gary a. stern, ph.d. managing director, state ......in compliance with california public utilities...

ADVICE LETTER (AL) SUSPENSION NOTICE ENERGY DIVISION

Utility Name: Southern

California Edison Company

Utility Number/Type: U-338-E

Advice Letter Number(s): 4281-E

Date AL(s) Filed: September 1, 2020

Utility Contact Person: Darrah Morgan

Utility Phone No.: (626) 302-2086

Date Utility Notified: September 28, 2020

[ X] E-Mailed to:

[email protected]

ED Staff Contact: Hafiz Bello

ED Staff Email: [email protected]

ED Staff Phone No.: 415-703-1525

[x] INITIAL SUSPENSION (up to 120 DAYS from the expiration of the initial review period)

This is to notify that the above-indicated AL is suspended for up to 120 days beginning 09-28-2020 for the following reason(s) below. If the AL requires a Commission resolution and the Commission’s deliberation on the resolution prepared by Energy Division extends beyond the expiration of the initial suspension period, the advice letter will be automatically suspended for up to 180 days beyond the initial suspension period. [x] A Commission Resolution is Required to Dispose of the Advice Letter [ ] Advice Letter Requests a Commission Order [] Advice Letter Requires Staff Review The expected duration of initial suspension period is 120 days

[ ] FURTHER SUSPENSION (up to 180 DAYS beyond initial suspension period) The AL requires a Commission resolution and the Commission’s deliberation on the resolution prepared by Energy Division has extended beyond the expiration of the initial suspension period. The advice letter is suspended for up to 180 days beyond the initial suspension period.

_____________________________________________ If you have any questions regarding this matter, please contact Werner Blumer at [email protected]. cc: EDTariffUnit

P.O. Box 800 8631 Rush Street Rosemead, California 91770 (626) 302-9645 Fax (626) 302-6396

obi Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations

September 1, 2020

ADVICE 4281-E (U 338-E)

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION

SUBJECT: 2020 Request of Southern California Edison Company for Efficiency Savings and Performance Incentive Award

I. PURPOSE In compliance with California Public Utilities Commission (Commission or CPUC) Decision (D.)13-09-023 as modified,1 Resolution E-4897,2 and D.16-08-019,3 Southern California Edison Company (SCE) hereby submits for Commission approval its Efficiency Savings and Performance Incentive (ESPI) award of $9,574,787 to be recognized as earnings in 2020.4 Table 1 presents the energy efficiency incentive awards for which SCE requests approval, and each line item is explained in more detail below.

Table 1 presents the information in the format as requested by the Commission in the “General Guidelines” tab of the 2020 ESPI Filing Workbook.5 Table 2 presents the information by four ESPI categories: 1) Part 1 – Program Year (PY) 2019, 2) Part 2 – PY 2018, 3) Utility Audit, Finance and Compliance Branch (UAFCB) Audit Adjustments, and 4) Other Adjustments.

1 See D.13-09-023, Decision Adopting Efficiency Savings and Performance Incentive

Mechanism, as modified by D.14-10-046, Decision Establishing Energy Efficiency Savings Goals and Approving 2015 Energy Efficiency Programs and Budgets and D.15-10-028, Decision Re Energy Efficiency Goals for 2016 and Beyond and Energy Efficiency Rolling Portfolio Mechanics.

2 See Resolution E-4897, issued on December 18, 2017 (Resolution E-4897). 3 See D.16-08-019, Decision Providing Guidance For Initial Energy Efficiency Rolling

Portfolio Business Plan Filings, August 25, 2016. 4 See Attachment 1 for the template used to calculate the 2019 Ex Ante EE ESPI

expenditures and the 2019 Ex Ante EE ESPI savings. 5 2020 ESPI Filing Workbook, available here:

https://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442465510

ADVICE 4281-E (U 338-E) - 2 - September 1, 2020

SCE’s request relies solely on the (1) data provided by Commission staff,6 (2) results of the UAFCB audit,7 and (3) SCE’s 2019 Claims data.8

Table 1 – Summary of SCE Incentive Award Request

Component Request 2018 Ex Post Savings $4,653,279 2019 Ex Ante Savings $714,713 2019 Ex Ante Review Performance $2,820,922 2019 Codes & Standards $909,214 2019 Non-Resource $477,059 2018 Ex Ante Savings True Up $0 2018 Ex Ante Review Performance True Up $0 2018 Codes & Standards True Up $0 2018 Non-Resource True Up ($400) Other Adjustments $0 Total Request $9,574,787

6 Final Savings Performance Statement on 2018 Evaluated Energy Efficiency Savings for the

2020 Efficiency Savings and Performance Incentive Mechanism, July 31, 2020. Available at https://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442465725. 7 Energy Efficiency Examination, Southern California Edison Company Program Year 2018,

Utility Audit, Finance and Compliance Branch, August 11, 2020. Available at ftp://ftp.cpuc.ca.gov/utilityaudits/Energy_Efficiency_Audits/2020/

8 Available at https://cedars.sound-data.com/upload/confirmed-dashboard/SCE/2019/.


Table 2 - Summary of SCE Incentive Award Request by Category

# Component Award1. Part 1 – Program Year (PY) 2019 Components 2019 Ex-Ante Savings9 $714,713 2019 Ex-Ante Review Performance or Resource Program

Management Fee $2,820,922

2019 Codes & Standards Program Management Fee $909,214 2019 Non-Resource Program Management Fee $477,059

Part 1 – PY 2019 Sub-total $4,921,9082. Part 2 – PY 2018 Components 2018 Ex-Post Savings $4,653,279 2018 Ex-Ante Savings True Up $0

Part 2 – PY 2018 Sub-total $4,653,279 3. UAFCB Audit Adjustments 2018 Non-Resource Program Management Fee True Up ($400) 2018 Ex-Ante Review Performance True-Up ($0) 2018 Codes & Standards True-Up ($0)

UAFCB Audit Adjustments Sub-total ($400)4. Other Adjustments – None $0 Total Award $9,574,787

II. BACKGROUND On September 11, 2013, the Commission adopted D.13-09-023 approving the 2013-2014 EE incentive mechanism for SCE and the other California investor-owned utilities (IOUs), including the timeline for the IOUs to submit their award requests.10 In D.15-10-028, issued on October 29, 2015, the Commission revised D.13-09-023, and established the following ESPI submission timelines:11

• By September 1 of each year, each utility will submit its ESPI advice letter addressing the Ex-Ante Review (EAR) performance award claim, and

• Within 30 days of issuance of the Final Savings Performance Statement, each utility will submit an advice letter addressing the ex post savings award claim.

9 D.13-09-023, p. 95, refers to this component as the “[p]reliminary ex ante locked down

deemed measure savings award.” CPUC Guidelines for the 2019 AL Submission refers to this component as “Ex-Ante Savings.”

10 D.13-09-023, Attachments 5 and 6. 11 D.15-10-028, Appendix 5.


A. 2018-2019 Efficiency Savings and Performance Incentive Mechanism Timing and Components

The ESPI mechanism processes award claims over a two-year cycle, meaning the award payments are granted in two installments:12

1. Part 1 – Claims for ESPI awards covering the PY shall be made during the following year (PY + 1) for the following ESPI elements:13

• Non-resource program management fee • Codes &Standards management fee • EAR performance bonus • Preliminary ex ante locked down deemed measure savings award14

2. Part 2 – Claims shall be made two years following the PY (PY + 2) for the

following ESPI elements:15 • Custom projects • Ex post verified deemed measure savings • True up of preliminary ex ante savings payment based on verified counts

Additionally, D.13-09-023 awards shareholder earnings to IOUs based on four components:16

1. Non-Resource Programs Management Fee – Three (3) percent of non-resource program expenditures, not to exceed authorized expenditures, and excluding administrative costs.

2. Codes & Standards (C&S) Management Fee – Twelve (12) percent of approved C&S program expenditures, not to exceed authorized expenditures, and excluding administrative costs.

3. Ex Ante Review (EAR) Performance Bonus - Up to three (3) percent of

resource program expenditures based on ex ante review process performance, excluding: administrative; C&S; evaluation, measurement, and verification (EM&V); and Community Choice Aggregation/Regional Energy Network (CCA/RENs) costs.

12 Id. at pp. 84-85. 13 Id. at p. 95. 14 “Ex Ante Lock-down” refers to the finalization of staff review of ex ante estimates of savings

for a given program or measure. 15 D.13-09-023, p. 96. 16 D.13-09-023, pp. 94-95.


4. Resource Programs Performance Bonus - Up to nine (9) percent of resource program expenditures based on ex ante and ex post energy savings, and excluding administrative, C&S, EM&V, and CCA/RENs costs.

III. SCE’S 2020 ESPI AWARD REQUEST BY CATEGORY As shown in Table 2, SCE’s ESPI request of $9,575,187 is based on four categories: 1) Part 1 - PY 2019, 2) Part 2 - PY 2018, 3) UAFCB audit adjustments, and 4) other adjustments. This section describes SCE’s ESPI request broken down for each part of the ESPI mechanism, including true-ups.

A. Part 1 – PY 2019 SCE’s PY 2019 award, as shown in Table 3, is comprised of four items. The payment is made over two years. SCE’s request for $4,921,908 represents the first payment of the PY 2019 award. Table 3 provides a summary of the PY 2019 components, followed by further details explaining calculations. Table 3 – Summary of Part 1 – PY 2019 Incentive Award Request

Component AwardPart 1 – PY 2019 Components 2019 Ex-Ante Savings $714,713 2019 Ex-Ante Review Performance Bonus or Resource Program Management Fee $2,820,922

2019 Codes & Standards Program Management Fee $909,214 2019 Non-Resource Program Management Fee $477,059

Part 1 – PY 2019 Total $4,921,908 The 2019 Ex-Ante Savings component is calculated by multiplying the adjusted lifecycle savings provided by Energy Division on August 6, 2020 and SCE’s 2019 authorized earning coefficients, which are a $2,122/GWh and $5,296/MW multiplier on net lifecycle energy savings.17. The 2019 Ex-Ante Review (EAR) Performance or Resource Program Management Fee is calculated by multiplying the PY 2019 EAR performance scores and 3 percent of 2019 resource program actual (non-audited) expenditures, excluding administrative costs. On June 22, 2020, SCE received from Energy Division the inputs, including the

17 On August 3, 2020, SCE submitted Advice 4268-E, calculating the 2019 PY ESPI

mechanism earning rates and award caps. The Energy Division approved the Advice Letter on August 25, 2020. SCE’s 2019 earning coefficients are $2,122 per Lifecycle Net GWH and $5,296 per Lifecycle Net MW.


workpaper and custom score. With these inputs, SCE calculated the PY 2019 EAR performance bonus at 88.76%.18 The 2019 Codes & Standards Management Fee and the 2019 Non-Resource Program Management Fees are calculated by multiplying the 2019 actual (non-audited) expenditures for the respective categories by the award fee of 12 percent and 3 percent, respectively. The total Part 1 for PY 2019 actual (non-audited) expenditures and SCE’s corresponding total 2019 award claim are shown below. Please see Attachment 1 for the details supporting the calculations.

Resource Programs Performance Bonus - Part (1)19 231,457,817.730 lifecycle net kWh x 1GWh/1,000,000kWh x $2,122/GWh = $491,153 42,212.965 lifecycle net kW x 1MW/1,000kW x $5,296/MW = $223,560 $491,153 + $223,560 = $714,713 EAR Performance Bonus $105,938,203 x 3% x 88.76% = $2,820,922 C&S Management Fee $7,576,783 x 12% = $909,214 Non-Resource Programs Management Fee $15,901,979 x 3% = $477,059 Total 2018 Part (1) Award Request: $714,713 + $2,820,922+ $909,214 + $477,059 = $4,921,908

18 As reported in the memorandum from CPUC, Final 2019 Efficiency Savings and

Performance Incentive (ESPI) Ex Ante Review Performance Scores, issued to the service lists in R.12-01-005 and R.13-11-005, March 30, 2019 and revised June 22, 2020, available here: http://www.deeresources.com/files/espi/downloads/SCE_2019_ESPI_2020_03_30_Final.pdf Table 1 on P.2 of the memorandum provides a workpaper score of 43.92 points and a custom score of 47.80 points. The score is then weighed per Ordering Paragraph 19 of D.16-08-019 (described further below in Section IV) by the proportion of deemed savings (88.15% in 2019) and custom savings (11.85% in 2019) in each utility’s portfolio. SCE’s PY 2019 EAR award performance bonus is 43.92*2*88.15% + 47.80*2*11.85% = 88.76%. More details can be found in Attachment 1, EAR Score Calculation tab.

19 Based on Adjusted Lifecycle savings from “ATR-2019.db” received from Energy Division on August 6, 2020. SCE also removed all savings for claims installed prior to 2019.


B. Part 2 – PY 2018 SCE’s PY 2018 award, summarized in Table 4, is comprised of two components:

2018 Ex-Post Savings and 2018 Ex-Ante Savings True-Up. On July 31, 2020, SCE obtained from Energy Division the two components from the Commission’s 2018 Ex-Post ESPI Final Performance Statement Report (Final Performance Statement Report).20 Payment for PY 2018 is made over two years. This section represents SCE’s request for the second year’s payment for the PY 2018 award. This request includes:

• Ex-post verified Custom project savings and deemed measure savings, and • True up of preliminary ex-ante savings payment based on verified counts.

Table 4 – Summary of Part 2 – PY 2018 Incentive Award Request

Component AwardPart 2 – PY 2018 Components2018 Ex-Post Savings $4,653,27921

2018 Ex-Ante Savings True Up $022

Part 2 – PY 2018 Total $4,653,279

Ex-Post Verified Custom and Deemed Measure Savings $1,594,462 + $3,058,817 = $4,653,27923 2018 Ex Ante Review Performance Bonus True Up $0 Total Non-Audit Adjustments 2016 Part (2) Award Request $4,653,279 + $0 = $4,653,279

The Final Performance Statement Report reflects the adjustments from the impact evaluation studies, including the primary lighting study. SCE’s request for the Part 2 - PY 2018 award reflects the results of those adjustments of approximately $11.9 million, of which $11.2 million is related to the primary lighting program.

20 See “2018 Ex Post Efficiency Savings and Performance Incentive (ESPI) Final

Performance Statement Report”, July 31, 2020, Available at: https://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442465725

21 Final Performance Statement Report, P. 2 22 Final Performance Statement Report, P. 5, Table 1 23 Final Performance Statement Report, P. 6, Table 2.


C. UAFCB Audit Adjustments24

Ordering Paragraph 17 of D.13-09-023 requires the UAFCB to perform an examination of, and provide an audit report (Audit) on, SCE’s annual EE expenditures.25 The IOUs are required to adjust their ESPI Earnings request based on any adjustments included in the UAFCB report (Audit). The Audit included only one finding that SCE overstated its Non Resource Expenditures by $12,405.26 However, because “SCE exceeded its ESPI award cap set for PY 2018, the Audit found that the “unallowable program expenditures do not affect ESPI management fees for the year.”27 Nevertheless, SCE makes a downward adjustment to reflect that the non-resource management fee should have been reduced by $400 in 2019 earnings. Please see the calculation in Table 5 below:

Table 5 – Summary of UAFCB Audit Adjustments

Calculation Component Award

A 2018 Non-Resource Management Fee True Up ($12,405)

B 3% Non-Resource Management Fee 3%

C=A*B Non-Resource Management Fee Adjustment ($372)

D = C*7.61% Cost of Capital Adjustment – 7.61%28 ($28)

E = C+D Non-Resource True-Up / UAFCB Audit Adjustments Total

($400)

D. Other Adjustments For the 2020 ESPI filing, there are no other adjustments.

IV. ADDITIONAL ADJUSTMENTS REFLECTING COMMISSION DECISIONS

24 All true-up amounts resulting from the audit of SCE’s 2018 EE portfolio include a 7.61% adder reflecting SCE’s weighted average cost of capital.

25 For this filing, please see Energy Efficiency Program Performance Audit, Southern California Edison Company (SCE) For Program Year Ended December 31, 2018, Utility Audit, Finance and Compliance Branch, August 11, 2020. Available at ftp://ftp.cpuc.ca.gov/utilityaudits/Energy_Efficiency_Audits/2020/

26 Energy Efficiency Program Performance Audit, p.1 27 Id. at p.1 28 All true-up amounts resulting from the audit of SCE’s 2018 EE portfolio include a 7.61%

adder reflecting SCE’s 2019 weighted average cost of capital.


SCE’s incentive award reflects the feedback and guidance the Commission provided in the ESPI resolution issued in December 2017 (E-4897). Resolution E-4897 “excluded savings for measures that had installation dates, identified in the official claims in the IOUs’ quarterly data submissions, prior to January 1, 2016” with certain exceptions.29 The award request contained in this advice letter is compliant with this requirement. Further, this advice letter reflects the adjustments contained in the recent audit of SCE’s 2018 EE Portfolio conducted by the UAFCB.30

SCE’s incentive award also reflects Ordering Paragraph 19 of D.16-08-019, which adds weighting to the ESPI formula based on the proportion of deemed savings and custom measures in each utility’s portfolio.

V. Conclusion SCE requests the energy efficiency incentive award of $9,575,187 as earnings in 2020. Component AwardPart 1 – PY 2019 $4,921,908Part 2 – PY 2018 $4,653,279UAFCB Audit Adjustments ($400)Other Adjustments – None $0Total Award $9,574,787

VI. ATTACHMENT

This advice letter includes Attachment 1 that contains the template used to calculate the 2019 Ex Ante EE ESPI expenditures and the 2019 Ex Ante EE ESPI savings.

VII. TIER DESIGNATION

Pursuant to D.13-09-023, Ordering Paragraph 4, this advice letter is submitted with a Tier 3 designation.

VIII. EFFECTIVE DATE

This advice letter will become effective upon Commission approval.

29 Resolution E-4897, p. 16. 30 UAFCB 2018 Energy Efficiency Examination, published on August 11, 2020.


IX. NOTICE

Anyone wishing to protest this advice letter may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this submission. Protests should be submitted to:

CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California 94102 E-mail: [email protected]

Copies should also be mailed to the attention of the Director, Energy Division, Room 4004 (same address above).

In addition, protests and all other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of:

Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770

Telephone (626) 302-9645 Facsimile: (626) 302-6396 E-mail: [email protected] Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California 94102 Facsimile: (415) 929-5544 E-mail: [email protected]

There are no restrictions on who may submit a protest, but the protest shall set forth specifically the grounds upon which it is based and must be received by the deadline shown above.

In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice letter submission to the interested parties shown on the attached GO 96-B, R.12-01-005, and R.13-11-005 service lists. Address change requests to the GO 96-B service list should be directed by electronic mail to [email protected] or at (626) 302-4039. For changes to all other service lists, please contact the Commission’s Process Office at (415) 703-2021 or by electronic mail at [email protected].


Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by submitting and keeping the advice letter submission at SCE’s corporate headquarters. To view other SCE advice letters submitted with the Commission, log on to SCE’s web site at https://www.sce.com/wps/portal/home/regulatory/advice-letters.

For questions, please contact Ka-Wing Maggie Poon at (626) 302-1194 or by electronic mail at [email protected].

Southern California Edison Company

/s/ Gary A. Stern, Ph.D. Gary A. Stern, Ph.D. GAS:mp:jm Enclosure

ADVICE LETTER S U M M A R YENERGY UTILITY

Company name/CPUC Utility No.:

Utility type:Phone #:

EXPLANATION OF UTILITY TYPE

ELC GAS

PLC HEAT

MUST BE COMPLETED BY UTILITY (Attach additional pages as needed)

Advice Letter (AL) #:

WATERE-mail: E-mail Disposition Notice to:

Contact Person:

ELC = ElectricPLC = Pipeline

GAS = GasHEAT = Heat WATER = Water

(Date Submitted / Received Stamp by CPUC)

Subject of AL:

Tier Designation:

Keywords (choose from CPUC listing):AL Type: Monthly Quarterly Annual One-Time Other:If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #:

Does AL replace a withdrawn or rejected AL? If so, identify the prior AL:

Summarize differences between the AL and the prior withdrawn or rejected AL:

Confidential treatment requested? Yes NoIf yes, specification of confidential information:Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/access to confidential information:

Resolution required? Yes No

Requested effective date: No. of tariff sheets:

Estimated system annual revenue effect (%):

Estimated system average rate effect (%):

When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting).

Tariff schedules affected:

Service affected and changes proposed1:

Pending advice letters that revise the same tariff sheets:

1Discuss in AL if more space is needed.

CPUC, Energy DivisionAttention: Tariff Unit505 Van Ness AvenueSan Francisco, CA 94102 Email: [email protected]

Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless otherwise authorized by the Commission, and shall be sent to:

Name:Title:Utility Name:Address:City:State:Telephone (xxx) xxx-xxxx:Facsimile (xxx) xxx-xxxx:Email:

Name:Title:Utility Name:Address:City:State:Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx:Email:

Zip:

Zip:

mailto:EDTariffUnit%40cpuc.ca.gov?subject=

ENERGY Advice Letter Keywords

Affiliate Direct Access Preliminary StatementAgreements Disconnect Service ProcurementAgriculture ECAC / Energy Cost Adjustment Qualifying FacilityAvoided Cost EOR / Enhanced Oil Recovery RebatesBalancing Account Energy Charge RefundsBaseline Energy Efficiency ReliabilityBilingual Establish Service Re-MAT/Bio-MATBillings Expand Service Area Revenue AllocationBioenergy Forms Rule 21Brokerage Fees Franchise Fee / User Tax RulesCARE G.O. 131-D Section 851CPUC Reimbursement Fee GRC / General Rate Case Self GenerationCapacity Hazardous Waste Service Area MapCogeneration Increase Rates Service OutageCompliance Interruptible Service SolarConditions of Service Interutility Transportation Standby ServiceConnection LIEE / Low-Income Energy Efficiency StorageConservation LIRA / Low-Income Ratepayer Assistance Street LightsConsolidate Tariffs Late Payment Charge SurchargesContracts Line Extensions TariffsCore Memorandum Account TaxesCredit Metered Energy Efficiency Text ChangesCurtailable Service Metering TransformerCustomer Charge Mobile Home Parks Transition CostCustomer Owned Generation Name Change Transmission LinesDecrease Rates Non-Core Transportation ElectrificationDemand Charge Non-firm Service Contracts Transportation RatesDemand Side Fund Nuclear UndergroundingDemand Side Management Oil Pipelines Voltage DiscountDemand Side Response PBR / Performance Based Ratemaking Wind PowerDeposits Portfolio Withdrawal of ServiceDepreciation Power Lines

gary a. stern, ph.d. managing director, state ......in compliance with california public utilities...

Documents