees* Under 1 Consolidated SCE Billing - Standard Bill by Mail Charge $ 0. ELM Meter Posting Fee Consolidated SCE Billing - Bill by Internet Charge $ 0. ELM Meter Posting Fee Value Added Network (VAN) Transmission of Data $ 0.1 ELM EDI VAN Charge Electronic Data Interchange (EDI) Bank Processing $. ELM EDI VAN Charge Electronic Data Interchange (EDI) Value Added Network (VAN) $. ELM EDI VAN Charge Investigate EDI Payment Charge $.00 ELM EDI VAN Charge * ELM = Eliminate. Direct Access Service Fees Forecast OOR Table XI- below presents the DA services and the revenues forecast by service fee. Line No. Direct Access Services Table XI- DA Service Fee Revenues FERC.01 (Nominal $s) Proposed Fee Forecasted Volume Forecasted 01 OOR ($000s) $ $ $ $ $ $ $ $ $ $ $ $ 1 Consolidated SCE Billing - Additional Page Charge $.00 1,00 EDI VAN Charge $0.0,1 Meter Data Posting $0.0,1 Testing Charge: IDR Meter $ Engineering Estimate or Job Design $ 1 1 Incomplete Trip Charge $ 1 0 Pulse Adapter Equipment and Installation Charge $ ESC Meter with Pulse Output Fee $0 1 Meter Replacement Service Fee $1 Involuntary Billing Change Charge $ 0 - Repost of Data Usage Files Fee $ In 01, revenues from DA service fees are forecast to decrease to $1,000, from $,000 in 01. The decrease is attributed to (1) decreased DA transaction volumes, () expected

269 decreased customer requests for meter reads, meter maintenance, and meter repair, () reduced demand for customer-owned meters, and () proposed decreases to DA fees. Figure XI-1 below shows the historical and 01 Test Year forecast of DA Service Fee OOR. To forecast DA service fee revenues, the 01 recorded transaction volumes were increased for the forecast customer growth of. percent between 01 and 01, and the proposed service fees were applied to the forecast volumes. For fees that are based on occurrences, the 01 occurrence level was used.

270 Figure XI-1 FERC.01 DA Service Fee Revenues (Nominal $000) 1 G. Community Choice Aggregation (CCA) Service Fees Of its existing CCA service fees, SCE proposes not changing 1 services fees, changing service fees, adding five new service fees, and eliminating or consolidating 0 existing service fees, resulting in a total of CCA service fees. The reasons for these proposals and the forecast revenue for each fee are discussed below. Refer to WP SCE-0 Ch. XI, pp. 1-1 for the recorded and forecast OOR for DA Service Fees. CCA-related Opt-Out fees included in this section refer to the option of customers to continue to take bundled service from SCE and therefore opt-out of CCA service. 0

271 FERC Account.1 Community Choice Aggregation (CCA) Service Fees FERC Account.1 records revenues for SCE s service fees for CCA participation. AB permits cities, counties, and Joint Power Authorities whose governing boards decide to act as CCAs to purchase and sell electricity on behalf of retail end-use customers within their jurisdictional areas. CCA service fees are required to compensate SCE for services provided so that bundled service customers do not subsidize CCA programs. The current CCA service fees are contained in SCE s Rate Schedule Community Choice Aggregation-Service Fees (CCA-SF), Customer Choice Discretionary Service Fees (CC-DSF), and Community Choice Aggregation Information Fees (CCA-INFO). The current service fees were adopted in D and D , which implemented portions of AB. a) CCA Service Fees Estimation Method In 01, SCE agreed to reexamine a cost study related to the Monthly Account Maintenance Fee and other CCA fees in Rate Schedules CCA-SF, CC-DSF, and CCA-INFO after SCE had experience with, and recorded, cost data for CCA-related services. 0 The results of the cost study were to be incorporated into SCE s 01 GRC proposal. SCE now has experience providing CCA-related services to Lancaster Choice Energy. As such, SCE performed a comprehensive review of its costs to provide services to CCAs and has incorporated the results of this study into its CCA service fee proposal. SCE s cost study evaluated CCA-related labor and non-labor costs. For labor costs, SCE performed a detailed analysis of functions, activities performed, time required to perform such activities (generally, measured in minutes or hours), and identification of the job classification (e.g., analyst, customer service representative) and wage rates (in nominal dollars) for the personnel performing the activities. Labor wage rates included appropriate costs for labor loaders. For non-labor costs, SCE reviewed the appropriate unit costs incurred for items such as telecommunication costs, automated printing, stationery, envelopes, and postage. As a result of this analysis, SCE identified activities that are no longer performed, activities that take less processing time due to process Electrical Restructuring: Aggregation, Stats. 00 ch. (AB, Migden). Information regarding AB is available at [as of August 1, 01]. 0 See D

272 efficiencies and automation, and new activities required to support CCA services. Fees proposed to be charged on a time and materials basis were not reviewed in the manner described above, as these fees will be appropriately charged based on SCE s level of effort and wage rates to provide such services. For each activity performed, SCE multiplied the labor processing time by the applicable labor rate of the personnel performing each activity to develop the activity costs. For each fee, all of the associated activity costs were then summed to develop the labor costs for the fee. Similarly, for non-labor costs, SCE developed an estimated per unit cost and multiplied by the appropriate volume. SCE then summed the individual non-labor cost components to develop the non-labor costs for the fee. Finally, for each fee, the labor and non-labor costs were summed to develop SCE s proposed CCA fee. As a result of the detailed analysis described above and certain fee structure changes (as described below), SCE proposes the following changes to its CCA service fees. (1) CCA Service Fees No Proposed Changes As shown in Table XI-, SCE proposes no changes to 1 CCA service fees because the fees were recently updated by Commission decision, SCE proposes to maintain the currently authorized time and materials fee structure, or SCE s current fees are sufficient to recover its costs. The Commission recently approved SCE s Monthly Account Maintenance Fee for Reporting Activities and Process as part of D , adopting a settlement agreement with the City of Lancaster effective October 1, 01 (AL -E). Since SCE recently completed the cost study for this fee, SCE proposes to keep this fee unchanged at $0. In addition, SCE proposes that seven CCA service fees continue to be charged on a time and materials fee basis and such costs will be directly billed to the appropriate CCA. These services are unique and can vary customer to customer, and are thus appropriately billed on a time and material basis. SCE also proposes that two services continue to be provided at no charge. This fee structure is reasonable given the frequency and data availability of these requests. Finally, per SCE s cost study, the fees charged for Customer Information Standardized Requests (CISR) are sufficient for SCE to recover its costs, and therefore, SCE proposes no changes to these service fees.

273 Table XI- CCA Service Fees No Proposed Changes to Service Fees FERC.1 (Nominal $s) Line Current Proposed Fee Description No. Fees* Fees* 1 Monthly Account Maintenance Fee - Manual Billing Exception Processing (Fixed) $ 0.00 $ 0.00 CCA Establishment - EDI Testing Fee T&M T&M CCA Termination of Service - Involuntary Service Change or Termination of CCA Service T&M T&M Special Services Request T&M T&M Additional Metering Related Services - Investigation and Scheduling Charge T&M T&M Additional Metering Related Services - Material Handling Charge T&M T&M Additional Metering Related Services - Dual Socket Adapter Device Charge T&M T&M Additional Metering Related Services - Dual Socket Adapter Device Installation Charge T&M T&M Additional Information - Monthly Energy Efficiency Participation Data Provided for Commission ReportinNo Charge No Charge Additional Information - Mapping of Rate Schedules by Rate Group No Charge No Charge Customer Information Standardized Request (CISR) - CISR Base Processing Fee $.1 $.1 1 Customer Information Standardized Request (CISR) - Usage Data Base Fee (Non-Interval) $. $. 1 Customer Information Standardized Request (CISR) - Service Acct Usage Data Fee (Non-Interval) $. $. 1 Customer Information Standardized Request (CISR) - Usage Data Base Fee (Interval) $. $. 1 Customer Information Standardized Request (CISR) - Service Acct Usage Data Fee (Interval) $. $. * T&M = Time and Material 1 () CCA Service Fees Proposed Fee Changes With the implementation of its first CCA, Lancaster Choice Energy, SCE gained experience and knowledge related to providing CCA services. As described below, SCE has utilized such knowledge and experience to create operational efficiencies, as well as changes to material costs, processing times, and fee structure. SCE proposes to update CCA service fees, which include 1 fee reductions, fee increases, and fee structure changes. 1 These changes are shown in Table XI-. (a) Operational Efficiencies SCE has achieved numerous operational efficiencies as a result of automation, process improvements, and its smart meter program. The experience gained from implementing its first CCA provided SCE an opportunity to perform a comprehensive review of its 1 Refer to WP SCE-0 Ch. XI, pp. 1-1 for the recorded and forecast OOR for additional details regarding CCA Service Fees proposed to be updated.

274 activities. SCE s review of its activities resulted in multiple process improvements, which streamlined and automated various functional activities, as well as the identification of reduced actual processing times compared to estimated processing times. One such service fee required considerable manual labor to process and originally took about four hours to complete one report. The process has since been fully automated and now takes approximately one minute to produce the report. Due to automation, SCE proposes this report be provided at no charge. The Edison SmartConnect Program also provided operational efficiencies, such as a metering communication system that eliminated the need for CCA-related customer site visits for mass enrollments and voluntary terminations. As a result of SCE s operational efficiency efforts, SCE proposes reducing the applicable components in SCE s proposed service fees. (b) Material Costs As described previously, SCE performed a function-by-function cost study that focused on labor and non-labor costs. As part of this study, SCE evaluated its material costs for such items as telecommunication costs, automated printing, stationery, envelopes and postage. Costs for these items have been updated, and will result in decreases and increases to the applicable cost components of SCE s proposed service fees. SCE performed a function-by-function cost study that focused on labor and non-labor costs. As part of this study, SCE evaluated its material costs for items such as automated printing, stationery, envelopes, and postage. Costs for these items have been updated and, as a result, SCE proposes to increase the Consolidated SCE Billing Additional Page Charge fee but also increase the page allowance. Currently, SCE bills CCA service accounts $0.0 for additional pages that exceed four pages. As a result of its cost study, SCE determined that SCE does not incur additional costs per statement until after seven pages. As a result, SCE proposes to charge time and material costs for bill statements that are between seven and pages and a $.00 fee for statements that exceed pages to recoup the extra postage and special packaging needed to accommodate the additional pages. This fee is necessary to recover SCE s costs from the appropriate CCA. SCE expects that this change will only apply to. percent of statements requested. (c) Increased Labor Costs SCE s aforementioned cost study evaluated activities, actual time (measured in minutes and hours), and job classifications required to perform individual activities related to its service fees. The processing time for many activities decreased, but activities previously not

275 identified and job classifications for certain activities did increase. As a result of these factors, SCE proposes to increase the applicable labor cost components included in certain CCA service fees. (d) Proposed Fee Structure Change SCE proposes that two CCA service fees be revised to time and materials based fees and such costs will be directly billed to the appropriate CCA. These services are unique and can vary by customer, and are thus appropriately billed on a time and material basis. Table XI- CCA Service Fees Fees Proposed to be Updated FERC.1 (Nominal $s) Line Current Proposed Fee Description No. Fees Fees* Reason for Change 1 Additional Metering Related Services - Acceptance Testing of Customer-owned Meter $.00 T&M Fee Structure Change Additional Metering Related Services - Engineering Estimate or Job Design $.00 $.00 Labor Increases Additional Metering Related Services - Incomplete Trip Fee $ 0.00 $.00 Labor Increases Additional Metering Related Services - Pulse Adapter Equipment and Installation Charge $.00 $.00 Labor Increases Replace cost T&M Additional Metering Related Services - Third Party Un-Returned Meter Penalty Charge of meter Fee Structure Change CCA Establishment - CCA Credit Establishment Fee $ 1.00 $.00 Operational Efficiencies CCA Establishment - CCA Service Establishment $ 0.01 $ 1.00 Operational Efficiencies CCA Non-Energy Billing Receivable Fee $.00 $.00 Operational Efficiencies CCA Termination of Service - Voluntary Termination Fee - Per Event $,01.00 $ 1.00 Operational Efficiencies CCA Termination of Service - Voluntary Termination Fee - Per Service Account $ 0.1 $ 0. Operational Efficiencies Community Choice Aggregation Service Request (CCASR) - Cancellation Fee $ 1.0 $. Labor Increases 1 Community Choice Aggregation Service Request (CCASR) - CCASR Fee $ 0. $ 0. Operational Efficiencies 1 Community Choice Aggregation Service Request (CCASR) - Customer Re-entry $ 1.0 $ 0.0 Operational Efficiencies 1 Community Choice Aggregation Service Request (CCASR) - New Customer $ 0. $ 1. Labor Increases 1 Community Choice Aggregation Service Request (CCASR) - Opt-out CCASR Fee $ 1.0 $.0 Labor Increases 1 Consolidated Bill Ready Billing Services - Additional Page Charge $ 0.0 $.00 Material Cost Increase 1 Mass Enrollment - Per Event $,01.00 $ 1.00 Operational Efficiencies 1 Mass Enrollment - Per Service Account $ 0.1 $ 0. Operational Efficiencies 1 Meter and Data Management Agent (MDMA) - Meter Data Posting Fee $ 0.1 $ 0.0 Operational Efficiencies 0 Testing Charge: IDR Meter $ 1.00 $ Labor Increases 1 Opt-Out Requests - Customer Contact Opt-out $ 0. $.0 Labor Increases Opt-Out Requests - Internet Opt-out $ 1.0 $ 0. Operational Efficiencies Opt-Out Requests - Voice Response Unit (VRU) Opt-out $ 0. $ 0. Material Cost Increase Special Requirements Data - Standard Output File by Rate Group $.00 $.00 Operational Efficiencies Special Requirements Data - Aggregate Annual Usage Report, Standard File $.00 $ 1.00 Operational Efficiencies Additional Information - Public Goods Charge, Residential Tier Data, Generation Revenue Informatio $ 0.01 No Charge Operational Efficiencies Standard Phase In - Mass Enrollment Fee - Per Phase $,01.00 $ 1.00 Operational Efficiencies Standard Phase In - Mass enrollment Fee - Per Service Account $ 0.1 $ 0. Operational Efficiencies *T&M = Time and Material

276 discussed below. () CCA Service Fees Proposed New Fees As shown in Table XI-0, SCE proposes five new service fees for reasons Table XI-0 CCA Service Fees Proposed New Fees for New Services FERC.1 (Nominal $s) Line Current Proposed Fee Description No. Fees Fees 1 Aggregate Annual Usage Report (Section A Report) Fee New $.00 Reposting of Usage Data Files Fee New $.00 EDI VAN Charge New $ 0.0 ESC Meter with Pulse Output Fee New $ 0.00 Meter Replacement Service Fee New $ 1.00 (a) Aggregate Annual Usage Report (Section A Report) Fee When considering CCA participation, cities may request an Aggregate Annual Usage Report (also known as a Section A Report ). This report consists of seven reports that are provided at no charge up to two times per year (see Table XI-1). To streamline and simplify its CCA fees, SCE proposes to consolidate the current fees into a single fee. As such, SCE proposes to combine the current fees listed below into the Aggregate Annual Usage Report (Section A) Report Fee service fee. This report will be provided to a CCA at no charge up to two times per year and for a fee of $ for each additional report. Refer to WP SCE-0 Ch. XI, pp. 1- for additional details regarding the CCA Service Fees Proposed New Fees for New Services.

277 Table XI-1 CCA Service Fees Aggregate Annual Usage Report (Section A Report Fee) FERC.1 (Nominal $s) Line No. Description Current Fees* 1 Information Normally Provided at No Charge - Number of Accounts in each Rate Group No Charge Information Normally Provided at No Charge - Aggregate Annual Consumption for each Rate Group No Charge Information Normally Provided at No Charge - Aggregate Noncoincident Demand in each Rate Group No Charge Information Normally Provided at No Charge - Aggregate Coincident Demand in each Rate Group No Charge Information Normally Provided at No Charge - Coincidence Peak Factors which Estimate Coincident Demands No Charge Information Normally Provided at No Charge - Standard System Average Load Profiles by Rate Group No Charge Information Normally Provided at No Charge - The Proportional Share in a CCA's Territory or Proposed Territory as Defined in the Commission's Energy Efficiency Policy Manual No Charge * For CCAs that request a report more than two times per calendar year, the CCA is charged $. for each additional report. It is proposed that these seven reports be consolidated with a charge of $ for each additional report (b) Reposting of Data Usage Files Fee Reposting of Usage Data Files is a new proposed fee that would be charged to CCAs for processing that occurs when a CCA misses a seven-day window to retrieve the meter usage data file(s). This fee replaces an activity that was previously included in the Meter Data Posting service fee. SCE proposes to assess this fee to only the CCAs who cause costs to be incurred when they miss downloading their usage data during a seven-day-retrieval window. SCE proposes a $.00 per occurrence fee that will cover up to 0 files. (c) EDI VAN Fee The EDI VAN is a new proposed fee that would be charged for transmitting bill charges over the Value Added Network (VAN). This fee would be charged to CCAs for transmission of their billing charges to SCE via EDI format across the VAN. Currently, EDI VAN costs are included in other CCA fees. To better track costs by categories, SCE proposes to remove the EDI VAN charges from other fees and consolidate the EDI VAN charges into one fee. As such, SCE proposes to remove the charge from the following CCA fees:

278 CCASR Community Choice Aggregation Service Request Customer Re-entry Community Choice Aggregation Service Request Cancellation Community Choice Aggregation Service Request New Customer Community Choice Aggregation Service Request Opt-out CCASR Standard Bill by Mail Charge (Consolidated Bill) SCE proposes a service fee of $0.0 per CCA service account. The proposed fee is based on the average volume of data that was transmitted and received through the network from October 01 to February 01 divided by the average number of DA and CCA service accounts. (d) Meter Related Fees SCE proposes to eliminate maintenance and meter fees related to Interval Data Recorder (IDR) meters. IDR meters for CCA customers are obsolete due to SCE s Edison SmartConnect (ESC) meters. See Section XI.F.1.a)() for more information. As such, for any remaining customer-owned meters, SCE is proposing new Meter Replacement Service fee. (i) ESC Meter with Pulse Output Fee SCE proposes a $0.00 service fee for customers that request a pulse output component be added to the ESC meter located at their site. This fee replaces the current IDR Meter Fees with Pulse Output. The fee was calculated based on each function performed at its applicable loaded-labor rate and then multiplied by the estimated time required to complete the activities associated with performing the service. The service includes contract preparation, engineer job design, installation process, and various metering costs. (ii) Meter Replacement Service Fee SCE proposes a $1.00 service fee to recover the labor costs of replacing a meter. The Meter Replacement Service fee occurs when a customer requests to have their customer-owned or SCE-owned ESC metering or metering facilities replaced with a standard SCE-owned meter. Customers may also request meter replacements when their customer-owned meter

279 is not compatible with SCE s meter-reading systems. This fee replaces the Meter Replacement with Standard SCE IDR Meter fee, Meter Replacement with Standard SCE Demand Meter fee, and the Meter Removal Service fee. () CCA Service Fees Eliminated Based on the comprehensive cost review of fees described earlier, SCE proposes to eliminate 0 existing CCA service fees because the fees are duplicative, obsolete, or no longer applicable because the sub-activities have been automated. These fees are shown in Table XI-. (a) Fees No Longer Applicable Because of Process Automation SCE proposes to eliminate the Customer Notification Standard Notification fee and the Miscellaneous Customer Notification fee because the process to notify customers has been automated. Developing any other notices will be performed on a time and materials basis under a Specialized Service Agreement and will incorporate development, stationery, envelope, and postage costs. (b) Fees No Longer Applicable Because of Duplication SCE proposes to eliminate four fees because the fees are duplicative of the Standard Output File by Rate Group fee and the three different aggregation methods, which include aggregation by zip code, by customer status, and by rate schedule. (c) Obsolete Fees SCE proposes to eliminate fees because the services are obsolete. Three reporting fees were originally developed because, at that time, the processing required considerable manual labor to develop the zip code, customer status, and rate schedule tables from the corresponding data set. However, with the introduction of pivot tables and advanced filtering options within Excel, this once manual process has become mostly automatic. Once customers purchase the Standard Output File by Rate Group, they can pivot and manipulate their own data as desired. As a result, customers no longer request these special reports. SCE also proposes to eliminate maintenance and meter fees that are specific for IDR meters. IDR meters for CCA customers are now obsolete due to the ESC meters and SCE will no longer provide IDR meters to customers.

280 Table XI- Community Choice Aggregation (CCA) Service Fees Fees Proposed to be Eliminated FERC.1 (Nominal $s) Line Current Reason for Description No Fees Elimination 1 Customer Notification - Standard Notification $ 1.0 Automated Miscellaneous Customer Notification Fee $ 0. Automated Special Requirements Data - Aggregate Annual Usage Report Base Processing Fee $.00 Duplicative Special Requirements Data - Aggregate Annual Usage Report, by Zip Code $.00 Duplicative Special Requirements Data - Aggregate Annual Usage Report, by Customer Status $.00 Duplicative Special Requirements Data - Aggregate Annual Usage Report, by Rate Schedule $.00 Duplicative Special Requirements Data - Standard Output File by Rate Group Aggregated by Zip Code $.00 Obsolete Fee Special Requirements Data - Standard Output File by Rate Group Aggregated by Customer Status $.00 Obsolete Fee Special Requirements Data - Standard Output File by Rate Group Aggregated by Rate Schedule $.00 Obsolete Fee Meter Ownership - Basic I $ 1.00 Obsolete Fee Meter Ownership - Basic I with Pulse Output $.00 Obsolete Fee 1 Meter Ownership - Basic I with Modem $.00 Obsolete Fee 1 Meter Ownership - Basic I with Pulse Output & Modem $ 0.00 Obsolete Fee 1 Meter Ownership - Advanced I $ 1.00 Obsolete Fee 1 Meter Ownership - Advanced I with Pulse Output $.00 Obsolete Fee 1 Meter Ownership - Advanced I with Modem $.00 Obsolete Fee 1 Meter Ownership - Advanced I with Pulse Output & Modem $.00 Obsolete Fee 1 Meter Services - Meter Installation IDR $ 0.00 Obsolete Fee 1 Meter Services - Meter Installation IDR with Pulse Output $.00 Obsolete Fee 0 Meter Services -Meter Installation IDR with Modem $.00 Obsolete Fee 1 Meter Services - Meter Installation IDR with Pulse Output & Modem $ 0.00 Obsolete Fee Meter Services - Basic I Maintenance Charges Billing Meter - IDR $ 1.0 Obsolete Fee Meter Services - Basic I Maintenance Charges Billing Meter- IDR Billing Meter with Pulse Output $ 1.0 Obsolete Fee Meter Services - Basic I Maintenance Charges Billing Meter - IDR with Modem $.0 Obsolete Fee Meter Services - Basic I Maintenance Charges Billing Meter - IDR with Pulse Output & Modem $.0 Obsolete Fee Meter Services - Advanced I Maintenance Charges Billing Meter - IDR $ 1.0 Obsolete Fee Meter Services - Advanced I Maintenance Charges Billing Meter - IDR with Pulse Output $ 1.0 Obsolete Fee Meter Services - Advanced I Maintenance Charges Billing Meter - IDR with Modem $.0 Obsolete Fee Meter Services - Advanced I Maintenance Charges Billing Meter - IDR with Pulse Output & Modem $.0 Obsolete Fee 0 Meter Services - Basic I Maintenance Charges Non-Billing Meter - IDR $ 1.0 Obsolete Fee 1 Meter Services -Basic I Maintenance Charges Non-Billing Meter- IDR Billing Meter with Pulse Output $ 1.0 Obsolete Fee Meter Services - Basic I Maintenance Charges Non-Billing Meter - IDR with Modem $.0 Obsolete Fee Meter Services - Basic I Maintenance Charges Non-Billing Meter - IDR with Pulse Output & Modem $.0 Obsolete Fee Meter Services - Advanced I Maintenance Charges Non-Billing Meter - IDR $ 1.0 Obsolete Fee Meter Services - Advanced I Maintenance Charges Non-Billing Meter - IDR with Pulse Output $ 1.0 Obsolete Fee Meter Services - Advanced I Maintenance Charges Non-Billing Meter - IDR with Modem $.0 Obsolete Fee Meter Services - Advanced I Maintenance Charges Non-Billing Meter - IDR with Pulse Output & Modem $.0 Obsolete Fee Additional Metering Related Services - Meter Removal Charge $ 1.00 Obsolete Fee Additional Metering Related Services - Meter Replacement Charges with Standard SCE IDR Meter $.00 Obsolete Fee 0 Additional Metering Related Services - Meter Replacement Charges with Standard SCE Demand Meter $ 0.00 Obsolete Fee 1 () CCA Service Fees - Consolidated into Other Fees Based on the comprehensive review of fees described earlier, SCE proposes to combine seven current CCA service fees into the proposed Aggregate Annual Usage Report (Section A) Report fee. SCE proposes to consolidate the current fees into a single fee to streamline and simplify its CCA fees. In addition, SCE proposes to consolidate three fees because the activities are 0

281 already captured in the Meter Data Posting Fee and consolidate two fees into the EDI VAN Charge. Table XI- summarizes the fees that SCE proposes to combine with other fees. Table XI- Community Choice Aggregation (CCA) Proposed for Elimination Due to Consolidation FERC.1 (Nominal $s) Line Current Proposed Description No. Fees Fees Consolidated Under 1 Consolidated Bill Ready Billing Services - Bill By Mail $ 0. Eliminated Meter Data Posting Consolidated Bill Ready Billing Services - Bill By Internet $ 0. Eliminated Meter Data Posting Monthly Account Maintenance Fee - Manual Billing Exception Processing (Variable) $ 0. Eliminated Meter Data Posting Information Normally Provided at No Charge - Number of Accounts in each Rate Group No Charge Eliminated Aggregate Annual Usage Report (Section A Report) Fee* Information Normally Provided at No Charge - Aggregate Annual Consumption for each Rate Group No Charge Eliminated Aggregate Annual Usage Report (Section A Report) Fee* Information Normally Provided at No Charge - Aggregate Noncoincident Demand in each Rate Group No Charge Eliminated Aggregate Annual Usage Report (Section A Report) Fee* Information Normally Provided at No Charge - Aggregate Coincident Demand in each Rate Group No Charge Eliminated Aggregate Annual Usage Report (Section A Report) Fee* Information Normally Provided at No Charge - Coincidence Peak Factors which Estimate Coincident Demands No Charge Eliminated Aggregate Annual Usage Report (Section A Report) Fee* Information Normally Provided at No Charge - Standard System Average Load Profiles by Rate Group No Charge Eliminated Aggregate Annual Usage Report (Section A Report) Fee* Information Normally Provided at No Charge - The Proportional Share in a CCA's Territory or Proposed Territory as Defined in the Commission's Energy Efficiency Policy Manual No Charge Eliminated Aggregate Annual Usage Report (Section A Report) Fee* * Currently, for CCAs that request a report more than two times per calendar year, the CCA is charged $. for each additional report. It is proposed that these seven reports be consolidated with charge of $ for each additional report.. CCA Service Fees Forecast OOR Table XI- presents the 01 forecast revenues by CCA service fees. 1

282 Table XI- Community Choice Aggregation (CCA) Fees FERC.1 (Nominal $s) 1 Forecast 01 Line Proposed Forecasted Fee Description Annual No. Fees Volume Revenue* 1 CCA Establishment - CCA Service Establishment $ $ 1 CCA Establishment - CCA Credit Establishment Fee $.00 1 $ 0 Mass Enrollment - Per Event $ $ 0 Mass Enrollment - Per Service Account $0. 1,000 $ Opt-Out Requests - Customer Contact Opt-out $.0,00 $ 1 Opt-Out Requests - Voice Response Unit (VRU) Opt-out $0.,00 $ Opt-Out Requests - Internet Opt-out $0.,00 $ Community Choice Aggregation Service Request (CCASR) - CCASR Fee $0. 1,000 $ Community Choice Aggregation Service Request (CCASR) - Customer Re-entry $0.0,00 $ Community Choice Aggregation Service Request (CCASR) - Cancellation Fee $. 0 $ - Community Choice Aggregation Service Request (CCASR) - New Customer $1.,000 $ 1 1 Community Choice Aggregation Service Request (CCASR) - Opt-out CCASR Fee $.0,00 $ 1 Consolidated Bill Ready Billing Services - Additional Page Charge $.00 1,00 $ 1 1 CCA Non-Energy Billing Receivable Fee $.00 0 $ 0 1 CCA Termination of Service - Voluntary Termination Fee - Per Event $ $ - 1 CCA Termination of Service - Voluntary Termination Fee - Per Service Account $0. 0 $ - 1 Meter and Data Management Agent (MDMA) - Meter Data Posting Fee $0.0,,000 $ 0 1 Monthly Account Maintenance Fee - Manual Billing Exception Processing (Fixed) $ $ 1 Standard Phase In - Mass Enrollment Fee - Per Phase $ $ - 0 Standard Phase In - Mass enrollment Fee - Per Service Account $0. 0 $ - 1 Special Requirements Data - Standard Output File by Rate Group $.00 1 $ 1 Special Requirements Data - Aggregate Annual Usage Report, Standard File $ $ Aggregate Annual Usage Report (Section A Report) Fee $.00 1 $ 1 Reposting of Usage Data Files Fee $.00 $ 0 EDI VAN Charge $0.0,,000 $ 1 Additional Metering Related Services - Engineering Estimate or Job Design $.00 0 $ - Additional Metering Related Services - Incomplete Trip Fee $.00 0 $ - Additional Metering Related Services - Pulse Adapter Equipment and Installation Charge $.00 0 $ - Testing Charge: IDR Meter $ $ - 0 Customer Information Standardized Request (CISR) - CISR Base Processing Fee $.1 0 $ - 1 Customer Information Standardized Request (CISR) - Usage Data Base Fee (Non-Interval) $. 0 $ - Customer Information Standardized Request (CISR) - Service Acct Usage Data Fee (Non-Interv $. 0 $ - Customer Information Standardized Request (CISR) - Usage Data Base Fee (Interval) $. 0 $ - Customer Information Standardized Request (CISR) - Service Acct Usage Data Fee (Interval) $. 0 $ - ESC Meter with Pulse Output Fee $ $ - Meter Replacement Service Fee $ $ - $ 1, * The Customer Services (Revenue Services Organization) O&M forecast includes expenses to support the forecasted increase in CCA OOR's. Details are provided in the workpapers for each fee. SCE s first CCA was implemented in 01, with the majority of accounts transitioning to CCA service in October 01. As discussed in Section VII.C..c), SCE anticipates implementing two additional CCAs by the Test Year 01. SCE forecasts CCA revenue to increase to $1. million by 01, if these CCAs complete implementation. The forecasting was based on one new CCA in 01

283 completing mass enrollment by June 01, increasing the total SA volume to,0 by end of year. Then a similar process in 01 for another CCA completing mass enrollment by June 01, increasing the total service account volume to 1, by end of year. These numbers are based on initial discussions with entities who have expressed serious interest in establishing a CCA. This includes SCE Retail sales growth rate and a % Opt-Out rate. Individual fee forecasting was based on the activity percentages experienced during the LCE launch in October 01 of 0,000 service accounts. Figure XI- below shows the historical and 01 Test Year forecast of CCA Service Fee OOR.

284 Figure XI- FERC Account.1 CCA Service Fee Revenue (Nominal $000) 1 H. Other - Miscellaneous OOR Accounts 1. FERC Account.1 Manufactured Home Billing Service Sub-account.1 records the revenue SCE receives from customers that use the Manufactured Home Billing (MHB) Service. SCE s Tenant Bill Calculation Service is an optional fee-based service available to Manufactured Home Park owners and operators on a contractual basis. This service allows customers to request that SCE calculate the amount of each tenant s monthly electric bill. SCE calculates individual tenant bill amounts based on input provided by the owner or operator Refer to WP SCE-0 Ch. XI, pp. 1-0 for the recorded and forecast OOR for CCA Service Fees.

285 after receiving its monthly master bill from SCE. Each tenant is billed on the Commission s approved domestic tariffs. This service performs tenant bill calculations and retains tenant electric billing data on a secure website. Table XI- shows the current service fees for MHB service; no changes are proposed for these fees. Table XI- Manufactured Home Billing Service Fees FERC.1 (Nominal $s) Line No. Description Charge 1 Customer Charge $.0 Per Master Meter per Month Standard Bill Calculation Charge $ 0.1 Per Submeter per Transaction Bill Calculation Presentation by Printed Statement 1 Calculation $ 0. Per Calculation - Calculations $ 0.1 Per Calculation - Calculations $ 0.1 Per Calculation -0 Calculations $ 0.1 Per Calculation 1+ Calculations $ 0.1 Per Calculation Bill Calculation Presentation via Correspondenc No Charge Special Services Request Charge Time & Materials Figure XI- shows the historic and forecast OOR for the Manufactured Home Billing Service. The forecast for 01 is based on the last recorded year.

286 Figure XI- FERC Account.1 Manufactured Home Billing Service (Nominal $000) 1. FERC Account. Optimal Billing Period Sub-account. records the revenue SCE receives from customers that use the Optimal Billing Period Service. The voluntary use of an Optimal Billing Period (OBP) allows a customer s billing cycles to coincide with the customer s high-seasonal-production cycle. The customer designates the OBP by selecting a specific month and day for the start of the OBP and a specific month and day for the end of the OBP. The start and end dates must fall within the customer s high-seasonal-production cycle. Refer to WP SCE-0 Ch. XI, pp. 0-1 for the recorded and forecast OOR for Manufactured Home Billing Service.

287 To qualify for this option, the duration of the customer s high-seasonal-production cycle must be six months or less, and the average of the customer s monthly maximum demand during the OBP must be at least double the average of its monthly maximum demand during the non-obp period. Customers may not discontinue this option before the end date of their OBP. Prior to receiving OBP service, the customer must sign an agreement and pay an OBP fee of $.00 per meter. To continue service under this Special Condition, the customer must sign a new OBP Agreement and pay the OBP fee each year. Figure XI- provides recorded and forecast data associated with the OBP. The forecast for 01 for this account is estimated to be $0 based on the last recorded year.

288 Figure XI- FERC Account. Optimal Billing Period (Nominal $000) Note: The O&M System rounds to the nearest 000s. The Recorded Operating Revenue from ranged from $0.00 to $ FERC Account 1.0 Misc. Revenues-Recovered for Unauthorized Use / Non-Energy This Subaccount records the non-energy costs that SCE recovers from the responsible party for unauthorized use of electric service. These costs include the cost of the investigation (i.e., investigator time), bookkeeping costs to re-bill the customer, overhead costs, and damages to SCE s property. Refer to WP SCE-0 Ch. XI, pp. 1- for the recorded and forecast OOR for Optimal Billing Period.

289 The historical revenue data in Figure XI- fluctuates widely, depending on the types of cases and the extent of the corrective action taken by the investigator and others. SCE continues to experience sophisticated, elaborate theft and unauthorized use conditions that require extensive time and material to address. Further, it is difficult to accurately predict the levels of future cost recovery associated with unauthorized use of electric service driven by unlawful behavior. As a result of these uncertainties, the 01 forecast for this account is based on the 01 recorded revenues for this sub-account. This forecast supports the downward trend of historic customer usage patterns and energy theft for residential, commercial, and industrial customers.

290 Figure XI- FERC 1.0 Miscellaneous Revenue from Unauthorized Use/Non-Energy (Nominal $000) 1. FERC Account. Energy Related Services Energy Related Services (ERS) is a tariffed product offered to our federal customers under SCE s Areawide Agreement and Basic Ordering Agreements. Executive Order, dated March, 1, authorized and encouraged the federal government to enter into contracts with local utilities to expedite and facilitate implementing cost-effective energy and water conservation Refer to WP SCE-0, Ch. XI, pp. - for the recorded and forecast OOR for Miscellaneous Revenue from Unauthorized Use Non-Energy. 0

291 measures. The ERS program was created through Advice Letter 1-E (approved on February 1, 1) and updated in Advice Letter 0-E (approved on April, 01). The current Areawide Agreement was created pursuant to federal law, dated February, 01. Under the ERS program, federal customers can utilize SCE s energy efficiency and project management expertise for identifying, designing, financing, and managing the construction of energy efficiency or renewable energy projects. SCE generates revenue through the project management of these energy efficiency and renewable projects. SCE has developed agreements with lenders to provide the initial funding and subsequent capital for projects when federal customers do not have the funds appropriated or budgeted. Project funding is repaid to the lender by the customer over time typically 1 years. In this manner, SCE can meet many of the needs of our federal customers while minimizing the required financial commitment. SCE targets moderate-sized projects in the $00,000 to $ million range. While there are minor year-to-year variances due to the varying size, scope, and timing of ERS projects, SCE forecasts the Test Year net OOR for ERS at $1,000, the Last Recorded Year revenues. Figure XI- provides the recorded and forecast revenues associated with ERS. Exec. Order No. 1,0, Fed. Reg. Vol., No., FR Doc No: - (Mar., 1), available at [as of August 1, 01]. GSA Areawide Agreements are authorized by CFR 1.0. See Advice 0-E (approved April, 01) for a copy of the current Areawide Agreement between SCE and the United States General Service Administration. 1

Figure XI- FERC Account. Energy Related Services (Nominal $000) 1. FERC Account. SCE EnergyManager SCE provides online energy information to its largest commercial and industrial customers using the SCE EnergyManager suite of tools.

292 Figure XI- FERC Account. Energy Related Services (Nominal $000) 1. FERC Account. SCE EnergyManager SCE provides online energy information to its largest commercial and industrial customers using the SCE EnergyManager suite of tools. Daily and monthly updates are free of charge. Customers can elect to receive same-day energy usage updates on an hourly or quarter-hourly basis for a fee of $0 per month and $0 per month, respectively. SCE is not proposing to change these fees. SCE EnergyManager operations are described in Section IX.D.1 of this exhibit. Over the period 0-01, the EnergyManager customer base has declined, though overall usage of the service Refer to WP SCE-0 Ch. XI, pp. -0 for the recorded and forecast OOR for Energy Related Services.

293 has increased as a result of SCE s marketing of self-service options. As shown in Table XI-, the number of customers electing to receive hourly and quarter-hourly updates has declined over the past five years at annual rates of. percent and. percent, respectively. Overall, paid updates have declined by. percent annually during the 0 though 01 period. Based on this decline in paid updates, SCE forecasts Test Year EnergyManager revenues of $1,000 as shown in Figure XI-. Table XI- EnergyManager Historical Usage Line No. Description CAGR [] 1 SCE EnergyManager Basic (Free) Customer Base (Free Access) [1],,0,,,1 -.0% Customer Base - Paid Services Hourly Updates % Quarter-Hourly Updates -.% Total Paid Updates % Explanatory Notes: 1. Customer Base is defined by unique customers with access to the service (includes >00kW SA's and some<00kw SA's). Figures in the table above reflect the number of customers on 1/1 of the year indicated.. CAGR = Compounded Annual Growth Rate.

294 Figure XI- FERC Account. SCE EnergyManager 0 (Nominal $000) 0 Refer to WP SCE-0 Ch. XI, pp. 1- for the recorded and forecast OOR for EnergyManager.