2018 General Rate Case Filing
On September 1, 2016, Edison International's subsidiary, Southern California Edison ("SCE"), filed its 2018 General Rate Case ("GRC") application for the three-year period 2018
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2020. SCE is requesting that the California Public Utilities Commission ("CPUC") authorize SCE's Test Year 2018 revenue requirement of $5.885 billion, an increase of $222 million over the 2017 GRC authorized revenue requirement. In addition, the application requests $48 million in one-time balancing and memorandum account recoveries. This represents a 2.7% increase over presently authorized total rates. SCE's 2018 GRC request also includes proposed revenue requirement increases of $533 million in 2019 and $570 million in 2020. For 2019 and 2020, respectively, these represent 4.2% and 5.2% increases over presently authorized total rates. The critical drivers of SCE's 2018 GRC request are the need to make significant investment in the electric infrastructure to replace aging equipment, add capacity to address customer and load growth, improve safety and reliability, and enhance capabilities to integrate increasing amounts of Distributed Energy Resources ("DER").
Based on the 2018 GRC application, SCE forecasts a $23.3 billion total capital program for years 2016 through 2020, which includes the CPUC-jurisdictional capital expenditures request as well as non-GRC CPUC capital spending, such as the Mobile Home Park Conversion and Charge Ready Pilot programs, and Federal Energy Regulatory Commission ("FERC") capital spending. If all capital expenditures requested in SCE’s 2018 GRC were approved by the CPUC, SCE forecasts total weighted-average rate base for CPUC- and FERC-jurisdictional capital expenditures increasing to $35.1 billion by 2020, a five-year compound annual growth rate of 8.5%.
SCE's 2018 GRC capital expenditures request for traditional programs that were also included in the 2015 GRC, such as work requested by customers, expansions and additions due to load growth, and infrastructure replacement and maintenance and generation maintenance and including capitalized overheads, is approximately $10 billion in 2018
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2020. While not necessarily indicative of future approvals, SCE received 81% of its requested capital spending in the 2009 GRC, 89% of its 2012 GRC request and 92% of its 2015 GRC request for similar, traditional categories of capital expenditures.
In the 2018 GRC application, SCE is proposing to spend $2.1 billion in grid modernization capital expenditures for 2018
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2020 to improve safety and reliability, facilitate DER adoption and enable DERs to provide grid services. Work will include updating automation systems on the worst performing distribution circuits, providing adequate communications equipment to support these automation upgrades, and deploying analytics tools to advance system planning and grid operations. SCE has no prior experience obtaining regulatory approval of capital expenditure requests pertaining to enabling DER adoption and integration comprising a significant portion of these capital programs. Accordingly, results obtained in prior rate cases with respect to approval of requested capital spending may not be predictive for grid modernization capital expenditures. Edison International and SCE have therefore not provided any forecast range for total capital expenditures or authorized rate base.
Additionally, SCE's request for some of the grid modernization capital expenditures is predicated on the approval of a memorandum account which SCE requested in July 2016. Failure to obtain CPUC approval of this memorandum account or a similar cost recording mechanism by the end of 2016, could delay or reduce SCE's 2018
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2020 grid modernization capital expenditures.
Pursuant to revised CPUC Rules, SCE was required to file its full GRC application on September 1, with no prior notice of intent as with previous GRCs. SCE is requesting that the CPUC issue a final decision by the end of 2017. If the decision is delayed, SCE will, consistent with CPUC practice in prior GRCs, request the CPUC to issue an order directing that the authorized requirement changes be effective January 1, 2018, even if the decision is issued subsequent to that date.
Edison International and SCE cannot predict the revenue requirement the CPUC will ultimately authorize for 2018 through 2020 or forecast the timing of a final decision. Members of Edison International management will use the information in the presentation attached hereto as Exhibit 99.1 in meetings with institutional investors and analysts and at investor conference presentations. The attached presentation will also be posted on www.edisoninvestor.com.
Item 9.01
Financial Statements and Exhibits.
(c) Exhibits
See the Exhibit Index below.