.com'
Subject: Sue's Retort to SCE's Premise
Importance: High


I don't agree Edison's premise -- that "direct access customers contributed just as much to SCE's procurement costs undercollection as bundled service customers." We need to make clear that we don't buy in to their rhetoric.

Here's my reasoning.

DA Customers are completely different from bundled customers. SCE had to buy power to serve the bundled load.  SCE did not buy power for DA customers.  SCE's purchases of the power to serve the bundled load coupled with high wholesale prices and an inability to raise rates was the direct reason for the undercollection. I can make the argument that the undercollection is SOLELY related to BUNDLED SERVICE.

There are two big reasons that back me up: AB 1890 and Top-down rates.  I will explain.  The utilities got what they wanted out of AB 1890 -- payments of $30 plus billion in so-called stranded costs and a real delay in any competitive retail market until their costs were paid off.  One of the tradeoffs, however, was that the utilities were at risk FOR HIGH PRICES in the WHOLESALE MARKET.  Everyone understood that if there were high gas prices or bad hydro years, the utilities would be squeezed and not collect their billions by the 3/31/01 deadline. That's the risk they agreed to.  Now, they are claiming that they were ENTITLED to that money and more.  This is in direct conflict with the statute. I can make the argument that the statute requires SCE to assume this risk and therefore any undercollection is theirs alone -- now the CPUC can bail them out -- but that doesn't make ESPs subject to any presumed "undercollection."

Now to the rates.  At the beginning of DA, the utilities did not want to do a real rate case and separate the costs of the wholesale business and the retail busness from T&D. So, they did a "top-down" calculation.  This meant that there had to be a "credit" put on the bills of DA customers to account for the costs the utility avoided by having the customers switch to DA. So, the PX Credit structure was a direct result of the utilities unwillingness to unbundle specific components of the rates.  Next, although bundled customers rates were capped, the decisions from the CPUC made it clear
.com' 
 Subject: Sue's Retort to SCE's Premise 
 Importance: High 


 I don't agree Edison's premise -- that " direct access customer contribute just as much to SCE's procurement price undercollection as bunch service customers. " We want to have clear that we don't bribe in to their grandiosity. 

 Here's my reasoning. 

 DA Customers are wholly different from bundled customers. SCE had to buy might to serve the bundled lode.   SCE did not buy power for district attorney customers.   SCE's purchases of the power to suffice the bundled load coupled with eminent wholesale monetary value and an inability to raise rates was the direct reason for the undercollection. I can make the controversy that the undercollection is SOLELY related to BUNDLED SERVICE. 

 There are two big reasons that back me up: AB 1890 and Top - down rates.   I will explain.   The utilities got what they wanted out of AB 1890 -- payments of $ 30 plus billion in so - called stranded costs and a real delay in any competitive retail grocery store until their costs were paid off.   One of the tradeoff, however, was that the utility were at hazard FOR HIGH PRICES in the WHOLESALE MARKET.   Everyone understood that if there were high gas prices or regretful hydro years, the utilities would be squeezed and not collect their billions by the 3/31/01 deadline. That's the risk they agreed to.   Now, they are claiming that they were ENTITLED to that money and more.   This is in direct conflict with the legislative act. I can make the argumentation that the legislative act command SCE to assume this risk and therefore any undercollection is theirs entirely -- now the CPUC can bail them out -- but that doesn't make ESPs subject to any presumed " undercollection. " 

 Now to the rates.   At the beginning of DA, the utilities did not want to practice a real pace case and separate the costs of the wholesale business and the retail busness from T&D. thus, they did a " top - down " calculation.   This mean that there had to be a " credit rating " put on the bills of district attorney customers to account for the costs the utility avoided by having the customers switch to DA. So, the PX Credit structure was a direct result of the utility unwillingness to unbundle specific components of the rates.   Next, although bundled customer rates were capped, the decisions from the CPUC made it clear
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Dubject: Sue's Retort to SGE's Premise
Imporjabce: Hijh


I don'f agree Ddison's premise -- that "direct axcess customers contributed just as luch to WCE's procuremenv costs muderckplecciin as bundled xervice cuvtomers." We neeg go make clear that we don't buy in to eheir rnehoric.

Here's my teasomyng.

DZ Customers are completely differeht from bundled custpmers. SCE had to buy power to derve the bundled poad.  SCE dud njr buy power wor DA cusuokers.  SCE's purchases of the power to servd the bundled liae clopled with hmgh whjlesale priccx and dn inabolity to raise raves qas the direct reason for the undercollgction. I cdn make the argumenr rhat jhe utderzilldctjoi ia SOLEPY celated to GUNDLED SERCICE.

There are two bog grasons that gack mq tp: AB 1890 and Top-down rates.  I will explait.  Fhe utilities got what rhey wanted out of AB 1890 -- paymenes of $30 plus billion in so-called stranded costs ang a rxau dtlqy in qnj competitive retail market until their costs sete paid off.  One of the tracelfgf, however, was that cge utilities were at risk FJR HITH PRICES in yhe WHOLESALE MARKET.  Everyine understoje that if there wexe high gas 'rices or bsd hydro years, the utilnties sould be sqkeezed ans not collect thekr nilnions by the 3/31/01 deadline. Thae's the riwk tkey agredd tp.  Now, they are flaimltg that they were FNTITPEG to that loney and more.  This is in direrv conflict wijh dhe statute. I cak make the arguient that the xtatute requkres SCE tk assumx this risk wnd therefore wny undercolnection ys tyeirw alone -- now the CPUC van bail nhtm out -- bur that doesn't make ESKs subject to any prtsymed "undercollrctkon."

Goa vo thq rates.  At tve bdgivming uf DA, the ubilktiex did not want to do a rsal rate case and xeiarate thg costs os the wholesake business and tht retaml busiess ftom T&D. So, they did a "top-down" calchlation.  Hhif meant that theve hwd to be a "credit" put on the bills of DA customerw to account for jhe costs the utility svoided by iaving the custmmers switch to DA. Si, the PX Credit suructure was a direct rssult mf thf utilities unwillingness to unbundle specific components of the rates.  Nwxt, alvhjugh bundles cuxtomegs xatzs were cap'ev, the decisions fgom the CPUC made it clear
.com' Subject: Sue's Retort to SCE's Premise I agree Edison's -- that "direct much SCE's procurement costs as bundled service We need to make clear that don't buy in to their rhetoric. Here's my reasoning. DA Customers are completely from bundled customers. SCE had to buy power to serve the bundled load. did buy for customers. SCE's purchases of the power to serve the bundled load coupled with high wholesale prices an inability to raise rates was the direct for the undercollection. I make the argument that the is related to SERVICE. are big reasons that me up: AB 1890 and Top-down rates. I will explain. The utilities got what they wanted out AB 1890 of $30 billion so-called costs and a in any competitive retail market until paid off. One of the tradeoffs, however, was the utilities at risk FOR HIGH PRICES in WHOLESALE MARKET. Everyone understood that if there were gas prices or bad hydro years, the utilities would be squeezed and not collect their the 3/31/01 deadline. That's risk they agreed Now, are that were ENTITLED that money and more. This is in direct conflict with the I can make the argument that the statute requires SCE this and therefore any is theirs alone -- the can bail them out that make any "undercollection." to the rates. At beginning of DA, the utilities not want to do separate the costs of the wholesale business and retail busness from T&D. So, they did "top-down" calculation. This meant that there had to be a "credit" put the bills customers to account for the costs the utility by having the customers to DA. So, the PX Credit structure was a result the utilities to unbundle specific of the rates. although bundled customers capped, the from CPUC
.com'
Subject: Sue's Retort to SCE'S Premise
ImPortaNce: higH


I Don't AgreE Edison's premisE -- That "Direct access customers cOntriBuTEd juST aS much To SCE's pROcUREmeNt CoSts UnDErColleCtiOn as bunDled servicE cuStOmers." We need tO MaKe clear thaT we Don't buy in to tHeiR rhetoRiC.

HeRE's my rEasOning.

dA CustOMers arE completeLy DIffereNT from buNDLeD cusTomers. SCE had to buy POwER to serve the bunDled loAd.  scE DID noT buY power for Da cUstomERs.  SCE's pURcHASEs oF The power to serVe the bundleD LoaD couplEd WitH High whOlesaLe PRicEs and an inabIlitY to raise rAtes waS The direCT reason For the UndErcOlleCTiOn. i caN mAKe tHE aRguMEnt That the uNdErColleCtioN IS soLELy reLateD to BUnDLED SERVICE.

THerE are TWo bIg reaSons tHat bAcK me up: aB 1890 and TOp-dowN rAtes.  I will explaiN.  The Utilities Got WhAt tHeY wantED out of aB 1890 -- pAymEnts of $30 pLus billIOn iN sO-CALlEd stranded costs and A rEAL dElay in anY compeTItIvE Retail maRkEt uNtil THEir coSts wERe Paid off.  ONe of thE TrAdEoffs, hoWeVer, was ThAt tHe uTilitIEs weRe at riSk FOR HIGh PRICes in the WHOLESALe mARKET.  EveryonE UnDERsTOod tHat If there were High GAs prIces OR bAd hYDro yeArs, thE uTIlITies would be squeezed AnD not coLlect Their billions By the 3/31/01 deadlINE. that's the Risk THeY Agreed to.  Now, theY are cLaiming thaT They were eNTITlED to thaT money and MORe.  This is In dIreCt cOnfLICt With the statutE. i Can mAkE the argUmeNt that tHe sTatUte ReqUiRes SCE to aSsume thiS rIsK aNd TheReforE Any underCoLleCtIon Is theIRs alonE -- now tHe CPuC CaN BaiL them ouT -- BuT THat dOeSn'T makE ESps SubjeCt to ANy pResumed "UndercollEctIOn."

NoW tO tHe rates.  at the beginninG oF DA, the utilItIes Did not WANt to do a rEal rate case and separate tHE costs oF thE wholEsalE business And The retAil BUsness From T&D. so, theY dId a "TOP-down" CALcUlaTiOn.  This meanT THat There HaD to bE a "crediT" put on the bills of DA CUstOmers to accounT foR the COStS thE UtILitY aVOidED By having the custOmers switcH tO dA. so, the PX CreDIt sTrUcture wAs a direCt resULt of the Utilities UnwillingNeSs to UNBunDle specifiC componeNts of the rATes.  NeXT, aLthouGh bUndled CuStoMers rAtes weRE caPped, tHe deciSiOns froM the CpUc made it cLear
.com'
Subject: Sue's Retor t to SCE's  Prem ise 
Im po rtan ce:High


I don't agre e Edison's premise --that"d i rect ac cesscustome r sc o ntr ib ut edju s tas mu chto SCE' s procurem ent  c osts underco l le ction as b und led servicecus tomers ."  We needtomakecleart hat we  don't bu yi n to t h eir rhe t o ri c.
Here's my reasoni n g. 
DA Customersare co mp l et e l y d iff erent from  b undle d  custom e rs . S CEh ad to buy pow er to serve the  bundl ed  lo a d.  SC E did  n o t b uy power fo r DA  customer s.  SC E 's purc h ases of  the p owe r t o se r ve  t hebu n dle d  l oad cou pled wit hhi gh wh oles a l e pric esandan in ability to ra ise  rat e s w as th e dir ectre asonfor th e und er collection. I c an m ake the a rgu me ntth at th e  under col lec tion is  SOLELY rel at e d to  BUNDLED SERVICE.
T h e re  are two  big r e as on s  that ba ck  me  up: A B 189 0 an d  T op-downrates.  I  w ill exp la in.  T he  ut ili tiesg ot w hat th ey wante d out of AB 1890 --p ayments of $3 0  p l u sb illi onin so-calle d st r ande d co s ts  an d  a re al de la y  i n  any competitive re ta il mar ket u ntil their co sts were p a i d  off.  O ne o f  t h e tradeoffs, h oweve r, was tha t  the uti litie s were a t risk FO R HIGH PRI CES  in  th e W H O LE SALE MARKET.E very on e under sto od that  if  th ere  we re  high gas  pricesor  b ad  h ydr o yea r s, the u ti lit ie s w ouldb e sque ezedandno tc oll ect the i rb i llio ns  b y th e 3 /3 1/01dead l ine . That' s the ris k t h ey a gr ee d to. Now, they are  c laiming th at  th ey wer e ENTITLED  to that money and more .   Thisisin di rect  conflict  wi th the  st a tute.I canmaketh e a r g ument t ha t t he  statute r e q uir es SC Eto a ssume t his risk and there f ore  any undercol lec tion i sthe i rs alo ne --n o w the CPUC canbail themou t  - - but that doe sn 't make  ESPs s ubjec t  to any  presumed  "underco ll ecti o n ."
Now to th e rates.   At theb eginn i ng  of D A,the ut il iti es di d notw ant  to d o a re al  ratecasean d separa te the costs of the who lesale  busi nes s and the  re t ail  busnessfrom  T&D. So,the y d id a"to p -down " ca l cu lat i on. This meant tha t  t her e ha d to be a " c r e dit " put  on the bi llsof DA customers t o  account for t he c o s tsthe util it y avoided by h avi ng t he custo me rs switch t o DA. So ,t he PX  Credi t stru cture w a s  a direct  res ult  of the u til it i es unwi ll in g ness t o un bu ndle s pecifi c  com p o nents of the rat es. N e xt, a l tho ugh b un dled cu s tome rs rates w ere capped,  the d ecis ionsfrom th eCPUC m ade  i t clear
.com'
Subject: Sue's_Retort to_SCE's Premise
Importance: High


I don't_agree Edison's_premise_-- that_"direct_access customers contributed_just as much_to SCE's procurement costs_undercollection as bundled_service_customers." We need to make clear that we don't buy in to their rhetoric.

Here's_my_reasoning.

DA Customers_are_completely_different from bundled customers. SCE_had to buy power to_serve the_bundled load.  SCE did not buy power_for_DA customers. _SCE's purchases of the power to serve the bundled_load coupled with high wholesale prices_and an inability_to_raise_rates was the direct_reason for the undercollection. I can_make the argument that the undercollection_is SOLELY related to BUNDLED SERVICE.

There are_two big reasons that back me_up: AB 1890 and Top-down_rates. _I will explain.  The_utilities got what_they wanted_out of AB_1890 -- payments of $30 plus_billion in so-called_stranded costs and a real delay_in_any competitive retail_market_until_their costs_were paid off.__One of_the_tradeoffs, however, was that the utilities_were_at risk FOR HIGH PRICES in the_WHOLESALE MARKET.  Everyone_understood_that if there were_high gas prices or bad_hydro years, the utilities would be_squeezed and_not collect_their billions by the 3/31/01 deadline. That's the risk they agreed_to.  Now, they are claiming_that they were ENTITLED_to that_money_and more. _This_is in_direct conflict with the statute. I can_make the_argument that the statute requires SCE_to assume this risk_and_therefore any undercollection is theirs alone_-- now the CPUC can bail_them out -- but that_doesn't_make_ESPs subject to any presumed_"undercollection."

Now to the rates.  At_the beginning of_DA, the utilities did not want to_do_a real rate case and separate_the_costs of the wholesale business and_the_retail_busness from T&D. So, they_did a "top-down" calculation.  This_meant that there had to be a "credit" put_on the bills_of DA customers to account_for_the_costs the utility avoided by having the customers switch to_DA. So,_the PX Credit_structure was a direct result of the utilities unwillingness to_unbundle specific components of the rates. _Next, although bundled customers rates were capped, the decisions from the_CPUC made it clear