The attached file contains a list of points which Edison has asked the CPUC to approve in our 12/6 and 12/20 filings. I encourage you to peruse these points and to be prepared to give your views on them (i.e. agree, could agree with modification, no way) at the 1/23 meeting so that we can get a sense of where to direct the efforts of the group in reducing the amount of litigation on these issues.

The following are specific decisions that Edison has asked the Commission to issue in response to its December 6^th and 20^th filings in the Restructuring Docket.

I. REVENUE REQUIREMENT

1. The current Electric Revenue Adjustment Mechanism (ERAM) and Energy Cost Adjustment Clause (ECAC) balancing accounts are eliminated effective January 1, 1998.
2. Edison's proposed Miscellaneous Adjustment Mechanism (MAM) balancing account is adopted effective January 1, 1998. The MAM revenue requirement will be collected through the nonPBR component of distribution rates in the Miscellaneous Adjustment Mechanism Billing Factor (MAMBF).
3. The current California Alternative Rate for Energy (CARE) balancing account will be retained on January 1, 1998.
4. CARE administrative costs currently collected through base rates will be collected through the Public Benefit charge effective January 1, 1998.
5. The nuclear decommissioning revenue requirement adopted in Edison's 1995 General Rate Case (GRC) will be reflected in a separate nonbypassable nuclear decommissioning charge effective January 1, 1998. Edison's proposed Nuclear Decommissioning Balancing Account Mechanism is adopted effective January 1, 1998.
6. The cost separation ultimately adopted in Edison's Generation PBR Application (A.9607009) or an alternative proceeding will be reflected in January 1, 1998 rates.
   

II. FUNCTIONAL RATE UNBUNDLING

1. Generation rates will be determined residually, by subtracting transmission, distribution, Public Benefit and nuclear decommissioning charges from the total rates as of June 10, 1996.
2. CTC will further be determined residually by subtracting the PX energy charge from the total generation charge.
   a. The PX price for a given hour will be the weighted average price of energy in the dayahead and hourahead markets for that hour as adjusted for administrative cost, settlements, ancillary services, and congestion fees.
   b. Direct access customers will be provided a credit based on this hourly weighted average energy price and their usage during each hour of the billing cycle. /1/
3. Nongeneration PBR base rates will be developed using the methodology set forth in Advice Letter 1191-E, updated to 1998 by the CPI-X update rule.
   a. Edison will design transmission rates using an Equal Percentage of Marginal Costs (EMPC) method to recover the 1998 FERC authorized transmission revenue requirement.
   b. Edison's proposed transmission rates will be developed using the transmission component of marginal cost revenue responsibility adopted by the Commission in D.9604050 in Phase 2A of Edison's 1995 GRC.
   c. Transmission rates will be established in accordance with the procedure described in Section B.2.a. of Chapter V in Exhibit SCE1.
   d. A rate credit approach is adopted effective January 1, 1998 to determine the starting point for the PBR component of Edison's distribution rates. The appropriate portion of transmission rates based on the FERCadopted transmission revenue requirement will be subtracted from nongeneration PBR rates resulting in PBR distribution rates as described in Section B.2.b of Chapter V of Exhibit SCE1.
   e. To the extent that the FERC revenue requirement includes categories of costs not reflected in the Nongeneration PBR, those costs should be deducted from the revenue requirement prior to the calculation of the distribution PBR starting point.
   f. Remaining non-PBR distribution revenues will be recovered on an equal centsperkWh basis.
4. The nonbypassable charges for Public Benefit programs and nuclear decommissioning costs will be recovered on an equal centsperkWh basis.
5. For Domestic rate schedules, the baseline/nonbaseline rate differential will be reflected exclusively in the CTC during the term of the rate freeze.
6. For interruptible rates, the interruptible credit will be reflected exclusively in CTC during the term of the rate freeze.
7. Edison should seek to modify its tariffs to reflect settlement of the ISO interruption criteria when the ISO assumes responsibility for the operation of the interruptible program.
8. The 10% rate reduction for residential and small commercial customers required by AB 1890, contingent on issuance of Rate Reduction Bonds, will be implemented through a 10% bill credit for customers in the Residential and GS1 rate groups. Funding for the principal, transaction costs and interest associated with the Rate Reduction Bonds will be provided through a centsperkWh surcharge applied to bills of customers receiving the bill credit.
9. All eligible lowincome customers will continue to receive the 15% CARE discount. For CARE customers on general service rate schedules, Edison will calculate the CARE discount based on the total rate before subtracting the PX energy charge.
10. Customers taking service under special rate contracts or options will have a lower CTC than that reflected in the otherwise applicable tariff, consistent with PU Code Section 368, which requires setting rates for contracts or tariff options at levels equal to those in effect as of June 10, 1996.
    

III. CURRENT AND FUTURE REGULATORY PROCEEDINGS

1. Each November 1, Edison will file its forecast January 1 revenue requirements and rates through an Advice Filing. The Advice Filing will contain all the information needed for Commission review in order to set January 1 rates.
2. Each April 30, Edison will file its Balancing Account Reports and its Reasonableness of Operations application for the prior calendar year. This Report will include full CTC Balancing Account reporting for the prior calendar year, in addition to the supporting documentation for the various other balancing accounts, while the reasonableness application will include information on Hydro, Catalina electric, and EPTC operations.

IV. DISTRIBUTION SERVICE UNBUNDLING

1. Edison's proposed AMR system-wide implementation and associated cost recovery is approved.
2. Unbundling is limited to Generation, Transmission and Distribution, Nuclear Decommissioning, Public Goods and CTC.
3. Utilities can negotiate contracts with ESPs to bill on their behalf. ESPs can bill on behalf of the utilities if they meet the credit standards for the account.
4. Utilities will provide timely access to meter reading data with the appropriate customer authorization.