Details for: 3947-E (Part 1 of 1).pdf

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

February 6, 2019
(U 338-E)
Marginal Generation Capacity Cost Factor Review for Maritime
Entities at the Port of Long Beach in Compliance with Decision


In compliance with California Public Utilities Commission (Commission or CPUC)
Decision (D.)14-03-007 (or the Decision), Southern California Edison Company (SCE)
hereby submits the following review of the Marginal Generation Capacity Cost Factor
(MGCC Factor) used in determining certain rate discounts for Maritime Entities at the
Port of Long Beach who are served on Schedule ME, Maritime Entities at the Port of
Long Beach.
The purpose of this advice letter is to comply with a term of a settlement approved in
D.14-03-007, which states “…SCE, in agreement with the Port, [shall] file an advice
letter every six (6) years, after the conclusion of alternate GRC proceedings, that would
propose to continue or modify the MGCC Factor set forth in Section 4.e of this
Settlement Agreement and/or renew the discount rates proposed herein.”1 For the
reasons set forth below, SCE will continue to use a 50 percent MGCC Factor as
described in Schedule ME until the next required review, which is scheduled to be at the
conclusion of SCE’s 2024 General Rate Case (GRC) Phase 2 proceeding. In preparing
this advice letter, SCE conferred with the Port of Long Beach (Port), as required, and
received the Port’s support for this submittal.
On March 13, 2014, the Commission adopted D.14-03-007, which approved, with
modifications,2 the Settlement Agreement for Rates and Infrastructure Applicable to
Maritime Entities in the Port of Long Beach (Settlement Agreement), filed by Joint
Motion of SCE, the City of Long Beach and the California Public Advocates Office

Settlement Agreement, p. 14.
The Decision did not approve Sections 4.f and 4.n.6 of the Settlement Agreement, neither
of which are impacted by or related to this filing.

P.O. Box 800

8631 Rush Street

Rosemead, California 91770

(626) 302-9645

Fax (626) 302-6396


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ADVICE 3947-E (U 338-E) -2- February 6, 2019 (PAO)3 on July 11, 2013. The Settlement Agreement addresses certain electric infrastructure and rate discount provisions applicable to customers located at the Port of Long Beach who meet the definition of a “Maritime Entity.”4 One such discount provides that, to the extent a Maritime Entity has new load (as defined in the Settlement Agreement),5 such qualifying new load receives a discount equal to 50 percent of the new load’s contribution to margin (CTM),6 provided the CTM is positive. In order to determine a Maritime Entity’s CTM, the marginal generation, distribution and customer costs of serving the Maritime Entity must be calculated on a monthly basis. The unit marginal generation capacity, distribution and energy costs used are consistent with those adopted in SCE’s most recent GRC Phase 2 proceeding,7 except that the MGCC is adjusted downward by the MGCC Factor approved in D.14-03-007. The initial MGCC Factor adopted in D.14-03-007 was 50 percent. Under the terms of Section 4.e of the Settlement Agreement adopted in the Decision, the MGCC Factor was to remain at 50 percent for an initial term of six years, and then be subject to review via a Tier 2 advice letter filed at the conclusion of SCE’s 2018 GRC Phase 2, and again at the conclusion of alternate (i.e., every other) GRCs thereafter through December 31, 2037.8 Continued use of an MGCC Factor less than 1.0 after the initial 6-year term requires a showing that it is justified, citing the Commission’s most recent Long-Term Procurement Plan (LTPP) proceeding or other applicable 3 4 5 6 7 8 At the time, PAO was referred to as the Office of Ratepayer Advocates (ORA). In accordance with the Settlement Agreement and Decision, Special Condition 1.g of Schedule ME defines “Maritime Entities” as follows: “Container, stevedoring and shipping entities located within the real property owned in fee by the City of Long Beach with or adjacent to the Harbor District, including real property in fee acquired by the City of Long Beach within or adjacent to the Harbor District, but excluding Pier H. Entities other than container, stevedoring and shipping entities, such as those engaged in oil extraction activities, are not Maritime Entities.” See Special Condition 1.h of Schedule ME. Special Condition 1.b of Schedule ME defines CTM and how it is used for the purposes of determining certain rate discounts. In SCE’s most recent 2018 GRC Phase 2 proceeding, the Commission did not adopt specific unit marginal costs. However, Finding of Fact No. 3 in D.18-11-027 acknowledges the range of marginal cost litigation positions set forth by the parties and found reasonable the settled-upon values for purposes of the revenue allocation settlement agreement adopted in that proceeding: “The artificial [settled] marginal costs used in the MC/RA settlement are considered to be reasonable by the parties. This is because the artificial [settled] marginal costs fall within the range of those originally proposed by parties, and according to witnesses are values that survived rejection by the parties, rather than values that were acceptable in and of themselves.” Conclusion of Law No. 3 further states: “It is reasonable for the Commission to accept the use of artificial marginal cost values for the purposes of revenue allocation and rate design, so long as those values are within the range of alternatives offered by the parties in their testimony.” Therefore, beginning March 1, 2019 (which is the implementation date for SCE’s 2018 GRC Phase 2), SCE intends to begin using the updated unit marginal costs that were ultimately used to reach the revenue allocation settlement adopted in D.18-11-027 for the purposes of calculating the marginal cost bills of Schedule ME customers, as applicable. Settlement Agreement, p. 10.
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ADVICE 3947-E (U 338-E) -3- February 6, 2019 Commission precedent or provision of the California Public Utilities Code. If the most recent LTPP or other applicable Commission precedent indicates that additional generation capacity is required for reliability purposes in SCE’s service territory, then the magnitude of an MGCC Factor would be determined according to the timing of the capacity need. Any updated MGCC Factor would apply for the 6-year term commencing with the conclusion of SCE’s 2018 GRC Phase 2. The Settlement Agreement provided further clarification on this review process, stating “[i]n the 2018 GRC Phase 2, for example, SCE would be required to show that there is no forecast need for additional generation capacity for reliability purposes in SCE’s service area from 2019 through 2024. If additional generation capacity is required, then the magnitude of a[n] MGCC Factor would be determined according to the timing of the capacity need.”9 DISCUSSION In accordance with the provision of the Settlement Agreement cited directly above, in testimony served in support of its 2018 GRC Phase 2 proceeding (Application (A.)17-06-030), SCE stated that based on the decision in the then-most recent LTPP proceeding,10 there was no forecast need for additional peak generation capacity for reliability purposes in SCE’s service territory from 2019 through 2024.11 The decision cited in that testimony remains the most recent Commission decision addressing the potential need for additional generation capacity related to reliability in SCE’s service territory. On August 1, 2018, SCE did file its Integrated Resource Plan (IRP) for the 2017-2018 cycle in Rulemaking (R.)16-02-007.12 However, the Commission has not yet issued a decision related to that filing. Moreover, in that filing, SCE did not identify any capacity needs for reliability through 2030 based on the assumptions used.13 Therefore, SCE 9 10 11 12 13 Id., footnote 2, p. 10. See Ordering Paragraph 1 of D.15-10-031, which approved SCE’s 2014 Bundled Procurement Plan (BPP) in R.13-12-010. SCE’s 2014 BPP requested that the Commission not authorize procurement since there was no additional need. See Second Revised Phase 1a Testimony of Southern California Edison Company on Resource Need, p. 1, in R.13-12-010. A.17-06-030, Exhibit SCE-02A, Exhibit F, Marginal Generation Capacity Analysis as Required Pursuant to D.14-03-007 in Regards to the MGCC Factor Applicable to Maritime Entities at the Port of Long Beach, p. F-2. Order Instituting Rulemaking to Develop an Electricity Integrated Resource Planning Framework and to Coordinate and Refine Long-Term Procurement Planning Requirement. See Integrated Resource Plan of Southern California Edison Company filed August 1, 2018 in R.16-02-007, p. 16: “In accordance with D.18-02-018, SCE’s IRP includes an SCE bundled portfolio using inputs and assumptions from the Commission’s Reference System Plan and the 2017 IEPR – the SCE Conforming Portfolio…Based on those assumptions, the SCE Conforming Portfolio shows no resource additions through 2030, because SCE can meet its GHG emissions targets and other needs with existing and contracted resources.” SCE acknowledges that it did not entirely agree with the assumptions used in the SCE Conforming Portfolio that may impact system or local reliability (see e.g., p. 57 of
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ADVICE 3947-E (U 338-E) -4- February 6, 2019 proposes to maintain the current MGCC Factor at 50 percent for the next six-year period. Finally, because SCE is implementing new time-of-use (TOU) periods effective March 1, 2019 along with updated corresponding unit marginal costs, bills calculated for Schedule ME customers on or after March 1, 2019 will use the updated TOU periods and unit marginal costs addressed in D.18-07-006 and D.18-11-027. The MGCC Factor will continue to be applied as outlined in Appendix A of the Settlement Agreement, across all TOU periods. TIER DESIGNATION Pursuant to D.14-03-007, this advice letter is submitted with a Tier 2 designation. EFFECTIVE DATE This advice letter will become effective on March 8, 2019, the 30th day after filing. 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 7 days after the date of this advice letter. Protests should be submitted to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California 94102 E-mail: 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: the IRP) and proposed a new reliability threshold mechanism in the event system or local reliability issues arise; but, again, the Commission has not yet acted on the filed plan, so there is no Commission decision on which to rely beyond the decision cited above in footnote 9.
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ADVICE 3947-E (U 338-E) -5- February 6, 2019 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: 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: 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 to the interested parties shown on the attached A.12-12-027 and GO 96-B service lists. Address change requests to the GO 96-B service list should be directed by electronic mail to 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 Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by submitting and keeping the advice letter at SCE’s corporate headquarters. To view other SCE advice letters submitted with the Commission, log on to SCE’s web site at For questions, please contact Erin Pulgar at (626) 302-2509 or by electronic mail at Southern California Edison Company /s/ Gary A. Stern, Ph.D. Gary A. Stern, Ph.D. GAS:ep:jm
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ADVICE LETTER SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/CPUC Utility No.: Southern California Edison Company (U 338-E) Utility type: ELC GAS PLC HEAT ELC = Electric PLC = Pipeline WATER Contact Person: Darrah Morgan Phone #: (626) 302-2086 E-mail: E-mail Disposition Notice to: EXPLANATION OF UTILITY TYPE GAS = Gas WATER = Water HEAT = Heat (Date Submitted / Received Stamp by CPUC) Tier Designation: 2 Advice Letter (AL) #: 3947-E Subject of AL: Marginal Generation Capacity Cost Factor Review for Maritime Entities at the Port of Long Beach in Compliance with Decision 14-03-007 Keywords (choose from CPUC listing): Compliance AL Type: Monthly Quarterly Annual One-Time Other: If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #: Decision 14-03-007 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 No If 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: 3/8/19 No. of tariff sheets: -0- 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: None Service affected and changes proposed1: Pending advice letters that revise the same tariff sheets: None 1 Discuss in AL if more space is needed. Clear Form
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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: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, CA 94102 Email: Name: Gary A. Stern, Ph.D. Title: Managing Director, State Regulatory Operations Utility Name: Southern California Edison Company Address: 8631 Rush Street City: Rosemead Zip: 91770 State: California Telephone (xxx) xxx-xxxx: (626) 302-9645 Facsimile (xxx) xxx-xxxx: (626) 302-6396 Email: Name: Laura Genao c/o Karyn Gansecki Title: Managing Director, State Regulatory Affairs Utility Name: Southern California Edison Company Address: 601 Van Ness Avenue, Suite 2030 City: San Francisco State: California Zip: 94102 Telephone (xxx) xxx-xxxx: (415) 929-5515 Facsimile (xxx) xxx-xxxx: (415) 929-5544 Email: Clear Form
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ENERGY Advice Letter Keywords Affiliate Direct Access Preliminary Statement Agreements Disconnect Service Procurement Agriculture ECAC / Energy Cost Adjustment Qualifying Facility Avoided Cost EOR / Enhanced Oil Recovery Rebates Balancing Account Energy Charge Refunds Baseline Energy Efficiency Reliability Bilingual Establish Service Re-MAT/Bio-MAT Billings Expand Service Area Revenue Allocation Bioenergy Forms Rule 21 Brokerage Fees Franchise Fee / User Tax Rules CARE G.O. 131-D Section 851 CPUC Reimbursement Fee GRC / General Rate Case Self Generation Capacity Hazardous Waste Service Area Map Cogeneration Increase Rates Service Outage Compliance Interruptible Service Solar Conditions of Service Interutility Transportation Standby Service Connection LIEE / Low-Income Energy Efficiency Storage Conservation LIRA / Low-Income Ratepayer Assistance Street Lights Consolidate Tariffs Late Payment Charge Surcharges Contracts Line Extensions Tariffs Core Memorandum Account Taxes Credit Metered Energy Efficiency Text Changes Curtailable Service Metering Transformer Customer Charge Customer Owned Generation Mobile Home Parks Name Change Transition Cost Transmission Lines Decrease Rates Non-Core Transportation Electrification Demand Charge Non-firm Service Contracts Transportation Rates Demand Side Fund Nuclear Undergrounding Demand Side Management Oil Pipelines Voltage Discount Demand Side Response PBR / Performance Based Ratemaking Wind Power Deposits Portfolio Withdrawal of Service Depreciation Power Lines Clear Form
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