Details for: SCE's Comments on Draft Resolution E-4959 (3768e).pdf

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

February 6, 2019

Energy Division
Attention: Tariff Unit
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102

Comments of Southern California Edison Company
on Draft Resolution E-4959

Dear Energy Division Tariff Unit:
Pursuant to Rule 14.5 of the California Public Utilities Commission’s (Commission’s)
Rules of Practice and Procedure, Southern California Edison Company (SCE)
submits these comments in support of Draft Resolution E-4959. On March 14, 2018,
SCE submitted Advice Letter 3768-E requesting Z-factor treatment for wildfire-related
liability insurance costs of $107.156 million incurred to obtain a 12-month, $300
million wildfire insurance policy for 2018.1 The Draft Resolution approves SCE’s
Advice Letter, finding that SCE has satisfied the Commission’s Z-Factor criteria (e.g.,
that the event was exogenous, the costs were largely outside the utility’s control,
costs were reasonably incurred, etc.).
The Commission should promptly approve the Draft Resolution at its February 21,
2019 Business Meeting. The Draft Resolution represents sound regulatory policy
that is much needed during a profoundly destabilizing time in our state. The Draft
Resolution recognizes that SCE acted prudently in obtaining additional wildfire
insurance following the unprecedented December 2017 wildfires, and the Thomas
Fire in particular, to mitigate the risk of potentially uninsured claims if another wildfire
event occurred. It also recognizes that SCE has no control over the wildfire
insurance market for California electric utilities, which is “hardening” (i.e., contracting)
due to factors outside SCE’s control like the increasing number and severity of
wildfires and insurers’ perception of risk in the state. These are appropriate findings,
and fully supported by the evidence submitted in SCE’s advice letter, including the
declaration of its director of corporate risk management, John Butler.


On December 17, 2017, SCE sent a notification letter to the Commission explaining the
urgent need to replenish its wildfire insurance and providing notification of its intention to
seek recovery of the premium’s cost via the Z-Factor mechanism.

P.O. Box 800

8631 Rush Street

Rosemead, California 91770

(626) 302-9645

Fax (626) 302-6396


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Energy Division California Public Utilities Commission February 6, 2019 Page 2 Southern California Edison Company /s/ Gary A. Stern Gary A. Stern, Ph.D. GAS:cf:cm cc: 2 Edward Randolph, Director, CPUC Energy Division Julia Ende, CPUC Energy Division Michael Conklin, CPUC Energy Division Franz Cheng, CPUC Energy Division Robert Finkelstein, TURN Mark Pocta, Public Advocates Office Service Lists for A.13-11-003 and A.16-09-0012 A.16-09-001 service list is being served to emulate the service of Draft Resolution E-4959.
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