BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E) NOTICE OF EX PARTE COMMUNICATION

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1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U 338-E) for Approval of its 2016 Rate Design Window Proposals. Application No (Filed September 1, 2016) SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E) NOTICE OF EX PARTE COMMUNICATION FADIA R. KHOURY RUSSELL A. ARCHER Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: (626) Facsimile: (626) Russell.Archer@sce.com Dated: July 21, 2017

2 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U 338-E) for Approval of its 2016 Rate Design Window Proposals. Application No (Filed September 1, 2016) SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E) NOTICE OF EX PARTE COMMUNICATION Pursuant to Rule 8.4 of the Rules of Practice and Procedure of the California Public Utilities Commission ( Commission ), Southern California Edison Company ( SCE ) hereby gives notice of the following ex parte communications. On July 18, 2017, SCE s Russell Garwacki, Director of Pricing Design and Research, gave a presentation titled Electric Transportation and Rate Designs at SCE (which is attached hereto as Appendix A) on a panel at the National Association of Regulatory Utility Commissioners (NARUC) Summer Policy Summit in San Diego, California. The panel in which Mr. Garwacki participated in lasted from approximately 4:00 p.m. to 5:00 p.m. Mr. Garwacki provided an overview of transportation electrification and state policy direction regarding rate guidance from the California Legislature (SB 350) and the Commission. In addition to describing SCE s pending time-of-use (TOU) period proposal in A , Mr. Garwacki described some key motivations associated with demand charges. Mr. Garwacki also described SCE s rate design proposal in its Transportation Electrification (TE) Application (A ) and the manner in which it addresses the short-term negative impacts that a demand charge rate structure can have on the adoption of these newer technologies. SCE s rate proposal provides a 1

3 5-year introductory period without demand changes, followed by a 5-year phase-in of demand charges. Addressing potential subsidy concerns, Mr. Garwacki described how the SCE proposal adopted an Economic Development Rate litmus test for its TE application. Mr. Garwacki explained SCE s view that as long as this new load was charged rates above marginal cost, SCE s remaining customers would be better off with the new load being served at the proposed rates than if the load did not materialize at all. Joanna Gubman, a Commission employee and Advisor to Commissioner Martha Guzman Aceves who is a decision maker under the Commission s ex parte rules, was an attendee at the session. 2

4 To receive a copy of this ex parte notice, please contact: Russell A. Archer Southern California Edison Company Law Department 2244 Walnut Grove Avenue Rosemead, California Russell.Archer@sce.com Telephone: (626) Respectfully submitted, Fadia R. Khoury Russell A. Archer /s/ Russell A. Archer By: Russell A. Archer Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: (626) Facsimile: (626) Russell.Archer@sce.com July 21,

5 Appendix A Electric Transportation and Rate Designs at SCE

6 Electric Transportation and Rate Designs at SCE Director Pricing Design and Research NARUC Summer Policy Summit, July-2017 San Diego, CA

7 Electric Transportation State Policy Direction The California Legislature (SB350) and, subsequently, the CPUC had some very specific rate guidance: Since the TE findings in Pub. Util. Code (a)(1) include, reducing fuel costs for vehicle drivers who charge in a manner consistent with electrical grid conditions, the TE applications may propose projects to change the rate structures, including demand charges, that are currently in effect for electric vehicles used in commercial applications. However, the utilities should keep in mind that simply shifting costs to other ratepayer classes does not comport with cost causation rate design principles and may not be a viable solution. September 14, 2016 Assigned Commissioner Ruling, R , page 20. <Emphasis added> 1

8 Consistent with Grid Conditions - SCE s Pending Time-of-Use (TOU) Period/Rate Proposals Season Existing Proposed On-Peak Summer Weekdays: 12:00 p.m. - 6:00 p.m. Weekdays: 4:00 p.m. - 9:00 p.m. Mid-Peak Summer Weekdays: 8:00 a.m. - 12:00 p.m.; 6:00 p.m. - 11:00 p.m. Weekends: 4:00 p.m. - 9:00 p.m. Winter Weekdays: 8:00 a.m. 9:00 p.m. Weekdays and Weekends: 4:00 p.m. - 9:00 p.m. Off-Peak Summer Weekdays: 11:00 p.m. 8:00 a.m. Weekends: All hours Super Off- Peak Winter Weekdays: 9:00 p.m. - 8:00 a.m. Weekends: All hours Weekdays and Weekends: All hours except 4:00 p.m. 9:00 p.m. Weekdays and Weekends: 9:00 p.m. - 8:00 a.m. Winter N/A Weekdays and Weekends: 8:00 a.m. 4:00 p.m. Peak periods shifted to later in the day. Establishes new flexible generation capacity cost component (aka ramping, all days). Introduces a peak time varying component in distribution rates. Super off-peak energy prices occur in the middle of winter weekdays/weekends. 2

9 Consistent with Grid Conditions - SCE s Pending Time-of-Use (TOU) Period/Rate Proposals Weekdays Existing Weekends Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jul Jul Aug Aug Sep Sep Oct Oct Nov Nov Dec Dec Weekdays Proposed Weekends Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jul Jul Aug Aug Sep Sep Oct Oct Nov Nov Dec Dec On-peak Mid-Peak Off-peak Super Off-Peak 3

10 Change the Rate Structures, including Demand Charges Motivation Behind Demand Charges Designed to recover longer term capacity related costs, thereby reducing the volumetric rates to their short-run marginal cost levels. This structure encourages efficient consumption levels and load (energy) growth for a given peak demand level. Works reasonably well for the typical range of customer load profiles. What s Changed? AMI metering allows for detailed study of relationships between coincident and non-coincident peak demands and peak period energy and demands. New electric transportation entrants have very low load factors, at least initially. 4

11 Serving Many Load Profile Masters Illustrative Rail 1.6 Residential EV Weekdays Weekends Hours of Day 0.0 kwh kwh Hours of Day Mass Transit Workplace Charging Mature Deployment Early Deployment 800 Office Building - Summer Building w/ev Charging Hours of Day Hours of Day kw (Normalized - % of Max) kwh kwh On-Peak (4-9pm) On-Peak (4-9pm) On-Peak (4-9pm) On-Peak (4-9pm)

12 Shifting Costs does not Comport with Rate Design Principles SCE adopted an Economic Development Rate mentality for its TE Application. Encouraging new growth is not a shift of costs as long as the price is above the marginal cost floor. SCE proposed a 5-year introductory period without demand charges followed by a 5-year phase-in of demand charges to facilitate this infant industry. End-state TE rate structures envisioned to be consistent with remaining customers rate structures. 6

13 Rate Proposal Illustrative Sample Rates Short Term Long Term (Cost Based) Demand ($/kw) X $10.00 Energy ($/kwh) $0.15 $0.10 Early Deployment Stage Full Deployment with Load Management X 5 X kw 400 kw ,000 kwh (Monthly) 75,000 kwh (Monthly) Demand (kws) Hours of Day Hours of Day Monthly Bill Bill Component Short Term Long Term Short Term Long Term Demand Charge X $3,000 X $4,000 Energy Charge $2,250 $1,500 $11,250 $7,500 Total Bill $2,250 $4,500 $11,250 $11,500 50% Energy Bill Savings on Short Term Energy Only Rate Customer will be indifferent as higher load factor (flatter load curve) is achieved 7

14 Life Cycle Schematic of ET Rate Proposal Illustrative Energy + Demand Energy Only Return to Energy + Demand Current Period Short-Term Period Medium/Long-Term Period x5 x5 20 x20 80,000 60,000 40,000 20,000 Energy (Monthly kwhs) 12-Month Period 12-Month Period 12-Month Period kw kw 400 kw Demand (kws) 12-Month Period 12-Month Period 12-Month Period Load Factor: 7% 15% 26% Improving Load Factors 8

15 So We Ditch Demand Charges? Not so fast!! Consider the Supply-side Analogy A reliability must-run generator is paid based on their availability to provide capacity irrespective of how often they re actually called. If this structure did not exist, these services would not be provided. All customers should pay a fair-share of capacity elements Energy-only Rates encourage uneconomic by-pass, especially after a scaling up of rates to recover the authorized functional revenue requirement. One way to address this issue is to extend the partially resourced customer treatment (e.g. Stand-by rate structure with its own separate rate group) currently in place for large cogeneration customers to other partially resourced customers. Basis of an Arizona Decision (2016) and near all-party Settlement (2017). 9

16 Questions? 10

17 Appendix 11

18 SCE s Optional Rate Designs Favorable for Electric Transportation Rate Schedule Maximum Demand (Voltage Level) Applicability Rate Structure TOU-EV-3 20 kw Customer Charge; TOU Energy Charges; Time-related Demand Charge (TRD); Facilities-related Demand Charge (FRD); Option B includes a FRD Charge Offset 3/ TOU-EV kw TOU-EV-6 > 500 kw (Secondary, Primary, Subtransmission) Applicable for businesses solely for the charging of EVs on a premise or public right of way where a separate SCE meter to serve EV charging facilities is required Customer Charge; TOU Energy Charges; FRD Charge; Includes a FRD Charge Offset 3/ TOU-EV-7 1/ 20 kw Customer Charge; TOU Energy Charges; 5-year intro period w/ no demand charge, followed by 5-year phase-in of demand charges; At the end of the 10 th year, rate will include FRD demand charge to collect 60% of all TOU-EV-8 1/ kw > 500 kw TOU-EV-9 1/ (Secondary, Primary, Subtransmission) distribution capacity costs; the remaining 40% will be collected through TOU energy charges 12

19 SCE s Optional Rate Designs Favorable for Electric Transportation (cont.) Rate Schedule Maximum Demand (Voltage Level) Applicability Rate Structure TOU-8-Option A > 500 kw (Secondary, Primary, Subtransmission) Applicable to customers who participate in Permanent Load Shifting (PLS), Cold Ironing pollution mitigation programs or the charging of zero emissions electric transportation intended for the transport of people or goods. Customer Charge; TOU Energy Charges; FRD Charge TOU-EV-1 N/A Applicable to residential customers exclusively for the charging of electric vehicles on a separate meter Customer Charge; TOU Energy Charges TOU-D-C 2/ N/A Applicable to residential customers; whole-house rate targeted for higherusage customers, including those with EVs. Customer Charge; TOU Energy Charges 1/ Pending CPUC approval in SCE s Transportation Electrification Application (A ). 2/ Pending CPUC approval in SCE s 2018 GRC Phase 2 Application (A ). 3/ Waives demand charges for EV charging if the EV demand does not exceed the demand of the associated facility. This structure helps the customer control their electricity costs associated with demand charges. 13

20 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Southern California Edison Company (U 338-E) for Approval of its 2016 Rate Design Window Proposals. Application No (Filed September 1, 2016) CERTIFICATE OF SERVICE I hereby certify that, pursuant to the Commission s Rules of Practice and Procedure, I have this day served a true copy of the SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E) NOTICE OF EX PARTE COMMUNICATION on all parties identified on the attached service list A Service was effected by one or more means indicated below: Transmitting the copies via to all parties who have provided an address. Placing the copies in sealed envelopes and causing such envelopes to be delivered by hand or by overnight courier to the offices of the Commissioner(s) or other addressee(s). ALJ Stephen C. Roscow California Public Utilities Commission 505 Van Ness Avenue San Francisco, CA Executed on July 21, 2017, at Rosemead, California. /s/ AnnMarie Lett AnnMarie Lett Legal Administrative Assistant SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770

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