2018 General Rate Case

Transcription

1 Application No.: A.1-0- Exhibit No.: SCE-0, Vol. Witnesses: Z. Armenian D. Tasaka R. Worden (U -E) 01 General Rate Case Administrative & General (A&G) Volume Regulatory Affairs, Corporate Communications & Local Public Affairs Before the Public Utilities Commission of the State of California Rosemead, California September 1, 01

2 SUMMARY Exhibit SCE-0, Volume 0 is composed of the following three chapters: - Chapter I- Regulatory Affairs - Chapter II- Corporate Communications - Chapter III- Local Public Affairs Chapter I discusses a request from Regulatory Affairs forecast that totals $.1 million for Test Year 01 expenses, a decrease of $1. million from the 01 recorded levels in 01 constant dollars. The decrease is primarily due to Operational Excellence initiatives initiated in late 01 to improve labor efficiency. Regulatory Affairs records to FERC accounts 0/1, and. Chapter II requests Test Year 01 Corporate Communication expenses of $1. million, which includes adjustments made to exclude shareholder expenses. The 01 test-year forecast represents a decrease of $.1 million from the 01 recorded levels, mostly attributed to Operational Excellence and improved efficiencies. The Test Year forecast is presented in 01 constant dollars. Corporate Communications records to FERC accounts 0/1,, and 0. Chapter III discusses Test Year 01 Local Public Affairs forecast of $. million, which includes adjustments made to exclude shareholder expenses. Local Public Affairs records to FERC accounts 0/1,, and 0 for Corporate Membership Dues and Fees.

3 Reg Affairs, Corp Comm, LPA O&M Expenses 01 Forecast (Total Company Constant $Million)

4 SCE-O: Administrative & Regulatory (A&G) Volume - Regulatory Affairs, Corporate Communications & Local Public Affairs Table Of Contents Section Page Witness I. REGULATORY AFFAIRS...1 R. Worden A. Introduction to Regulatory Affairs Description of Regulatory Affairs...1. O&M Expense Request...1. Productivity Measures and OpX Cost Reductions... a) Operational Excellence... B. Comparison of Authorized 01 to Recorded... C. Regulatory Affairs Functions State Regulatory Operations... a) Revenue Requirements and Tariffs... b) Pricing Design and Research... c) General Rate Case ( GRC ) Management.... FERC Rates and Regulation... a) CAISO and GHG Markets ( C&GM )... b) Transmission & Distribution Integration.... Integrated Planning and Analytics (IP&A)... a) Resource Planning... b) Resource Analytics...1. State Regulatory Affairs...1. Energy and Environmental Policy...1 a) Energy Policy...1 b) Energy Procurement Policy...1 -i-

5 SCE-0: Administrative & Regulatory (A&G) Volume - Regulatory Affairs, Corporate Communications & Local Public Affairs Table Of Contents (Continued) Section Page Witness c) Customer Service Regulatory Support...1 d) Environmental Affairs and Sustainability...1 (1) Agency Engagement...1 () Air Quality, Climate Change, and Transportation Electrification...1 () Water...1 () Hazardous Materials and Waste Management...1 () Coastal Areas...1 () Public Lands...1 () Natural and Cultural Resources...1 () Corporate Responsibility and Sustainability...1 e) Infrastructure Licensing...1 D. Analysis of Recorded and Forecast O&M Expenses Analysis of Recorded Regulatory Affairs Expenses...1. Regulatory Affairs Test Year Forecast... a) Regulatory Affairs FERC Account 0/1... b) Regulatory Affairs Integrated Planning Power Procurement FERC Account... c) Regulatory Affairs Operational Excellence Test Year Adjustment... II. CORPORATE COMMUNICATIONS... D. Tasaka A. Content and organization of testimony... B. Summary of Test Year Request... -ii-

6 SCE-0: Administrative & Regulatory (A&G) Volume - Regulatory Affairs, Corporate Communications & Local Public Affairs Table Of Contents (Continued) Section Page Witness C. Overview... D. Productivity measures and OpX, cost control measures or benchmarking... E. Comparison of 01 GRC Authorized to Recorded... F. Corporate Communications Activities and Non-Utility Credits... G. Corporate Communication Accounts Communication Operations (FERC Account 0/1)...0 a) Activity Description...0 (1) Public Education...1 () Communications Quality Assurance...1 () Key Initiatives... () Emerging Issues... () Operating Unit Communications... () Digital Communications... () Creative Services... () Corporate Events and Corporate Travel... b) Scope and Forecast... (1) Historical Variance Analysis (0/1)... () Forecast.... Communication Outside Services (FERC Account )... -iii-

7 SCE-0: Administrative & Regulatory (A&G) Volume - Regulatory Affairs, Corporate Communications & Local Public Affairs Table Of Contents (Continued) Section Page Witness a) Activity Description... (1) Ethnic Public Relations... () Communications Measurement... () Communications Quality Assurance... b) Scope and Forecast... (1) Historical Variance Analysis... () Forecast.... Communications Products (FERC Account 0)... a) Activity Description... (1) Annual Report... () Legal Notices... () Public Safety Education Programs... b) Scope and Forecast...0 (1) Historical Variance Analysis...0 () Forecast...0 III. LOCAL PUBLIC AFFAIRS... Z. Armenian A. Content and organization of testimony... B. O&M Expense Request... C. Overview Regulatory background/policies driving SCE s request.... Comparison of Authorized 01 to Recorded... -iv-

8 SCE-0: Administrative & Regulatory (A&G) Volume - Regulatory Affairs, Corporate Communications & Local Public Affairs Table Of Contents (Continued) Section Page Witness a) Local Public Affairs [FERC Account 0/1]... b) Corporate Membership Dues & Fees [FERC Account 0]... D. Description of Organization Overview of Activities.... Situational Shift Due to Changing Customer Expectations, New Trends in Customer Engagement, Increased Focus on Customer Service, and Support of Grid Modernization.... LPA s New and Modified Roles and Responsibilities Since the 01 GRC... a) Matrixed Project Teams Aligned by Customer Impact... b) Skill Sets Aligned to Expertise for Customer Service and Response.... LPA s Continuing Roles and Responsibilities...0 a) National Incident Management System (NIMS) and Incident Command System (ICS)...0 b) Emergency Response Activities...1 (1) Emergency Response and Communication with Local Government Officials...1 () SCE Alert Communication Conference Calls with Government Officials...1 () Reverse to Communicate with Residents... -v-

9 SCE-0: Administrative & Regulatory (A&G) Volume - Regulatory Affairs, Corporate Communications & Local Public Affairs Table Of Contents (Continued) Section Page Witness c) Customer Outreach through Multiple Channels... d) Project Management of Customer Engagement on Grid Modernization (Infrastructure Projects).... Corporate Membership Dues & Fees... a) Description of Account (Description of EEI Activities)... b) SCE Involvement in Other Organizations that Benefit Customers... E. O&M Activity Description - Local Public Affairs [FERC account 0/1].... Activity Description - Corporate Membership Dues & Fees [FERC account 0].... Analysis of Recorded Expenses... a) Labor [FERC Account 0/1]... b) Non-Labor [FERC Account 0/1]... c) [FERC Account 0].... Test Year Forecast... a) Local Public Affairs [FERC account 0/1]... (1) Local Public Affairs Operational Excellence Test Year Adjustment... b) Corporate Membership Dues & Fees [FERC account 0]... -vi-

10 I. REGULATORY AFFAIRS A. Introduction to Regulatory Affairs In 01, SCE centralized the groups that performed regulatory policy development, case management, regulatory advocacy, and regulatory operations into a single organization to better manage those activities while reducing costs. This chapter describes the resulting Regulatory Affairs organization and the forecast O&M expenses necessary to conduct that function. 1. Description of Regulatory Affairs As a regulated utility, SCE is subject to oversight by various state, federal, and local agencies, primarily the California Public Utilities Commission (Commission), the California Energy Commission (CEC), the California Independent System Operator (CAISO), and the Federal Energy Regulatory Commission (FERC). The Regulatory Affairs Department has primary responsibility for managing and directing SCE s regulatory activities before these agencies. These activities include serving as the Company's interface with the California Public Utilities Commission and FERC in developing about $1 billion of annual revenue requirements, managing rate changes, and overseeing over 00 supporting tariffs that recover the Company s authorized costs of providing utility service and govern the terms of that service. These organizations also manage the Company s responses to the Commission investigations and rulemakings, and SCE s applications before the Commission.. O&M Expense Request The Regulatory Affairs O&M forecast for the 01 Test Year is shown in Table I-1. Regulatory Affairs, Integrated Planning & Analytics, and Procurement Regulatory Support are managed within the same organization and are presented together here, although under ER- which authorized SCE s FERC jurisdictional rates, the costs associated with FERC Account are segregated from other Administrative and General activities. While developing this testimony, SCE was establishing its Strategy, Integrated Planning & Performance ( SIP&P ) organization to better coordinate planning across SCE s Operating Units. A portion of the Energy Policy organization and the Integrated Planning and Analytics organization will be moved to the S&IP organization, but they are included in the Regulatory Affairs function presented here consistent with their associated Base Year recorded costs. There will be no change in the overall SCE revenue requirement forecast due to this reorganization. 1

11 Table I-1 Regulatory Affairs 01 O&M Forecast Summary (Constant 01 $000) Line FERC 01 Activity No. Account Forecast 1 Resource Planning and Procurement Support,000 0/1 Regulatory Affairs 1,1 Total O&M Expenses,1 1. Productivity Measures and OpX Cost Reductions a) Operational Excellence In 01, SCE consolidated its regulatory groups into a single organization to improve the functioning and consistency of its regulatory activities. This change also resulted in reduced costs. In 01, Regulatory Affairs took additional steps to improve operations and further reduce costs. The Regulatory Affairs Test Year forecast reflects a further reduction in O&M expenses of $1. million compared to the Base Year. The additional savings were realized through workforce reductions.

12 Figure I-1 Total SCE Advice Letters and Tariffs In Effect Effective Tariffs Advice Letters Filed 1 B. Comparison of Authorized 01 to Recorded The comparison of the authorized O&M expenses for Regulatory Affairs in SCE s 01 GRC and the recorded, adjusted amounts are shown in Figure I-. 1 The 01 recorded, adjusted O&M for Integrated planning activities was $0. million or % less than the 01 GRC authorization. Recorded adjusted O&M for FERC Account 0/1 was $. million less than the authorized amount. This difference is due to reductions in labor and non-labor associated with a departmental restructuring and the transfer of Regulatory Compliance (NERC and Non-NERC) functions, which was authorized as a part of Regulatory Affairs 0/1 in the 01 GRC. These employees have since transferred to the Ethics and Compliance organization in addition to certain Transportation Electrification activities transferring to other Operating Units. 1 See D.1--01, p.. Generation Planning (FERC Account ) is combined with Integrated Planning (FERC Account ) consistent with its presentation in this GRC.

13 Figure I- Regulatory Affairs 01 Authorized and Recorded (Constant 01 $000),000 0,000,000 $, $, ($) 0,000,000 0,000 ($,) $, 1,000,000, Request 01 Authorized Variance 0-1 Variance 01 Recorded - Integrated Planning Power Procurement Reg. Support Regulatory Affairs C. Regulatory Affairs Functions The Regulatory Affairs is organized into five departments described below. 1. State Regulatory Operations State Regulatory Operations ( SRO ) is the department responsible for calculating all the CPUC-jurisdictional revenue requirements, managing 0 memo and balancing accounts, designing rates to recover the authorized revenue requirements, and preparing the advice letters and tariffs that govern the cost recovery and terms of service for SCE s customers. The volume of balancing and memorandum accounts, number of customer rates offered and ongoing reporting through advice letters has grown significantly, as can be seen in Figure I-1. Since 00, SCE s annual count of advice letters has grown from to, or 1%. Similarly, during that same period SCE s effective tariffs have grown from to 1, or 1%. Besides calculating and managing the cost recovery, the employees of SRO regularly draft testimony, advice letters and tariffs, and sponsor testimony on behalf of the company. SRO also manages related compliance filings.

14 SRO consists of the following three functional divisions: a) Revenue Requirements and Tariffs The Revenue Requirements and Tariffs group develops and administers Commission-related revenue requirements, along with corresponding ratemaking mechanisms. These employees also provide cost and revenue requirement forecasts. This group manages the two largest cases at SCE, the GRC revenue requirement and Energy Resources Recovery Account (ERRA) proceedings, plus the balancing and memorandum accounts in compliance with Commission orders. They are also responsible for the administration of SCE tariffs (including rules, pricing schedules, and contracts), tariff-related portions of regulatory proceedings and other compliance activities, including tariff interpretations for internal and external parties, and formal and informal customer complaint cases. Additionally, this group is responsible for the preparation and filing of all advice letters. In 01, Case Administration employees transferred from the Law Department to SRO. Case Administration manages the data request process from question assignment to sending SCE s response to the data request s author. They distribute testimony, comments, etc. from other parties to internal distribution lists. They prepare and arrange for the production of company workpapers supporting testimony, and copying and transmittal of testimony. Case Administration also supports SCE, and Commission personnel during the evidentiary hearings. They perform such duties as providing copies of exhibits in the Commission s hearing room, organizing witness order, keeping track of exhibits by number, and an array of other support responsibilities. b) Pricing Design and Research The Pricing Design & Research group s primary responsibility is to design rates that equitably recover SCE s authorized revenue requirements from our customers, subject to the Commission s policy directives. This group conducts cost and load studies and various revenue allocation analyses across customer rate groups, and incorporates those results into customer rates. Combining these rate designs with customer-specific usage data enables effective customer energy communication and planning. In addition, these employees provide rate group load analyses used in the forecasting and settlement processes with the CAISO. The Pricing Design and Research group is also responsible for the Corporate Revenue Reporting Information System, which provides SCE and the During this transfer, Case Administration reduced its workforce by three positions.

15 Department of Water Resources the SCE billed revenue and usage information for financial and regulatory reporting. c) General Rate Case ( GRC ) Management The GRC Case Management group is responsible for the development, oversight and management of SCE s CPUC general rate cases before the Commission. This group supervises the preparation of GRC forecasts, supporting testimony, and workpapers that accompany the GRC application. The GRC group is responsible for making sure SCE s rate case request accurately reflects the cost of providing safe and reliable service to SCE customers. They work directly with witnesses and other supporting department experts to develop the forecasts and supporting testimony that will meet SCE s burden of proof to demonstrate the requested revenue requirement is reasonable. The effort necessary to prepare and file a general rate case involves personnel from across the company. Managing this undertaking requires a great deal of consultation and analysis to be certain that the forecasts are consistent across Operating Units and departments. After the Application is submitted, the GRC Management group provides timely responses to thousands of data requests and coordinating efforts for public participation hearings, preparation of rebuttal testimony, evidentiary hearings, and briefs. In addition, this group leads regulatory efforts associated with Risk-Informed Decision Making related matters at the Commission and the Safety Model Assessment Proceeding. They manage internal efforts as SCE transitions to a more structured and transparent risk-informed planning model. This group also collaborates with Commission staff, intervenors and other California utilities to establish new methodologies, standards and tools to support safety and other risk analyses as it pertains to funding, resource allocations and GRC requests.. FERC Rates and Regulation FERC Rates and Regulation ( FR&R ) develops and manages tariffs and rates related to transmission and interconnection agreements filed with FERC. In addition, it prepares filings necessary for SCE s Market Based Rate authority and manages SCE s participation in regulatory proceedings that seek refunds due to customers from the 000 energy crisis. The FERC-related regulatory work in the FR&R group associated with Transmission Owner and Wholesale Distribution Access Tariff ( WDAT ) interconnections and services has

16 increased in the past several years. It will likely continue at a high volume in the future. FR&R employees draft, review, negotiate, prepare, and file with FERC the interconnection terms with renewable generators. These employees draft tariff language, prepare cost-of-service studies, and perform regulatory analysis on a variety of issues involving the interconnection of renewable generation and other resources. FR&R also represents SCE before the CPUC and the FERC regarding cost recovery of the transmission expenses to accommodate new generation. The group also assists in developing interconnection and distribution service arrangements for wholesale Load Serving Entities (LSEs), particularly at the distribution level. Another major element of work for the FR&R group is preparing and submitting rate filings at FERC, whose number and frequency have likewise grown in the last few years. As with the interconnection work, we expect a workload increase over the next few years. Many of these submissions are necessary to fulfill California s ambitious renewable generation targets. Since 01, SCE has operated under a formula rate for cost recovery of FERC-jurisdictional revenue requirements, which had replaced a traditional rate case filing. Under the formula rate tariff, SCE must file annually with FERC to adjust the transmission revenue requirement. There are also other ad-hoc filings required to comply with the formula rate tariff. The current formula rate will expire on December 1, 01. Before this date, SCE must file at FERC to implement a new replacement rate mechanism to recover its transmission revenue requirement beginning in 01. This application may be a replacement formula rate or a traditional rate case filing, but in either instance this effort will require significant company resources. The FR&R group will continue to manage the extensive work required for recovery of SCE s transmission-related revenue requirement. These employees are also responsible for FERC filings to request transmission investment incentives. The Energy Policy Act of 00 directed FERC to develop incentive-based rate treatments for transmission of electric energy in interstate commerce. The rule implemented this new statutory directive through incentive-based rate treatments including enhanced returns on equity for new investment, full recovery of prudently-incurred construction expenses recorded in Construction Work in Progress ( CWIP ), accelerated depreciation, and full recovery of incurred costs of abandoned facilities. As discussed in Exhibit SCE-0, Vol. 1, Administrative and General (A&G) expenses, which include Regulatory Operations O&M expenses, are allocated between Commission jurisdictional revenue requirements and FERC jurisdictional revenue requirements on the basis of labor cost ratios.

17 Given California s increasing renewable generation goals, and the large number of new generators in a queue, additional FERC incentive filings will be necessary in FR&R continues to actively participate in ongoing refund litigation and settlement negotiations related to California s energy crisis. To date, they have played an important role in the recovery of about $00 million in refunds for SCE s customers. FR&R staff members participate in a consortium of stakeholders ( The CalParties ) in pursuit of various parties that still owe California and SCE customers significant funds related to their conduct during the energy crisis. FR&R will continue to actively participate in the CalParties efforts to obtain additional refunds. During 01-01, FERC ruled in favor of California customers in several related proceedings, and regulatory, legal and settlement actions should continue for several years. The refund proceedings require FR&R employees to develop testimony with supporting analysis, financial accounting reviews, and other litigation support activities. a) CAISO and GHG Markets ( C&GM ) C&GM participates in the regulatory processes related to market rules, structures and participant behavior, and monitors developments and performance in power and associated markets. The group is active in wholesale electricity market design and performance, and environmental markets directly affecting electricity sales, including California s GHG market. The group focuses on CAISO and the FERC market issues, and CPUC issues that directly affect SCE s market participation such as Resource Adequacy. These employees monitor market performance, conduct market simulations and studies, assess market design, manage submittals before the FERC, and internally coordinate company analysis of market-related issues. In 01, transactions through the CAISO exceeded $1 billion, so even small flaws in the market have the potential to cost customers millions of dollars. C&GM will continue to engage the CAISO, FERC and California Air Resources Board ( CARB ) to identify and propose remedies to market flaws. For example, the primary refund case FERC Order on Remand, San Diego Gas & Elec. Co. v. Sellers, 1 FERC 1,1 (00) Docket No. EL00--; FERC Order on Remand, Puget Sound Energy, Inc. v. All Jurisdictional Sellers, 1 FERC 1,001 (0). FERC Docket No. EL01--0; The People of the State of California et. al. v. The United States, United States Court of Claims, Case No. 0-1C (April, 01) and The People of the State of California et. al. v. The Unites States, United States Court of Claims, Case No. 0 1C and 0-1C related to Bonneville Power Administration refund obligations; Case EL0-1 and Long Term Contract case EL0-0.

18 Integrating renewable energy has resulted in additional complexity in the work performed by C&GM, with a material impact on market design rules and price outcomes. The C&GM group participates in several stakeholder activities at the CAISO and various proceedings before the CPUC to establish new requirements in contracting for resources and their participation in the CAISO markets. Activity will probably continue for several years. C&GM works with the CAISO and regulatory bodies to propose policies that have a goal of improving market efficiency. b) Transmission & Distribution Integration The Transmission & Distribution Integration (T&DI) group is responsible for SCE s engagement in the CAISO transmission planning process, resource interconnection and integration into competitive energy markets. With activity at both the federal (FERC) and state (CPUC) levels, T&DI s priorities are the interconnection of new generation resources to the transmission and distribution grid, the CAISO s competitive transmission planning process and integrating renewable generating resources, energy storage and distributed resources on the grid.. Integrated Planning and Analytics (IP&A) Integrated Planning and Analytics provides analysis, planning and strategy to integrate generation, transmission, and distribution assets to serve SCE s five million customers. Much of this work involves participating in several mandated regulatory proceedings as detailed below. California s hybrid electricity market takes place in a competitive wholesale environment. Therefore, decisions to invest in new generation and transmission assets are made through an integrated resource planning process determined by California s loading order for preferred resources. To manage planning in this environment, IP&A brings together individual groups within SCE with expertise in wholesale market functions, integrated resource planning, and generation. The functions performed by these groups enable SCE to comply with federal and state regulations while maintaining the reliability of the electricity infrastructure. IP&A conducts analysis, modeling and scenario simulation to support SCE s filings related to the CPUC s biennial Long Term Procurement Planning (LTPP) proceeding to fully reflect renewable resource and greenhouse gas (GHG) reduction goals, such as those expressed in California s AB legislation. In past LTPP proceedings, analysis has been limited to system generation resources without sufficient integration of transmission considerations. However, in the 01 LTPP, the CPUC encouraged the CAISO to introduce local capacity requirement (LCR) analysis. LCR studies, which rely on traditional transmission power flow models, are typically used to identify transmission upgrades, but

19 they are now also being used to seek generation solutions, including demand side management. Introducing LCR analysis into the LTPP proceeding and increased LTPP focus on local areas necessitate a more integrated approach to resource planning. In the 01 LTPP, over-generation emerged as a potential concern. This integrated approach addresses grid reliability through detailed and simultaneous study of the impacts of new generation resources, transmission upgrades, and demand-side management. IP expects future LTPP proceedings to focus on reliability needs for both systems and local areas, requiring improved internal coordination and increasingly granular and complex modeling techniques to accommodate this approach. IP&A helps SCE maintain grid reliability by conducting studies and modeling scenarios to identify the potential impacts of increasing levels of renewable generation in the resource mix, issues associated with their integration into the SCE grid, and possible solutions. In addition, IP&A undertakes activities related to both short- and long-term grid reliability planning, and develops plans and strategies to address the potential system impacts of emerging technologies such as energy storage and transportation electrification. IP&A also identifies potential sites for new generation based on SCE s reliability needs. IP&A consists of the Resource Planning and the Resource Analytics organizations, and their expenses are recorded in FERC Account. These groups are described below. a) Resource Planning The Resource Planning (RP) group uses production simulation modeling tools to develop least cost, best fit long-term resource plans so there are enough resources to deliver reliable service to our customers. RP conducts economic and other analyses to validate that the electric grid as projected to be built out will meet all planning requirements, such as reserve margin and import limitations, and will not face shortages of energy or reserves. RP uses techniques in the LTPP proceeding to model the flexibility needs of a generation system with a % renewable power mix, Over-generation occurs when more generation is produced than can be consumed in the electric system. This circumstance generally occurs at mid-day when solar generation is at its peak. As discussed in Chapter V, the Transportation Electrification (TE) division is responsible for coordinating all critical activities related to transportation electrification. IP and TE work closely together to execute targeted transportation electrification related analyses and evaluations. Through this collaboration, SCE optimizes resource skills and avoids duplication of efforts. Specifically, IP provides project management and analytical support to TE, and integrates TE s forecasted transportation loads into the loads and resources of SCE.

20 based on 0 years of weather history. These methods have been implemented to assess flexible resources needed to reliably operate the electrical grid with the expected build-out of renewable power over the next decade. RP forecasts the prices in CAISO day-ahead electricity and GHG emissions markets, tests the effect of intermittent renewable operations with other resources in the generation portfolio, calculates resource deficiencies that may exist in SCE s service territory or other areas of California, and analyzes other pertinent future planning and operating criteria. The RP group assesses the cost-effectiveness of major generation and transmission projects and renewable solicitations, and performs scenario planning activities, renewable penetration, and operability studies as required by the CPUC. RP also assists the CEC and CAISO in renewable integration and other studies and helps regulators understand the operational cost and customer implications of various policies. Resource Planning also conducts analyses to support SCE s filings in the CPUC s LTPP, Resource Adequacy, Distributed Generation and Energy Storage proceedings, and the CEC s biennial Integrated Energy Policy Report proceeding. This and similar projects are expected to continue as the grid is modified to incorporate increased deliveries of intermittent renewable energy resources, retirement of OTC facilities, and modification of the transmission grid. RP personnel have developed strong expertise in this modeling and must also have expertise in load shape development, types of generation resources, and the operating characteristics of over,000 generating units in the WECC footprint. The RP team performs production cost simulations for various SCE projects and programs. These simulations assess the economics, reliability impact, and overall fit of the projects and programs within SCE s resource portfolio and balances cost, reliability, and environmental goals. Examples of projects that Resource Planning has recently evaluated include the sale of SCE s share of the Four Corners power plant, replacement resource options to make-up for lost SONGS generation, various transportation electrification technologies, cost impacts of various penetration levels of localized energy resources, and economic impacts of conventional resources (nuclear, hydro, and natural gas). Activities that RP expects to undertake over the next few years include assessment of energy storage technology, preferred resource valuations (particularly regarding energy efficiency and demand response), and evaluation of the capabilities of new, more efficient natural gas turbines to enable integration of increasing levels of renewables.

21 RP is also responsible for long-term production simulation modeling to support SCE s scenario planning initiatives. These initiatives provide an understanding of what the California electricity grid might look like under very different future market conditions and how these conditions might affect customers. Some of the efforts we expect to undertake over the next few years include assessing the impact of the following scenarios: renewable energy penetrations beyond the current % RPS policy, dramatically reduced availability of emissions allowances in California, heavy adoption of demand response and energy efficiency, and large-scale adoption of electric transportation, including commercial and industrial technologies. RP staff understands these scenarios in terms of availability of generation resources, effect of GHG and other criteria air pollutants, cost to customers and impacts on grid reliability, and also for informing SCE policies and strategies based on study findings. b) Resource Analytics Resource Analytics carries out activities in the following categories: evaluation of generation technologies, tracking of regulatory- and legislative-related initiatives for future generation needs. These activities benefit SCE s customers by identifying types and costs of future generation available to supply electricity reliably to customers at a reasonable cost. By knowing about generation technology and technology costs, and understanding options available to the utility, Resource Analytics serves customers by providing realistic utility cost-of-service options to compare against market offers. Resource Analytics will engage in several future activities driven by the changing electricity market and the need to comply with new environmental and energy policies. These activities include: studies of generation to assist with meeting renewable portfolio standard goals, advanced natural gas technologies, generation needs associated with potential shutdown of OTC plants, carbon capture technologies used with fossil fuels and development of an Integrated Resource Plan ( IRP ). 1

22 State Regulatory Affairs The primary focus of the small State Regulatory Affairs group is to be the company s primary point of contact with Commissioners and the CPUC staff. In San Francisco, the five employees in this office respond to inquiries from the Commission, meet with Commission Staff, Advisors and Commissioners. This group also reports on results of Commission meetings, directly file the advice letters with the Commission s docket office and respond to inquiries made directly by Commission employees. SCE likewise has one-person liaisons to the CAISO/CEC and FERC in Sacramento and Washington, D.C., who interact and respond to these commissions and their staff directly.. Energy and Environmental Policy SCE s Energy and Environmental Policy organization develops and implements SCE s policies related to energy and environmental issues. This function includes case management of applications or permitting requests before the regulatory bodies. SCE seeks Permits to Construct and Certificates of Public Convenience and Necessity (CPCN) for construction projects such as substations, participating in broad policy rulemaking proceedings before the CPUC, CEC, CAISO, FERC, the California Coastal Commission ( CCC ), to name a few. In addition, the Energy and Environmental Policy group is also responsible for the management and administration of SCE s Preferred Resources Pilot. The Energy and Environmental Policy group is made-up of the following divisions: a) Energy Policy SCE s Energy Policy organization is responsible for preparing testimony and supporting analysis submitted in CPUC proceedings, answering data requests, and representing the company in the many Commission workshops and hearings. This organization also manages the efforts of internal company departments in response to regulators initiatives and SCE applications in the form of testimony, comments on rulemakings, etc. The number of open dockets has grown over the last decade, and SCE expects to have a significant workload for the foreseeable future. b) Energy Procurement Policy The Energy Procurement Policy organization manages the submissions before the CPUC regarding energy procurement. Their work includes developing policy positions in testimony, Note: Most of the Labor expense and certain Non-Labor expenses for several of these employees is excluded from the forecast of this GRC. 1

23 comments on rulemakings, etc. at the federal and state levels. Topics include energy market activities, plus renewable and alternative energy procurement. They represent SCE at workshops organized by the Commission and other Regulatory agencies, such as the California Energy Commission, CARB, CAISO, and FERC. They manage such cases before the CPUC as the Long-Term Procurement Plan, approval of contracts to meet the Renewable Portfolio Standard and Combined Heat and Power goals, Greenhouse Gas-related ratemaking, and Short-run and Long-run Avoided Cost methodology. These employees also manage SCE s participation in other state and federal agencies regulatory proceedings, such as resource adequacy, and the CAISO market enhancement initiatives. c) Customer Service Regulatory Support The Customer Service Regulatory Support group focuses on issues directly affecting SCE s customers or Customer Service organization and provides regulatory support to Customer Service for all CPUC or SCE-initiated regulatory proceedings. Activities include preparing the Customer Service-related portions of regulatory filings including the Residential Rate OIR, Distributed Generation OIR, the Green Rate and Community Renewables program, and many others. Finally, this group is also responsible for selected compliance activities, including the administration of the Essential Use and Service Guarantee programs. d) Environmental Affairs and Sustainability The Environmental Affairs & Sustainability (EA&S) division directs SCE activities associated with environmental policy, strategy, and regulation. Examples of EA&S work include: interactions with regulatory policymakers and other personnel responsible for issuance of permits or other rules that govern SCE s work delivering electricity to our customers, regular interaction with various stakeholders active in environmental matters, managing SCE s use of or impacts on federal and state lands, and corporate environmental stewardship. (1) Agency Engagement SCE owns and operates generation, telecommunication, transmission and distribution infrastructure, and related facilities that must acquire permits to be constructed, operated and maintained in a manner consistent with the environmental requirements of many government agencies. Agency environmental requirements come in the form of laws, regulations, policies, initiatives, procedures, or guidelines. These environmental requirements address air and water quality, climate change, hazardous materials and waste management, natural and cultural resource protection, and management of public lands. EA&S professionals interact with regulators, Non-Governmental 1

24 Organizations (NGOs), and other stakeholders regarding SCE s electrical system and the impacts that environmental policies will have on the Company s operations. A well-informed regulatory environment will lead to more thoughtful and balanced regulatory decisions. When a new or modified requirement is proposed that may affect SCE operations, EA&S interacts with the agency to understand the intent of the new requirement. Examples of EA&S s activities regarding nine environmental issues are described below. () Air Quality, Climate Change, and Transportation Electrification In 01, the air quality, climate change and transportation electrification (TE) policy functions were merged into a single organization called the Air and Climate group. This organizational change reflects that these three policy areas have become increasingly intertwined in recent years. Electrification of the transportation sector has become a primary strategy to attain the goals of the federal National Ambient Air Quality Standards and the state s more aggressive air quality and greenhouse gas goals. A primary focus of the State is balancing the policy and regulations related to criteria and greenhouse gas emissions from generation sources that serve increased TE electric load against the greater emission reductions to be achieved by decreasing fossil fuel use in the transportation sector. The primary activities of these three areas are as follows: (a) Air Quality Besides the United States Environmental Protection Agency (EPA) and California Air Resources Board (CARB) regulatory requirements, SCE must interact and comply with the regulatory requirements of ten additional local air quality agencies. SCE s operating units must know and comply with existing regulations and evaluate proposed regulations to determine the potential system impacts. Other major initiatives in the air quality arena also require focused policy oversight. EA&S reviews and comments on air quality policy documents such as the South Coast Air Quality Management District s Air Quality Management Plan and planning documents issued by CARB and the Southern California Association of Governments. Another major air quality focus during the next few years will be transportation electrification. EA&S is working closely with state and local air quality Agencies that EA&S works with relating to air quality include: United States EPA, CARB, South Coast Air Quality Management District (SCAQMD), San Diego Air Pollution Control District (APCD), Ventura County APCD, Santa Barbara County APCD, Eastern Kern APCD, San Joaquin Valley APCD, Great Basin Unified APCD, Mojave Desert AQMD, Antelope Valley AQMD, and Clark County Environmental Services. 1

25 agencies on TE initiatives such as goods movement and evaluating the resultant impacts on emissions and load growth to SCE s system. (b) Climate Change The California Global Warming Solutions Act of 00 (AB-) continues to have a transformative effect in all areas of the state s economy, including the electric utility sector. CARB is charged with developing and implementing regulations to achieve the State s greenhouse gas ( GHG ) emission goals established by AB, many of which directly impact SCE operations. (c) Transportation Electrification The EA&S TE function covers federal, state and local TE policy, regulations, and planning initiatives in areas including personal transportation, mass transit, goods movement, and transportation-related grants and tax incentives. Market and policy forces continue to accelerate the connection of different transportation technologies to the electrical grid and the utilization of electricity as a transportation fuel. This requires SCE to continuously adapt its infrastructure and operations to handle new technologies and increased loads while mitigating adverse environmental impacts. As one example, Governor Brown s Zero-emission Vehicle Action Plan calls for 1. million zero-emission vehicles on California roadways by 0. As another example, SB 0 lays the foundation for the widespread adoption of electric vehicles and a new utility role in this market. Regulatory activities to implement these new requirements will likely result in multiple initiatives requiring active participation by TE personnel. The TE function also works with SCE s other operating units to facilitate an integrated, company-wide strategy and approach to TE activities. TE professionals serve as internal experts, providing direction on TE-related initiatives such as SCE s Charge Ready Program, TE Advisory Services, and Transportation Electrification Marketing and Outreach efforts. () Water EA&S represents SCE in the policy and regulatory processes of the California State Water Resources Control Board ( SWRCB ) and the regional boards within SCE s 1

26 service territory. EA&S analyzes policies proposed by the SWRCB and the regional boards, coordinates with internal technical experts to determine potential policy impacts, develops policy positions, and educates SWRCB and regional board executive staff and board members on any impacts to SCE operations. Current policy issues include water impacts related to SONGS decommissioning, transmission project construction, SCE-owned generation sources, operation and maintenance activities, and reliability issues surrounding the SWRCB once-through cooling policy. SCE provides water utility service to residents and visitors to Catalina Island. This service requires additional interactions and submittals to the regulatory agencies noted above, plus this Commission in its role regulating service and customer rates. () Hazardous Materials and Waste Management EA&S analyzes the impacts of new or changing hazardous materials and solid/hazardous waste laws, policies and legislation. The California Department of Toxic Substances Control (DTSC) has the authority to identify and prioritize chemicals of concern, evaluate the use of alternatives to chemicals of concern in products, and specify regulatory responses for chemicals of concern when found in products. Ongoing DTSC regulatory activities have the potential to eliminate critical electrical contact cleaning chemicals from commerce affecting system maintenance and electric system reliability. EA&S provides input to the regulators on such proposed regulations in partnership with other utilities and industry stakeholders. () Coastal Areas The California Coastal Commission (CCC) and local government bodies with approved Local Coastal Plans regulate development within the coastal zone in their areas of jurisdiction. Development activities are broadly defined by the Coastal Act to include construction of buildings, divisions of land, and activities that change land-use intensity or public access to coastal waters. This definition covers most utility construction, maintenance and decommissioning projects within the coastal zone. Such activities require a coastal development permit (CDP) from either the CCC The agencies that EA&S works with relating to water are the State Water Resources Control Board, the San Diego Regional Water Quality Control Board (RWQCB), the Santa Ana RWQCB, the Los Angeles RWQCB, the Central Valley RWQCB, the Lahontan RWQCB, and the Colorado River RWQCB. Division., Title, California Code of Regulations, Chapter. Safer Consumer Products 1

27 or a local government body. Development activities that occur within or may affect the coastal zone in locations where there is not an approved Local Coastal Plan require interaction with the CCC. EA&S is the SCE organization with primary responsibility for interaction with CCC senior staff and commissioners. Recent activities include obtaining two critical CDPs covering expansion of the SONGS Spent Fuel Storage facility and the SONGS Spent Fuel Islanding project that were critical to maintaining the SONGS decommissioning timeline. () Public Lands SCE has over,000 miles of transmission and distribution lines, telecommunications equipment, hydroelectric facilities and at least four substations on over 0,000 acres of rights-of-way on federal and state lands. SCE s ability to construct, operate and maintain these facilities in a sound manner is necessary to provide reliable service to SCE customers. EA&S is the SCE organization responsible for interaction with the leadership and key decision-making staff of the public lands agencies. Activities with these agencies include working to include pre-approved operation and maintenance plans within SCE s many land use authorizations and permits to eliminate the need for individual permit applications, and securing reviews and approvals of SCE s many open permit requests to allow expedited pole replacements to address safety and reliability concerns. () Natural and Cultural Resources Constructing new infrastructure and the operation and maintenance of existing infrastructure can affect natural and cultural resources. These activities are highly regulated by state and federal natural and cultural resource agencies. 1 EA&S s role involves working with SCE s operating units to resolve environmental issues associated with new construction, operation and maintenance activities. These activities include participating in developing mitigation and management plans to avoid potential resource impacts. The agencies responsible for public lands with which EA&S interacts include the U.S. Forest Service, U.S. Department of Agriculture, U.S. Bureau of Land Management, National Park Service, U.S. Department of the Interior, U.S. Army Corps of Engineers, U.S. Bureau of Indian Affairs, California State Lands Commission, Arizona State Lands Department, California Department of Parks and Recreation and California Department of Fire and Forestry. 1 The agencies responsible for natural resources with which EA&S interacts include the California Department of Fish and Wildlife, Nevada Department of Wildlife, U.S. Fish and Wildlife Service, and State Office of Historic Preservation. Additionally, the public land agencies mentioned in the previous footnote also work on various natural resource issues. 1

28 EA&S is also working with the other California utilities and the California Department of Fish and Wildlife (CDFW) on revisions to the state nesting bird regulations. These changes include provisions that will streamline compliance during operational activities. () Corporate Responsibility and Sustainability Finally, EA&S manages SCE s corporate responsibility and sustainability efforts. These efforts initially began to demonstrate SCE s leadership in corporate sustainability, but were later broadened to include a corporate responsibility initiative in response to the CPUC s increasing interest in California investor-owned utilities (IOU s) efforts to improve corporate responsibility and sustainability practices. SCE participates in the California Utility Sustainability Partnership (CUSP) that was developed by SCE, Pacific Gas & Electric, San Diego Gas & Electric, and the Southern California Gas Company to coordinate utility corporate responsibility and sustainability programs and identify strategies and best practices for addressing these issues. SCE also participates in the Electric Power Research Institute s (EPRI s) Environmental Sustainable Interest Group (ESIG) to further enhance our focus on corporate sustainability. EA&S works closely with SCE s operating units, CUSP, and ESIG to develop best practices in sustainability priority areas such as: public and employee safety, system reliability, economic vitality, and environmental impact (e.g., global climate change, water impacts and habitat protection). EA&S is organizing SCE s corporate-wide sustainability efforts into an integrated plan that will increase sustainability initiatives while reducing operational costs and environmental impacts. These efforts include SCE s green fleet program, green buildings program, sustainable supply chain, preferred resources pilot, alternative-fueled vehicle demonstration projects, energy efficiency and demand response programs, clean goods and people movement infrastructure projects, climate adaptation planning, and developing an SCE green chemistry team and corporate responsibility webpage. The above efforts and additional programs and initiatives are described and reported on in SCE's annual Corporate Responsibility Report, which EA&S develops in coordination with Corporate Communications and SCE s operating units. e) Infrastructure Licensing SCE is engaged in constructing numerous projects that require a Certificate of Public Convenience and Necessity ( CPCN ), Permit to Construct ( PTC ), or Coastal Development Permit ( CDP ). The Infrastructure Licensing organization is responsible for the management of the 1

29 applications seeking the permits. In addition, the Infrastructure Licensing organization manages regulatory activity associated with the sale of utility assets such as streetlight systems. D. Analysis of Recorded and Forecast O&M Expenses For the 01 Test Year, SCE forecasts $.1 million in expenses for the Regulatory Affairs function. Figure I- below displays recorded expenses for the period 0 through 01 and the forecast expenses for Test Year The Test Year forecast reflects SCE s successful effort to realize improved efficiencies in the Regulatory Affairs function despite growth in regulatory activity. 1 Refer to WP SCE-0, Vol. 0, Ch. I, pp

30 Figure I- Regulatory Affairs (FERC Accounts 0/1 and ) (Constant 01 $000) 0,000,000 0,000,000 0,000 1,000,000, Labor Non-Labor Other Recorded Forecast FERC Account Labor,,,,,1,,, Non-Labor,1,,0,0,,,, Other Total 1,,,0,,,000,000,000 FERC Account 0/1 Labor 1, 1,0 1, 1,1 1, 1, 1, 1, Non-Labor,,1,,,,,, Other Total,01 0,, 1,01 1,0 1,1 1,1 1,1 Regulatory Affairs Total Labor,1,,0,1 0, 1,1 1,1 1,1 Non-Labor,0,1,,,01,01,01,01 Other Total, 1,1, 1,,0,1,1,1 1 O&M expenses for the activities described above record to FERC Accounts 0/1 and. In this GRC, SCE has combined these functions for presentation to reflect the current consolidated organization. In compliance with ER-, SCE s 01 FERC Rate Case settlement, SCE has maintained a separate forecast and workpaper support for Integrated Planning and Analysis FERC Account. This separation of expenses is required by terms of the FERC Rate Case Settlement, and results in exclusion of certain generation-related regulatory expenses from FERC jurisdictional rates. 1. Analysis of Recorded Regulatory Affairs Expenses As shown in Figure I-, aggregate Regulatory Affairs O&M expenses have declined by $.0 million or, nearly % since 0. With the exception of 01, since 0 Regulatory Affairs labor and non-labor expenses have declined by $.0 million and $.1 million, respectively, due to improved efficiency. 1

31 In FERC Account 0/1, labor expenses have declined each year with the exception of 01 when they increased by $1. million, relative to 01, due to regulatory and analytical work associated with the Commission s review of the outage at the San Onofre Nuclear Generating Station (SONGS). These one-time expenses are not a part of SCE s test year forecast. In 01, labor expenses continued their decline and, by 01, were $. million or, 1% lower than in 0. Similarly, non-labor expenses in FERC Account 0/1 have declined during the recorded period with the exception of 01. In 01, non-labor expenses increased temporarily due to the SONGS outage as described above. In 01, non-labor expenses continued their decline and, by 01, were $. million or, % lower than in 0. Reductions in both labor and non-labor expenses in FERC Account 0/1 were due to SCE s efforts to improve operational efficiencies and reduce the use of consultants. For example, in 01, SCE reduced use of consulting services related to transportation electrification. For FERC Account, labor expenses have declined each year with the exception of 01 when they increased temporarily due to staffing the Preferred Resources Pilot Program. Overall, labor expenses in FERC Account declined by $.0 million or, % during the recorded period. They have varied from year-to-year due to specific initiatives described below. In 01, nonlabor expenses increased by $0. million due to an increased use of consultants for generation-related studies associated with the SONGs shutdown and other regulatory activities. In 01, non-labor costs increased by $0. million primarily due to consulting costs associated with increased resource planning activities. Despite these variations, however, non-labor expenses in FERC Account have increased by only $0.0 million or % during the recorded period.. Regulatory Affairs Test Year Forecast Figure I- shows the forecast O&M expenses for the Regulatory Affairs function. Details regarding the forecast O&M expenses for this function are described below. a) Regulatory Affairs FERC Account 0/1 As shown in Figure I-, SCE recorded $1, million for Regulatory Affairs 0-1 labor activities in the Base Year. With the exception of 01, labor costs have decreased over

32 the last five years, so 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. 1 As shown in Figure I-, non-labor costs have shown a downward trend during this period, with the exception of 01 when non-labor expenses increased for the reasons described above. 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. 1 b) Regulatory Affairs Integrated Planning Power Procurement FERC Account Overall, labor costs have shown a downward trend over the historical period with the exception of a slight increase in labor costs recorded in year 01. Costs recorded in the most recent year more accurately reflect expense levels associated with the test year 01, therefore, the Last Recorded Year was selected as the forecast method for labor expenses in FERC account. Non-labor costs have remained relatively stable over the last three years in FERC Account. For that reason, the Last Recorded Year is the appropriate methodology to forecast test year expenses. c) Regulatory Affairs Operational Excellence Test Year Adjustment In late 01, Regulatory Affairs reduced its workforce as part of SCE s ongoing efforts to achieve improved efficiency. Reductions in Regulatory Affairs expenses are expected to total $.0 million on an annualized basis. Of this amount, $,000 was realized in 01, and thus are reflected in the Base Year recorded/adjusted amount. The remaining $1. million reduction is reflected in Regulatory Affairs Test Year O&M labor expense forecast shown in Figure I- and summarized in Table I-. This reduction was a result of eliminating 1 positions from the Regulatory 1 The selection of last year recorded as the appropriate basis for forecasting O&M expenses in FERC Account 0/1 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 year recorded in an appropriate base estimate. For Regulatory Affairs, labor expenses have trended downward over the period The selection of last year recorded as the appropriate basis for forecasting O&M expenses in FERC Account 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 year recorded in an appropriate base estimate. For Regulatory Affairs, non-labor expenses have trended downward over the three year period

33 Affairs department due to realized and improved efficiencies. Of this $1. million, $0. is the test year labor reductions reflected in FERC Account, while the remaining $0.1 million is reflected as a test year labor reduction in FERC Account 0/1. 1 Line No. Table I- Regulatory Affairs Test Year O&M Forecast O&M Forecast Element FERC Account 0/1 Regulatory Affairs Total 1 Forecast Method: Last Year Recorded, 1,0,0 Less OpX Adjustment () (1) (1,) Test Year Forecast,000 1,1,1 1 Refer to WP SCE-0, Vol. 0, Ch. I, pp. - for additional details supporting the Regulatory Affairs Operational Excellence adjustment.

34 1 1 1 II. CORPORATE COMMUNICATIONS A. Content and organization of testimony This section provides a review of the products and services provided by Corporate Communications. Corporate Communications creates and measures the results of communication media for various audiences. Corporate Communications expenses are recorded in three FERC Accounts: 0/1 (Communications Operations) for labor and nonlabor expenses; (Outside Services) for ethnic public relations agencies, communications measurement services, and communications quality assurance and translation services; and 0 (Communications Products) that includes various public safety education programs, public safety advertising, and the annual report. B. Summary of Test Year Request Corporate Communications forecasts $1. million to perform the functions necessary to reach various stakeholder groups. Table II- shows the forecast divided into the Operating Unit s three FERC Accounts. Table II- Corporate Communications 01 GRC Forecast Account Activity 01 0/1 Communications Operations $.01 Outside Vendors $1. 0 Communications Products $. Total O&M Expenses $ C. Overview Corporate Communications provides communication to a range of audiences to help them be well-informed about and stay safe around electricity. These audiences include customers, the media, public officials, policymakers, SCE s business suppliers, community organizations, shareholders, employees, and the general public. Customers benefit when they have clear and consistent information on issues such as power reliability and outages, customer service options, rate changes, electric safety and other consumer

35 education topics. The general public also benefits when they are informed about electric safety, infrastructure improvement projects, power outages, and energy policy issues. Our service territory covers five media markets, one of which is the second largest in the United States. 1 Corporate Communications, on behalf of the company, communicates with external audiences through multiple channels, including newspapers, television, radio, out-of-home channels such as billboards and bus shelters, and digital media channels including social media. Customers are increasingly using new technologies, and they want to receive communications through their medium of choice. To deliver important messages to customers and the general public, SCE must communicate with an ethnically and linguistically diverse customer base spanning a 0,000 square-mile service territory. Approximately % of the residents within our service territory speak a language other than English at home, with % of those residents speaking English less than very well. 1 Corporate Communications delivers many messages in multiple languages and works with agencies specializing in ethnic audiences when needed to achieve customer and public awareness of key information. Our diverse employee base needs to receive clear and consistent communications about company goals and initiatives so that they work safely and contribute to cleaner, more reliable, and more affordable operations. Employees should also be aware of key customer communications, which they can share with their families, friends and neighbors. Employee communications occur through our intranet website, , digital screens, business briefings, and other channels. Safety messaging is a high priority for all audiences, with messages being delivered through the internal channels mentioned above as well as external channels, including advertising, web content, social media, general and ethnic media, and public safety education programs for school children and at-risk workers including construction workers, agricultural workers, tree trimmers and first responders. The public safety advertising campaign is delivered to the public through mass media in multiple languages, including television, print, digital, social media, outdoor and radio advertisements. 1 Top 0 Media Markets, News Generation, radio-markets/ 1 See WP SCE-0, Vol. 0, Ch. II, p..

36 Corporate Communications launched an enterprise-wide Communications Quality Assurance program as the result of a self-report of noncompliance with the Commission s Affiliate Transaction Rules, which was reported on November, This program promotes compliance, accuracy, and consistency for externally published materials. Under a 01 Settlement Agreement between SCE and the Disability Rights Advocates (DisabRA), 0 Corporate Communications has also incurred costs to make SCE s website compliant with Web Content Accessibility Guidelines. Costs for this work are managed under the Communications Quality Assurance program. D. Productivity measures and OpX, cost control measures or benchmarking In April 01, Corporate Communications reorganized to better meet the communication needs of the Company and our customers. Corporate Communications now places a greater emphasis on prioritized, centralized content and more plain-speaking, customer-friendly communications. Through this reorganization, Corporate Communications realized a reduction in labor costs of $.0 million and a $.1 reduction in non-labor costs across all of Corporate Communication FERC accounts. 1 Table II- summarizes the reductions. The detailed explanations for these OpX reductions are described in the forecast section for each Corporate Communications FERC account. 1 See WP SCE-0, Vol. 0, Ch. II, pp D.1--01, Section, Ordering Paragraph 1, dated December, 01. The 01 General Rate Case Decision approved the Settlement Agreement between SCE and Disability Rights Advocates (DisabRA) for the filing of expanded bill format options. See also Advice Letter (AL) 1-E, dated August, See WP SCE-0, Vol. 0, Ch. II, p..

37 Table II- Corporate Communications OpX Reductions by FERC Account for Test-Year 01 (Constant 01$, millions) FERC Activity Labor OpX Reduction Non-labor OpX Reduction Total OpX Reduction FERC 0/1 $.0 $0. $. FERC - $1.1 $1.1 FERC 0 - $0.0 $0.0 Total $.0 $.1 $. 1 E. Comparison of 01 GRC Authorized to Recorded Figure II- Corporate Communications 01 Authorized and Recorded (Constant 01 $000),000 $0, 0,000 1,000 $1, ($1) $1,0 ($0) $1,,000, Request 01 Authorized 0-1 Variance Variance 0 Variance 01 Recorded

38 Table II- Corporate Communications Authorized Vs. Recorded Amounts Constant 01 ($000) GRC Activity 01 GRC Authorized 01 Recorded 0/1 Communications $, $, Operations Outside Vendors $ $, 0 Communications Products $, $,1 1 1 As shown in Figure II- and Table II- recorded expenses in FERC accounts 0/1 and 0 remained consistent with the 01 GRC authorized amounts. Recorded expenses in FERC Account increased because Corporate Communications began a new Communications Quality Assurance program to support accuracy, compliance and consistency in external company communications. An explanation of the activities in FERC Account is in Section G.. below. F. Corporate Communications Activities and Non-Utility Credits Several SCE Corporate Communications activities are subject to non-utility credits under SCE s multifactor rate set by our Controller s Department. Although the total O&M expense for the production of the annual report is included in SCE s Test Year estimate in this application (FERC Account 0). Recorded amounts are credited back to customers using this affiliate credit mechanism. Table II- below shows Corporate Communications accounts assigned non-utility credits in 01. Corporate Communications expects the same treatment in 01. For a detailed testimony, see Exhibit SCE-0, Vol. 1.

39 Table II- Corporate Communications Activities Subject to Affiliate Credit No. Activity FERC Account 1 Media Relations 0/1 Internal Communications 0/1 Edison International Annual Report 0 Outside Services G. Corporate Communication Accounts 1. Communication Operations (FERC Account 0/1) The labor and non-labor expenses associated with Corporate Communications/Communications Operations are recorded in FERC Account 0/1. SCE s 01 Test Year Forecast is $.01 million. Corporate Communications activities help customers and the public stay safe around electrical infrastructure and understand company and regulatory actions that affect them directly. SCE also communicates with customers about emerging issues such as bill scams, warning customers about outsiders pretending to be SCE workers trying to fraudulently collect money. Frequent communication with customers correlates strongly with overall customer satisfaction. Customers likewise expect their utility to communicate with them via their preferred channels, including digital media. SCE must also cultivate an engaged workforce to fulfill its mission to safely deliver reliable, clean, and affordable energy. Internal communications play a key role in ensuring that employees have the information they need to work effectively and with purpose. Activity Description a) Activity Description Corporate Communications organization is divided into the following functional areas: See WP SCE-0, Vol. 0, Ch. II, pp See WP SCE-0, Vol. 0, Ch. II, pp. -. Id. 0

40 (1) Public Education This function undertakes public education campaigns, including public safety topics such as downed power lines and staying safe around overhead lines, bill scam prevention, and hazards presented by metallic balloons. This group manages all mass media buys for the company and also supports customer education campaigns (e.g., paperless billing, electric vehicle benefits) through paid mass media channels. Examples of activities associated with managing mass media include media planning and strategy, production, media buying, optimization and analytics/reporting. Mass media channels include television, radio, billboards, bus shelters, and digital ads including video, mobile and social media. These activities are distinct from those performed by the Customer Service organization, which focuses on direct customer channels such as direct mail, s and bill onserts. FERC Account 0 includes labor to conduct and supervise these activities; FERC Account 0 includes nonlabor costs for the campaigns such as production and media buys; and FERC Account includes nonlabor costs for translations/transcreation of communication materials for non-english speaking audiences. () Communications Quality Assurance The Communications Quality Assurance (QA) function supports accuracy, consistency and compliance for all external communications. This function started in 01 following a self-reported non-compliance event. The action plan authorized by the Commission included 1) retraining the appropriate SCE groups, ) overseeing content development, and ) augmenting final review for affiliate compliance. In September 01, we informed the Commission that the new Communications QA group included the following areas of responsibility (among others): Development and implementation of policies, standards, strategies, business plans, training and governance processes for external-facing communications; and See WP SCE-0, Vol. 0, Ch. II, pp. -. See WP SCE-0, Vol. 0, Ch. II, pp. -. 1

41 Centralization of all mass media advertising and translations to ensure affiliate rule compliance. The group also centralized oversight of the company s style guide, translation process, and logo requests to further support consistency and compliance in external communications. FERC Account 0 includes labor to conduct and supervise these activities; FERC Account includes the nonlabor expenses associated with this program. () Key Initiatives Key Initiatives develops proactive communications strategies focused on long-term issues that face SCE customers, regulators and the public such as improvements to the power grid, broad company initiatives affecting customers, and employee safety. In addition, this group delivers communications about programs that increase employee effectiveness, maximize efficiencies, and educate employees about key business initiatives, updates, or safety information. This group also serves as public information officers during emergencies. () Emerging Issues The Emerging Issues function exists to respond quickly and comprehensively to all audiences, including employees, about issues ranging from routine electrical outages to emergency events. This group works with the news media and produces and distributes news releases, media statements, fact sheets, and question-and-answer documents. This group answers inquiries to SCE s -hour media hotline, which numbered about 1,0 in 01, and serves as public information officers during emergencies. They also provide support for company-wide employee communications and manage the Inside Edison web site that keeps all stakeholder audiences, including customers, employees and regulators informed of issues that impact the company and the industry. This group offers media training to employees fluent in Spanish, Chinese, Khmer (Cambodian), Korean, and Vietnamese so they can act as spokespeople for the company to various audiences. () Operating Unit Communications While internal communications are handled mainly by Emerging Issues and Key Initiatives staff from an enterprise perspective, a few of SCE s larger OUs with customer- See WP SCE-0, Vol. 0, Ch. II, pp. 1-. One new project management position was created for the Communications QA group. The other management and staff positions aligned key external communications functions, such as translations and advertising, and added quality assurance responsibilities to their roles.

42 facing activities receive dedicated support from Corporate Communications personnel. The Operating Unit (OU) Communications group supports the Transmission and Distribution, Customer Service, and Operations Support OUs. With an employee base in the field and spread across the entire service area, these large OUs have a high demand for specialized communications that can be met more effectively with dedicated OU support rather than enterprise-wide communications. Corporate Communications also supplies messaging and materials to support company-wide efforts in the areas of HR recruiting and diversity and supplier diversity. () Digital Communications Digital Communications includes social media channels, intranet content administration, and elements of the website sce.com. This group is responsible for the day-to-day management of SCE s core social media channels, including Facebook, Twitter, LinkedIn and Instagram. Activities include executing effective social campaigns (using targeting techniques), monitoring social media for mentions of SCE and related topics, responding to customers, and reviewing metrics to determine effectiveness of communications. In 01, this group reached more than. million unique individuals within our service territory, who took more than 1. million actions such as clicking though to sce.com to learn more about a program and sharing useful information with their personal network. Communications via social media are primarily in English, but SCE has a Spanish-language social media channel (@SCE_Espanol) and has published tweets in Mandarin and Cantonese in emergency situations such as Flex Alerts. Digital Communications also provides oversight for the other organizational units at SCE that operate SCE-branded social media channels, including providing training and direction to Customer Services Consumer Affairs group (responsible for customer service inquiries), and Business Customer Division (customer engagement/education), to Local Public Affairs (responsible for key stakeholder engagement), and to Human Resources (for recruitment). SCE s social media teams responded to approximately 1,00 inquiries and comments from customers, the public, the media, and other stakeholders in 01. Digital Communications also oversees the operations and compliance for key portions of SCE s internal portal website and sce.com. The portions of sce.com that pertain to Corp Comm responsibilities include public safety, legal notices, and the homepage carousel. For sce.com, SCE s main customer-facing website, Corporate Communications delivers information on public safety

43 and other topics in English, Spanish, Vietnamese, Korean, and Chinese. Digital Communications also develops and enforces company-wide standards and guidelines so that all SCE websites are compliant. All content on sce.com complies with Web Content Accessibility Guidelines (WCAG) so web content can be understood by people with disabilities. The web function provides the labor to oversee operations and verify web accessibility and nonlabor costs for WCAG are captured in FERC. The group also manages several key sections of SCE s intranet website, internally referred to as the Portal, which helps employees do their work. The Portal achieved 0 million page views in 01. () Creative Services The Creative Services group produces and coordinates photography, video production, and graphic design services for the company. This includes all forms of graphic needs associated with the Company s external and internal websites, external media, customers, and various internal communication projects. Creative Services also includes all internal audio visual technology needs for company meetings. () Corporate Events and Corporate Travel Corporate Events is a centralized function supporting corporate meetings, event planning, and educational workshops. This group was in Corporate Real Estate in the 01 GRC. Its historical costs have been transferred to Corporate Communications FERC Account 0/1 for testimony in this proceeding. Corporate Events also acts as the travel manager for the Company, by providing air travel, hotel accommodations, and car rental coordination services for SCE business travel.

44 b) Scope and Forecast Figure II- Corporate Communications FERC Account 0/1 (Constant 01 $000) (1) Historical Variance Analysis (0/1) (a) Labor As shown in Figure II-, labor expenses recorded in FERC Account 0/1 decreased by $1. million (-0%) from 0 to 01 when Corporate Communications transferred several employees to other OUs to be closer to the functions they support. There was a slight increase from 01 to 01 to account for the re-centralization of several positions. From 01 to 01, we recorded decreasing labor costs of $1.1 million (-1%). Vacant positions from employee attrition were not back-filled as reorganization and process improvement assessments were ongoing. (b) Non-Labor Non-labor expenses recorded in FERC Account 0/1 decreased by $1. million (-%) from 0 to 01 for internal client services expenses associated with the transfer out of employees supporting OUs and for reductions in program costs for the Inside Edison print

45 publication. Expenses then decreased by $0. million (-1%) from 01 to 01 due in part to the OpX reductions that took place during 01, when staff transitions resulted in lower annual recorded expenses. Expenses from 01 to 01 decreased by $0. million (-0%) primarily due to a decrease in contract workers hired to support Creative Services projects as well as further reductions in the Inside Edison print publication. () Forecast Corporate Communications forecast for FERC Account 0/1 is $.01 million, which is $. million less than the last recorded year of $. million. FERC Account 0/1 has been trending downward over the last five years. (a) Labor Corporate Communications forecast is $.01 million in labor expenses for FERC Account 0/1. Labor expenses have declined over the historical recorded period with the exception of 01, when costs rose slightly as a result of recentralization of several positions. In fact, labor costs in this activity decreased by $.1 million or % over the five-year historical period. Therefore, the last-recorded year is the most appropriate methodology to determine our future expense needs. To this last-recorded year forecast base of $. million we are subtracting an additional labor savings adjustment of $.0 million to reflect OpX savings, as shown in Table II-. Table II- Corporate Communications 0/1 Labor Test-Year O&M Forecast ($Millions) Forecast Methodology: $. Last Recorded Year Less OpX Adjustment: Internal Communications Reorganization $1. $. Web and Social Media Consolidation $0.1 Creative Services Work Realignment $0.1 Media Relations Consolidation $0.1 Public Education Consolidation $0.0 Admin Assistant Labor Reduction $0.0 Test-Year Forecast $.01

46 (b) OpX Adjustment Reorganizing Corporate Communications to prioritize communications on the issues of greatest importance to our stakeholders, remove organizational silos, and implement process improvements, allows for reductions in FERC Account 0/1 labor resources, which constitute the bulk of communications operations. The total forecast headcount reduction for the organization is positions, resulting in an OpX labor adjustment of $.0 million. We previously dedicated employees to internal communications. After reorganizing, only four employees are dedicated solely to internal communications while the rest of that activity is shared by the Emerging Issues and Key Initiatives teams focusing on both external and internal communications around priority areas. The resulting synergies of this consolidation allow us to reduce headcount by 1 positions, reducing our labor expenses by $1. million for the Test Year. We previously had a team dedicated solely to media relations, and that function is now handled by the Emerging Issues and Key Initiatives teams, allowing a reduction in headcount of three, resulting in $0.1 million in labor savings. We consolidated the Web and Social Media groups to create synergies and allow us to reduce headcount by four, resulting in $0.1 million in labor savings. After Corporate Communications reorganized, Creative Services is now focused on producing content aligned with our communications priority areas, allowing us to reduce headcount by two, resulting in $0.1 million in labor savings. Several activities in the Public Education group were consolidated, resulting in a headcount reduction of two and resulting labor savings of $0.0 million. These include advertising and translation services, where more of this work will be managed through vendors as well as research and measurement, where media measurement services will be managed by Emerging Issues. The overall reduction in staff within Corporate Communications also allowed for the reduction of one administrative assistant resulting in labor savings of $0.00 million. See WP SCE-0, Vol. 0, Ch. II, p. 1.

47 Corporate Communications new organization is delivering consistent messaging, and doing so more frequently on priority issues, thereby increasing message retention and awareness among all stakeholders, including employees, customers and the general public. (c) Non-Labor As shown in Table II-, Corporate Communications forecasts $1.0 million in non-labor expenses for FERC Account 0/1. Non-labor expenses in this account have decreased consistently over the past five years. Therefore, the last recorded year, $1.01 million, is an appropriate base estimate to reflect future Test Year needs. To this base estimate, Corporate Communications is forecasting a further decrease in non-labor expenses of $0. million, which is % of the OpX labor reductions. This percentage is based on the non-labor associated with labor in this activity, which includes expenses such as travel, training, and materials and supplies. Table II- Corporate Communications 0/1 Non-labor Test-Year O&M Forecast Forecast Methodology: Last Recorded Year Less OpX Adjustment Test-Year Forecast $1.01 million $0. million $1.0 million Communication Outside Services (FERC Account ) The non-labor expenses associated with Corporate Communications outside vendors are recorded in FERC Account. SCE s 01 Test Year Forecast is $1. million. 0 a) Activity Description FERC Account includes non-labor expenses for the outside vendors contracted by Corporate Communications, such as public relations agencies specializing in ethnic media and for communication measurement services. Beginning in 01, this account also includes outside 0 See WP SCE-0, Vol. 0, Ch. II, pp. 1.

48 services associated with the Communications Quality Assurance (QA) program managed by the department. A description of the services in this account follows. (1) Ethnic Public Relations This account includes the non-labor expenses for ethnic public relations agencies. The agencies provide in-language media relations support services for ethnic and in-language newspapers, broadcast (television/radio), and digital/social media in Spanish and multiple Asian languages. These services include proactive and reactive media outreach through news releases, media interviews, media briefings, editorial briefings, and maintaining contacts with media outlets/journalists. It is especially prudent to deliver messages about safety, reliability and emergency conditions in our customers preferred language and with the appropriate cultural resonance. The ethnic public relations agencies provide important strategic guidance besides adapting, translating, and distributing SCE customer information to their target audiences. Using these agencies for this work allows SCE to expand and contract the volume of work according to business needs, which would not be the case with full-time employees. () Communications Measurement The communications measurement services in this account include message effectiveness and comprehension, customer awareness tracking surveys, communications benchmarking, traditional and social media monitoring, and U.S. consumer trends monitoring. Our communications measurement capabilities help us to identify how different segments in our customer base and the general public wish to be reached and how individual messages are resonating. This capability is essential for public safety and emergency messaging. Through customer awareness tracking surveys covered in this account, we can measure the increase in public safety message awareness among residential customers from 0 to 01 ( to %, see Figure II- in Section II.G..). () Communications Quality Assurance Corporate Communications began a Communications QA program associated with external communications in 01. It creates a unified process and internal controls to safeguard that external communications comply with company policy, style guidelines, Web Content Accessibility Guidelines (WCAG), and Class A Affiliate rules that govern our company. Expenses in this account include agency and consulting services for enterprise-wide staff training, web accessibility remediation, creation and maintenance of style guides/glossaries to promote consistency in language and

49 1 graphic identity, and translation services for externally published materials, including content published on sce.com. 1 The Communications QA program includes training for employees and agency staff who produce and distribute materials for external audiences. The training covers developing accurate, consistent, and compliant communications for our customers, and educates them about how to access up-to-date online resources on the company s internal portal website. In 01 and 01, we trained 01 employees who reported an increase in knowledge of compliance requirements from.1 to. on a 1 to scale, as shown in Figure II- below. Once trained, employees complete a One Voice Checklist prior to publishing external materials, which includes questions related to Class A Affiliates, translation requirements, and third party marketing. If the materials include a mention of a Class A Affiliate, they are submitted to the Affiliate Compliance Office for review prior to distribution. Since program inception, employees completed 1 checklists. 1 We removed start-up expenses associated with the Communications QA program in 01. See OU Adjustment 1 in FERC Account 0/1 Communications Operations in workpaper SCE-0, Vol. 0, Ch. II, p. 1. Communications QA expenses associated with outside vendors originally recorded in FERC Account 0/1, and were transferred to FERC Account in OU Adjustment 1. See WP SCE-0, Vol. 0, Ch. II, pp See WP SCE-0, Vol. 0, Ch. II, pp. -. 0

50 Figure II- Communications Quality Assurance One Voice Training Survey Results, The style guide and translations services promote communications that are written and presented in such a way they will be understood by their intended audience and accurately reflect the English versions. It is important that the messages and the look and feel (i.e., the images and graphics) of our communications resonate with customers based on their preferred language and cultural norms, particularly for content related to safety and reliability. We provide translations of most customer-facing materials including sce.com web content in Spanish, Chinese, Korean and Vietnamese, which can be scaled and adjusted as necessary by using outside vendor services. For some communications such as Public Safety, we translate materials in nine languages. The style guide and translations services promote communications that are written and presented in such a way they will be understood by their intended audience and accurately reflect the English versions. It is important that the messages and the look and feel (i.e., the images and graphics) of our communications resonate with customers based on their preferred language and cultural norms, particularly for content related to safety and reliability. We provide translations of most customer-facing materials including sce.com web content in Spanish, Chinese, Korean and Vietnamese, which can be scaled and adjusted as necessary by 1

51 using outside vendor services. For some communications such as Public Safety, we translate materials in nine languages. We processed translation projects (e.g., program materials, ads, sections of sce.com) in 01 and 0 translation projects in 01. Our translation services include certified translation agencies who draft and then quality check the materials. Our translation services also include maintaining four glossaries (Spanish, Chinese, Korean and Vietnamese) of several hundred commonly-used industry terms and program names, ranging from California Alternate Rates for Energy (CARE) to occupancy sensor. These glossaries are updated annually to confirm that key terms reflect the correct meanings in their respective languages and are consistently translated. See WP SCE-0, Vol. 0, Ch. II, pp. 1 1.

52 b) Scope and Forecast Figure II- Corporate Communications FERC Account (Constant 01 $000) (1) Historical Variance Analysis (a) Non-Labor As shown in Figure II-, between 0 and 01, the expenses in FERC Account included ethnic PR agencies, media monitoring services, and communications measurement services. Between 0 and 01, expenses increased by $0.1 million (+%). There was an increase in ethnic PR services and an increase in the expenses for media monitoring including the addition of services that provide daily media clips to over 00 employees, as well as services that provide consumer insights and trends. From 01 to 01, expenses in this account remained stable. We reduced expenses related to the media monitoring services and ethnic PR expenses while adding an inlanguage augment to our Customer Attitude Tracking survey to support quarterly surveys in Spanish and annual surveys in Chinese, Korean and Vietnamese. These targeted surveys help us measure the impact of our communications to the diverse audiences we serve across our service territory.

53 From 01 to 01, expenses in this account increased by $1.0 million (+%). The bulk of this increase, $1. million, results from the launch of the new Communications QA program established by Corporate Communications. Expenses paid to ethnic PR agencies also increased relative to 01. From 01 to 01, expenses remained stable. Expenses for the Communications QA program decreased as the program completed its launch while Ethnic PR expenses increased. () Forecast (a) Non-Labor As of 01, this category witnessed a significant increase in costs due to the launch of a new program, the Communications QA program. Over the last two recorded years and since the launch of this new program in 01, costs in this activity have remained relatively stable. As a result of these new costs, the Last Recorded Year (LRY) is the most reflective forecast methodology of our future expense needs in this activity. To the LRY forecast base of $. million, we make an additional downward adjustment to reflect savings identified through our OpX initiative for Test Year 01, as shown in Table II-. Table II- Corporate Communications Non-labor Test-Year O&M Forecast Forecast Methodology: Last $. million recorded year Less OpX Adjustment: Vendor Contract Renegotiation $0.1 million $1.1 million Other Services Elimination $0.1 million Communications Quality Assurance Savings $0. million Test-Year Forecast $1. million (b) OpX Adjustment Corporate Communications OpX initiative examined opportunities to reduce costs in FERC Account by $1.1 million. The savings include

54 renegotiating several contracts with vendors to achieve savings of $0.1 million, and we plan to eliminate other services for further savings of $0.1 million. In Communications Quality Assurance, an additional $0. million in savings have been identified relative to 01 recorded/adjusted expenses. These adjustments result in a 01 test-year forecast of $1. million, which represents a $1.1 (-0%) decrease from the LRY. As shown in Figure II- below, momentarily excluding Quality Assurance from the $1. million forecast, the $1.00 million forecast for the remaining activities is lower than the comparable expenses from 01 to 01, and is only $0.0 higher than 0 expenses. Figure II- Ongoing and New Activities - FERC Account (Constant $01, Millions) We also identified savings opportunities within Communications QA that cut these expenses in half in the Test Year. The Communications QA savings reflect the successful completion of program launch activities, shifting services to lower-cost vendors and insourcing work. During the first two years of the program, we engaged our Spanish and Asian creative agencies to develop translations glossaries. Major work on the company s style guides, including our five style-guides (general market, Spanish, Chinese, Korean and Vietnamese) and a social media style guide is also complete, reducing the need for agency expenses. These style guides were also transferred from a web hosting platform managed by an agency vendor to a platform managed by Corporate Communication s digital communications team at the end of 01. Our internal team can implement

55 updates at no incremental cost. We developed a web-based version of the Communications Quality Assurance training for all external communicators in 01, which will replace the more expensive inperson trainings conducted in 01 and 01. Going forward, we are shifting to a lower-cost translation vendor to perform the language translations for most external communications, and will only engage our higher cost ethnic creative agencies for large campaigns involving new creative executions.. Communications Products (FERC Account 0) Non-labor expenses for Corporate Communications Products record to FERC Account 0. SCE s 01 Test Year Forecast is $. million. a) Activity Description Corporate Communications records expenses to FERC Account 0 for: (1) the publication of the U.S Securities and Exchange Commission (SEC)-required annual report and legal notices; () the design, production, and implementation of public safety education programs, including the development of related communications materials produced in multiple languages; and () costs for the Public Safety Around Electricity public education advertising campaign. (1) Annual Report Corporate Communications develops the Edison International and SCE annual reports to inform shareholders and regulators about SCE s financial and operational status, under federal and state requirements. () Legal Notices Corporate Communications assumed the costs of publishing mandatory legal notices in newspapers beginning in 01. Legal notices are ads publicizing public hearings about topics such as rate changes (e.g., evidentiary hearings for low-income rates, GRC Phase ) and notices of office closures, among others. () Public Safety Education Programs Corporate Communication oversees three public education programs focused on safety around electricity. The first bilingual campaign informs at-risk workers about how to avoid harm around overhead and downed power lines. The second program provides for the publication and teaching of general electrical safety materials for elementary school teachers and students. The third See WP SCE-0, Vol. 0, Ch. II, pp..

56 and largest program is a multi-channel mass media advertising campaign to inform the general public about how to stay safe around electricity. (a) Safety Materials for At-Risk Workers This is a direct-mail program aimed at professionals who may come in contact with electrical equipment on the job, including construction contractors, tree trimmers, agricultural workers and first responders. This program educates workers on how to stay safe around electricity. Materials are distributed in Spanish and English. These materials are designed by a vendor with the assistance of utility and contractor safety experts, are peer reviewed, and have proved successful in increasing worker awareness of utility-related hazards. In 01, an effectiveness survey showed that half of all survey respondents recalled receiving these materials, and % of those who received the materials read them. Overall, 0% of respondents who recall the mailing passed the materials along to one or more in their company. (b) Electrical Safety for Elementary Students This program provides for the publication and in-person presentation of general electrical safety materials for elementary grade teachers and students. In 01, SCE reached over,000 students with these materials. In 01, educators in SCE s service area gave the following feedback: % agree that the materials are valuable in helping teach their students; % agree that the materials are written and illustrated in a way that connects with students; % encourage students to discuss information learned from the SCE safety education program with their parents/guardians and siblings; % agree that the safety materials will benefit students for years to come. These metrics are consistent with national averages and research demonstrates that importance nagging by children directed at parents is a highly effective tool. (c) Public Safety Advertising Campaign The Public Safety Around Electricity Campaign is a comprehensive, mass-media public education campaign for both residential and business customers. Its objectives include: See WP SCE-0, Vol. 0, Ch. II, pp Id. Id.

57 Changing the public s behavior when it comes to staying safe around power lines by: o Raising awareness of safety around power lines both seen and unseen; o Educating customers and the public about how to stay safe around power lines; o Modeling safe behavior in multiple situations, which could be hazardous if handled incorrectly; Refreshing creative to encourage customer engagement; and Effectively targeting and reaching SCE s entire service territory, including diverse ethnic and hard-to-reach customers in the most appropriate media and languages (Spanish, Chinese, Korean, Vietnamese, Tagalog, and Khmer). This public education campaign has been conducted year-round since 01. From 0 to 01, customer awareness levels of how to stay safe around electricity increased from to % as measured in our Customer Attitude Tracking survey (see Figure II-). Figure II- Awareness of SCE Safety Messaging (Residential Customers) Source: SCE Customer Attitude Tracking (CAT) Survey

58 Messages are created and delivered in multiple languages and to in-language and general audiences with increased frequency during historically weather-driven seasons. Mass media used includes: billboards, bus shelters, newspapers, radio, digital (desktop, mobile, video, search and social media) and television. In 01 we developed new public safety creative, focusing on simple educational messages with a call to action and clear visuals. Besides messages about staying away from downed wires, we incorporated new messages regarding how to stay safe around overhead wires. The selected creative uses simple visuals that tested well with both general and Spanish and Asian language-dependent audiences and are similar to public service announcements. The simple visuals reduce creative and production costs associated with using ethnically diverse talent. SCE verified the media plans for 01 provided coverage to all ethnic segments and hard-to-reach rural areas including the central valley (e.g., Tulare, Visalia), central coast (e.g. Oxnard, Ventura), and other outlying areas such as the Coachella Valley. We purchased specific media to reach seniors, low-income and Native American populations through digital and outof-home media. In 01, we increased the share of media dollars spent in both social media and mobile advertising as customers media preferences change. 01 SCE achieved efficiencies through the bulk purchase of media resulting in better rates and additional added-value exposure, as highlighted below: For out-of-home media, we were able to secure optimal rates and premium locations for the entire year. We reduced the number of flights to save on production costs and achieved permanent board placement in high-visibility locations. Our vendor purchased all radio placements in one transaction. SCE secured an up to 0% price break in some markets and received bonus placements. SCE sought to identify further efficiency savings in the 01 Test Year, as described below in the forecast for this account. See WP SCE-0, Vol. 0, Ch. II, pp.1 1.

59 b) Scope and Forecast Figure II- Corporate Communications FERC Account 0 (Constant 01 $000) (1) Historical Variance Analysis (a) Non-Labor As shown in Figure II-, expenses in FERC Account 0 vary from year to year with the exception of 01 to 01 when expenses remained stable. The primary driver of the varying expenses is the Public Safety advertising campaign, which makes up the largest portion of expenses in FERC Account 0. In 01 and 01, for example, Corporate Communications refreshed the creative assets for the campaign resulting in extra creative and production costs. Other factors such as weather-driven events and supply of radio spots and billboards also impact the overall mass media expenses from year to year. () Forecast (a) Non-Labor Corporate Communications calculates a Test Year forecast of $. million for FERC Account 0. Costs in this account have typically fluctuated over the historical period, and we expect this fluctuation to continue. Once every three years we perform a creative refresh 0

60 of our public safety advertising campaign to keep our customers engaged with the message, and costs for publishing legal notices also vary from year to year. Consequently, a three-year averaging methodology is the most appropriate to calculate the forecast base for Test Year expenses. A forecast base using the chosen three-year average methodology also results in the lowest Test Year request for this activity as compared to a forecast methodology using a four-year average, five-year average, or lastrecorded year. As shown in Table II-, from the three-year average baseline of $. million we are forecasting further reductions associated with our OpX initiative of $0.0, including $0.00 million in expenses related to our public safety education programs, and another $0. million in advertising efficiencies. Table II- Corporate Communications 0 Non-labor Test-Year O&M Forecast Forecast Methodology: Average of last three recorded years Less OpX Adjustment: Test-Year Forecast Public Safety Education Program Savings $0.0 million Advertising Efficiencies $0. million $. million $0.0 million $. million (b) OpX Adjustment Corporate Communications renegotiated its contract with the vendor that produces the at-risk worker and elementary schoolchildren safety education programs. There is no change to the level of support or quantity of materials produced by the vendor. This renegotiation resulted in savings of $0.00 million. Corporate Communications is also forecasting a reduction of $0. million in public safety advertising based on several efficiency gains. In the past, Corporate Communications paid for three flights of Out of Home advertising per year, including billboards and bus shelter advertising. Reducing the number of flights and running the remaining flights for a longer duration is expected to save $0.00 million on associated printing costs without affecting the total time these advertisements are in market each year. Corporate Communications can further save on production 1

61 costs by using total market campaigns that do not require different imagery by ethnic segment, saving $0.1 million. An additional $0.1 million in savings is forecasted based on shifting a portion of advertising creative development costs in-house. A further $0.00 million will be saved in radio advertising by running traffic and weather spots, which have minimal production costs relative to prerecorded spots. A further $0.00 million can be saved in digital advertising by having digital networks and individual sites produce certain assets.

62 1 1 1 III. LOCAL PUBLIC AFFAIRS A. Content and organization of testimony This section covers the Local Public Affairs (LPA) organization, responsible for local government and stakeholder engagement with the 1 cities, 1 counties and 1 Native American tribes in the SCE service territory. The activities covered include engagement with government officials, staff, and local community stakeholders to support electric safety education, emergency response communications, grid modernization, operations with community impact and local reliability, and education on state-mandated policy initiatives such as energy efficiency, renewables, distributed generation, and other programs. B. O&M Expense Request As shown in Table III-, SCE s forecast for the Local Public Affairs organization is $.0 million to engage with government officials, staff, and local community stakeholders and $1. million for expenses associated with Corporate Dues and Membership Fees. Table III- Local Public Affairs 01 O&M Forecast Summary (Constant 01 $000) Account Activity 01 0/1 Local Public Affairs Operations,0 0 Corporate Memberships Dues & Fees 1, Total O&M Expenses, C. Overview The Local Public Affairs (LPA) organization engages with government officials, staff, and local community stakeholders to support electric safety education, emergency response communications, grid modernization, operations with community impact and local reliability issues and education on state-mandated policy initiatives such as energy efficiency, renewables, distributed generation, and other programs.

63 1. Regulatory background/policies driving SCE s request LPA supports regulatory or legislative decisions that require local government outreach such as General Order 1 and California Public Utilities Code. (AB), which require public utilities to share disaster and emergency preparedness plans with local governments to support better emergency response and recovery coordination with local jurisdictions. 0 Other directives include General Order -D, which requires providing public notice to local stakeholders near planned construction of certain types of transmission lines and substations. Examples of GO -D projects that LPA supports include the Chino Hills undergrounding project where LPA has staff who support public outreach before and during construction per CPUC mitigation measures and direction. 0 Refer to WP SCE-0, Vol. 0, Ch. III, pp. -.

64 . Comparison of Authorized 01 to Recorded Figure III- Local Public Affairs 01 GRC Authorized and Recorded (Constant 01 $000) 1,000 1,000 $1,0 $1, 1,000 1,000,000,000 ($,) $ $,1,000,000, Request 01 Authorized 0-1 Variance 0 Variance 01 Recorded Local Public Affairs 0 - Corp Membership Dues And Fees a) Local Public Affairs [FERC Account 0/1] As shown in Figure III-, Local Public Affairs recorded $. million in O&M expenses in 01, $. million less than the $1. million authorized in SCE s 01 GRC. This was largely driven by a 1.% shift in work from ratepayer to shareholder, delay in filling vacancies, and efforts to achieve OpX savings. Starting in 01, LPA left vacancies unfilled in anticipation of the department s re-organization in late Refer to WP SCE-0, Vol. 0, Ch. III, pp..

65 b) Corporate Membership Dues & Fees [FERC Account 0] The decision on SCE s 01 GRC was issued toward the end of 01. The Edison Electric Institute (EEI) and the majority of the other corporate membership fees are annual payments due the first half of each year. $1. million was paid prior to receiving the authorized $1.1 million, which results in $,000 above authorized. D. Description of Organization 1. Overview of Activities Local Public Affairs (LPA) is responsible for engagement with government officials to support electric safety education, emergency response communications, grid modernization, operations with community impact, local reliability, and education on state-mandated policy initiatives such as energy efficiency, renewables, and distributed generation. LPA achieves this through community outreach via local governments, nonprofit organizations, neighborhood groups, government associations, and chambers of commerce. LPA also works with local and regional governments in their capacity as regulators of SCE's operations, as intermediaries between SCE and end-use customers, and as customers in their own right. LPA supports the utility s operations by working directly with 0 franchises and the governments of 1 cities, 1 counties, 1 cities with municipal utilities, and 1 Native American tribes (1 federally recognized and two state recognized tribes).. Situational Shift Due to Changing Customer Expectations, New Trends in Customer Engagement, Increased Focus on Customer Service, and Support of Grid Modernization Customer expectations and trends in engagement of the new energy consumer are shifting, as referenced in the annual Accenture study of electric utility customers: The New Energy Consumer; Unleashing Business Value in a Digital World 01. LPA has modified its approach slightly from the 01 Rate Case to more efficiently, effectively, and proactively address matters arising from SCE s increased focus on customer service and support of grid modernization. Just as unidirectional energy flow has characterized the industry historically for the last century, unidirectional communication has been a hallmark of LPA s outreach. However, as customer communication patterns See WP SCE-0, Vol. 0, Ch. III, pp.. See WP SCE-0, Vol. 0, Ch. III, pp..

66 and expectations have shifted into a multi-directional flow, LPA is now migrating to an organizational structure that better matches evolving customer expectations. Those expectations include networked communications and engagement, and greater agility and speed of response. This model requires fewer resources, but also requires increased responsiveness to online networks and improved identification of patterns of concern. It requires increased teamwork and communication within LPA to identify those patterns, and it requires increased teamwork and communication with other organizations within SCE to engage customers more effectively. Customers expect timely information about outages through social media channels, both directly from SCE or through their local government s channels. LPA has added capabilities to coordinate such online information both through the social media channels of our government affairs representatives and by providing such information to local governments so they may distribute it online. LPA is now organized around small, interdisciplinary teams focused on those initiatives and projects that have the greatest impact on customers. LPA supports the company s emergency response efforts via the Incident Command System (ICS). This means that nearly every position in LPA has two roles: one for day-to-day work and one, on-call role in the ICS structure. Those functions formerly performed by LPA, but which are not core to the LPA function, have been transferred to other operating units within SCE. Residential customer complaints have been moved to the Consumer Affairs department in Customer Service to better address residential customer concerns via an ombudsman service, payments and administrative tracking of business license taxes and franchise payments has moved to Controllers, and management of utility users tax payments has moved to Customer Service s Revenue Services Organization. The teams and functions remaining in LPA are described below.. LPA s New and Modified Roles and Responsibilities Since the 01 GRC LPA focuses on government officials, who are often the first to receive inquiries from customers affected by SCE outages, infrastructure work, and policy implementation. LPA s approach is to address concerns in a timely manner through an organization that is agile and scalable. This includes identifying potential concerns before they arise, through projections of potential impacts to customers or through advanced identification of patterns or trends. For example, pole replacement experience in one See WP SCE-0, Vol. 0, Ch. III, p..

67 community may inform customer concerns in a similar community. This model is agile in that the teams around which LPA is organized are fluid; it is scalable in that the skill sets within the teams can be deployed where needed, when needed. a) Matrixed Project Teams Aligned by Customer Impact LPA s matrixed project teams are the hub of the organization. Unlike traditional matrices that position individuals in a fairly rigid grid with multiple leaders, the LPA matrix operates as a hub-and-spoke model, where project managers mobilize team members with various specialties and where these specialists offer their services to various teams. The key is to have specialists reflect the skill sets needed to properly round out the teams for improved customer service. The role of the management team is to coach the teams and team members, to intervene on escalated matters, and to verify that the teams are employing best practices and are developing as individuals to deliver a high level of performance. Besides project teams, LPA is organized around subject matter disciplines. The project teams assign work, but the discipline teams verify that staff maintain a high level of awareness of best practices and skill sets. The disciplines include project managers, government affairs representatives, research analysts, public affairs specialists, and social media strategists. These are supported by a small team of support analysts who are critical to providing data on overall organizational performance, and a handful of administrative assistants who each support multiple teams. Equally important to the organization and deployment of these functions is the assessment required to determine how issues are assigned and what level of engagement is necessary on any issue. b) Skill Sets Aligned to Expertise for Customer Service and Response Each skill set within LPA is its own discipline but is flexible enough to meet the needs of a particular project team. The positions are: Project managers are called account directors to better reflect external titles. They primarily lead public affairs engagement with operating unit partners. They develop and deliver public affairs strategies and tactics for major issues, programs, and projects; capably lead and work within cross functional teams; and apply leadership and organizational skills focused on developing strategic engagement plans. See WP SCE-0 Vol.0, Ch. III, p..

68 Government Affairs Representatives (GARS) may be assigned in the field or may be office-based, depending on their primary functions. However, their skill sets are interchangeable. Field-based government affairs representatives focus on key corporate initiatives in geographic areas; run all requests through an assessment process to determine course of action; and provide project teams with their assessment of concerns. Certain GARs have been assigned to limited cities for proactive engagement due to long-term impacts of SCE work or CPUC policies affecting the area. For example, the Chino Hills transmission undergrounding ordered in D has necessitated field-level assignments in Chino Hills and other communities where transmission construction is planned. Tribal nations also have an assigned, field-based, government affairs representative. There are also headquarters-based government affairs representatives, but they may be located temporarily in the field as needs arise. They focus on issue assessment, strategic planning, and monitoring. They also identify and receive emergent issues or trends, and employ an assessment process to determine courses of action. Headquarters-based GARs are among the most experienced government affairs representatives who utilize their experience and knowledge of best practices to deploy resources where necessary. However, to maintain continuity and points of contact for local governments, every jurisdiction in the service territory is provided a GAR contact to allow for rapid response to issues that may arise. Those issues are handled within LPA or are referred to the entity within SCE better equipped to respond. Public Affairs Specialists develop and manage comprehensive strategies to engage third-party organizations across the SCE service territory in various stakeholder categories, including ethnic groups and special interest groups such as seniors, veterans, LGBT, disabled, and others who may help inform the best way to reach these customer groups. Public Affairs Specialists work closely with GARs to identify groups most likely to be affected by SCE projects and CPUC policies. Research Analysts measure the effectiveness of various programs and tactics using tools and metrics that support the larger public affairs organization. They share best practices and reports to inform program direction. They conduct research on the concerns of key government and community stakeholders to verify those are addressed in outreach efforts; prepare community assessments with the public affairs specialists; organize logistics related to public outreach efforts; and research community demographics and issues to address proper sensitivities, such as language issues. Social Media Strategists identify social media tools and forums to enhance communication on projects. While some CPUC requirements involve placing notices in local newspapers or sending letters to customers within 00 feet of project construction, another strategy is to

69 place a sponsored post on Facebook or Twitter in a certain geographic area to inform customers, especially if traffic disruption is anticipated beyond the immediately affected community. This approach was used in Chino Hills in 01 when construction activity required lane closures on a major thoroughfare. Sometimes larger projects could warrant more online engagement with stakeholders through project web pages or social media pages, and these positions give LPA the capability to do that. Support Analysts provide analytical support, including research, report compilation, and query analysis relative to the overall performance of the organization. They conduct research and identify industry benchmarks to determine best practices around metrics and analytics, and they make recommendations to internal teams on meeting business needs. Support Analysts are also responsible for reporting and communicating on compliance initiatives and requirements.. LPA s Continuing Roles and Responsibilities As part of SCE s commitment to the Incident Command System (ICS) in emergency situations, LPA supports Business Resiliency s implementation of ICS by filling roles such as Liaison Officer, Agency Representative, and Situation Awareness or Document Unit Team members. This means that almost every position in LPA also has a secondary role for emergency response. To maintain certification-level qualifications for graded, state and national drills, LPA staff also participate in all corporate training, drills, and incident deployments. a) National Incident Management System (NIMS) and Incident Command System (ICS) The National Incident Management System (NIMS) and Incident Command System (ICS) are commonly accepted, national frameworks for coordinated emergency response put forth by FEMA and Department of Homeland Security. As early as the fall of 0, LPA already had trained in NIMS and ICS to better interface with first responders who employ these standards for emergency response. In 0, SCE adopted these standards for responding to natural disasters and developed a corporate ICS implementation plan. By the end of 01, 0% of LPA employees completed training in ICS at one level, ranging from the Federal Emergency Management Agency s See WP SCE-0, Vol. 0, Ch. III, pp.. Refer to SCE-0, Vol. 01 Business Resiliency. 0

70 (FEMA s) introductory computer-based training for administrative assistants to multi-day, role-specific training and certification for others. In 01, as part of SCE s effort to coordinate with local governments on emergency response communications, LPA developed and executed an outreach program in response to AB by informing local governments of SCE s emergency response plans and providing guidance on emergency protocols and logistics when coordinating with cities and counties on emergency preparedness and disaster response. This program was developed with initial input from local governments and first responders, but it will continue to be refined as local agencies adopt and improve their own programs and as LPA continues to support compliance with AB. As part of this outreach, LPA distributed a practical field guide on SCE s emergency communication information for use by LPA staff in their work with local governments. In 01, LPA migrated to a digital mobile application for this information. This app is now available for mobile device downloads by invitation to local officials. b) Emergency Response Activities (1) Emergency Response and Communication with Local Government Officials The primary function of LPA in ICS mobilizations for incident response involves deployment of Liaison Officers, Agency Representatives, and Situation Team or Document Team members. Liaison Officers on an Incident Management Team support good communication with local officials via agency representatives at city or county emergency operations centers (EOCs), or directly with city managers and elected officials when local EOCs have not been activated. Agency representatives are available for assignment to EOCs or for outreach to city staff, first responders, and elected officials. Some LPA staff are also available for deployment to support situation unit teams and document unit teams to support Incident Management or Incident Support command and general staff. Depending on a particular jurisdiction s own communication protocols, LPA staff in these roles may communicate through that jurisdiction s incident command center or may determine a need to communicate directly with other municipal staff, first responders, and elected officials. Updates may also be provided to state and federal elected officials as necessary. () SCE Alert Communication Conference Calls with Government Officials Based on input from city managers, LPA adopted a single-source telephonic update if significant emergencies occurs. This is available when an Incident Management Team is deployed under ICS. It also recognizes that some city and county EOCs may not be accessible 1

71 by SCE personnel in a natural disaster. LPA developed a system by which mayors, city managers, and emergency response personnel can receive regular status updates for their own ICS operational period briefings and planning meetings. Under this system, if a natural disaster occurs, LPA will launch telephonic updates, noticed via and/or text, at regular intervals. To enhance familiarity with and readiness of the system, LPA has conducted periodic drills with officials from throughout the service territory and has highlighted the instructions for these calls in the mobile app. () Reverse to Communicate with Residents Following the 0 San Gabriel Valley windstorm, many local public officials called for use of a reverse system to alert customers to outage information. After consultation with Sheriff and Police Departments that operate these systems, it was determined that Fire and Police Department communications take precedence over electrical system status updates. LPA has obtained letters of agreements with multiple jurisdictions for access to their reverse system when available. The letter agreements provide an important redundancy to multiple, customer communication efforts via local media, social media, and local officials. This system was successfully deployed in San Bernardino County s Forest Falls snow storm response in early January 01. With significant cooperation from the county, LPA was able to provide restoration updates to customers via the reverse system. SCE and San Bernardino County are sharing this experience with multiple jurisdictions as a best practice. c) Customer Outreach through Multiple Channels LPA leverages community-based organizations (CBOs) as trusted partners to deliver important educational information to hard-to-reach, ethnic and underserved communities. LPA accomplishes this by engaging CBOs through community meetings as needed. LPA also works with SCE s volunteer Speakers Bureau, SCE s emergency response employee volunteers, SCE s Government Advisory Panel and Consumer Advisory Panel for this purpose. These efforts complement and support outreach efforts on customer programs and are a significant vehicle to receive input and provide in-person education to community leaders on new initiatives. d) Project Management of Customer Engagement on Grid Modernization (Infrastructure Projects) LPA supports major grid modernization projects through public engagement, that includes local governments and community stakeholders, during the siting, licensing, or permitting phases of a new project s approval process. This includes bulk power systems and all distribution work

72 related to grid modernization efforts to accommodate new technologies. LPA provides input into plans for new transmission or new substations, and large distribution programs, by helping SCE account for local issues and concerns. Active public involvement is encouraged by the CPUC and by the California Environmental Quality Act (CEQA). The construction phase of new projects and programs requires a second significant phase of LPA activities wherein LPA must deliver construction updates and regularly brief local government officials and staff, affected residents, and other stakeholders, and work with SCE operations staff and local government staff on permitting and traffic controls. Per the CPUC s mitigation measures related to public notification, regular community updates are required for projects of a certain scale, such as Tehachapi Renewable Transmission Project (TRTP). Grid modernization efforts are also ramping up and have a significant impact in much of the older, more densely populated communities of SCE s service territory. These impacts include construction, traffic, and outage experiences by customers for pole relocations or replacements, conductor upgrades, recabling, distributed generation interconnections, etc. LPA supports the construction of new and upgraded transmission, substation, and distribution facilities. These construction activities have significant workload impacts on LPA staff who coordinate with the cities and counties on issues ranging from permits to community engagement. LPA manages community outreach and education on all siting and licensing of new transmission and substation projects that require a CPCN or a PTC from the CPUC and various federal permits as required. As opposition to transmission projects has grown with increased activism by local governments and residents, LPA has increased its community outreach and education efforts. LPA has increased its community outreach involvement following the CPUC decision to underground 00kV transmission lines in Chino Hills. LPA has a menu of outreach options to fit each circumstance. These can include items ranging from door-to-door notifications, if feasible, to mailers, to community workshops. The project team assesses outreach needs on a project-by-project basis.. Corporate Membership Dues & Fees SCE and its customers realize multiple benefits through customer-funded dues and memberships, which help SCE stay current on important industry trends and best practices. a) Description of Account (Description of EEI Activities) EEI is an association of U.S. investor-owned electric companies, international affiliates, and industry associates worldwide. The U.S. members serve over 0 million Americans and make up 0% of the U.S. electric power industry. EEI s membership includes over 0 international

73 affiliates in 0 countries and approximately 0 associate members. SCE and its customers realize multiple benefits through EEI membership, including: Company access to important information on new customer products and services, technologies, business practices, regulations, and key industry developments through participation in meetings, educational seminars, and online workrooms. Company participation and involvement on policy committees covering customer service, transmission, accounting, environment, supplier diversity, physical and cyber-security, and mutual assistance and emergency preparedness and response to help identify and provide innovative, more costefficient approaches in enhancing service to customers. Access to educational resources, such as industry-wide research studies, surveys, publications, online services, and consulting expertise. Participation in the formative stages of developing work products that benefit the industry and SCE s customers. Participation in EEI brings SCE employees together with peers and colleagues from other companies in business and industry to perform collective activities not regularly performed by the individual companies on a full-time basis, such as benchmarking studies, industry surveys, and sharing best practices. This collaborative approach reduces the need for expensive customized research and studies, consultants and experts, database development and maintenance, publication development, and specialized training. b) SCE Involvement in Other Organizations that Benefit Customers The Conference Board convenes educational seminars and peer-learning groups, provides management research, and economic forecasting and analysis. The California Utilities Emergency Association provides support during emergencies and also provides compliance with CPUC General Order No. 1, Standard. The Center for Energy Workforce Development provides resources to address the need for a qualified, diverse workforce to serve utility customers.

74 The Southern California Leadership Council enables SCE to be informed of issues that affect workforce development, greenhouse gases, climate change, and goods movement. It is one of the strategic committees of The Center of Economic Development, a program of the Economic Development Corporation of Los Angeles County. The Western Energy Institute provides SCE with a forum of technical energy experts to address common business issues and promote the progress of the electric industry. E. O&M 1. Activity Description - Local Public Affairs [FERC account 0/1] As shown in below in Figure III-1, FERC Account 0/1 captures labor and nonlabor expenses of the LPA department that engages with government officials to support electric safety education, emergency response communications, grid modernization, operations with community impact, local reliability, and education on state-mandated policy initiatives such as energy efficiency, renewables, and distributed generation. A detailed description of LPA s activities captured in this account is provided in sections A-D in this testimony. See WP SCE-0, Vol. 0, Ch. III, pp. 1.

75 Figure III-1 Local Public Affairs Recorded 0 01 / Forecast FERC Account 0/1 1. Activity Description - Corporate Membership Dues & Fees [FERC account 0] SCE and its customers realize multiple benefits through customer-funded dues and memberships, which help SCE stay current on important industry trends and best practices. As shown in Figure III-1, for Test Year 01 SCE forecasts $1. million for this account. SCE s request primarily represents the annual corporate membership fee to the EEI, but it also includes membership fees to various electrical-system research and economic development organizations. 0 See WP SCE-0, Vol. 0, Ch. III, pp See WP SCE-0, Vol. 0, Ch. III, pp. -.

76 Figure III-1 Corporate Membership Dues & Fees Recorded 0 01 / Forecast FERC Account 0 1. Analysis of Recorded Expenses a) Labor [FERC Account 0/1] Labor costs have trended downward from 0 to 01 due to a 1.% shift in work from ratepayer to shareholder, delay in filling vacancies, and attrition. 1 Over the -year period, labor has decreased an average of % annually. In 01, vacancies were held open and hiring was minimal as the departmental Operational Excellence strategy was developed and the department was reorganized in late 01. b) Non-Labor [FERC Account 0/1] As shown in Figure III-1, non-labor costs for the period 0 01 follow the labor costs decreasing year to year, except for 01, where costs remained similar to the previous year. Between 0 and 01, non-labor expenses decreased by $1. million primarily due to the 1 See WP SCE-0, Vol. 0, Ch. III, pp. -.