EXHIBIT 20.2
Memorandum of Understanding Between Edison and DRA
Re 1995 General Rate Case
This MOU is not a settlement agreement or stipulation between Edison and
DRA, but forms the basis for a future settlement or stipulation. This MOU
is subject to approval by Edison's Board of Directors. Edison and DRA
agree not to publicly disclose the terms of this MOU until approved by
Edison's Board. Edison and DRA will conduct these negotiations in
confidence pursuant to Rule 51.9 of the Commission's Rules of Practice and
Procedure. Edison and DRA will make all reasonable efforts to negotiate
the settlement or stipulation in time for rates to be effective 1/1/95.
1. Edison will accelerate the recovery of its share of SONGS 2 & 3 sunk
costs commencing on 2/1/96 and terminating on 12/31/03 ("8-Year
Period").
2. The sunk costs Edison will recover is a SONGS 2 & 3 rate base amount
of $2,749 million less the accumulated deferred taxes of $562
million. 1
3. During the 8-Year Period, Edison will earn a return on SONGS 2 & 3
sunk costs equivalent to 7.78% on rate base.
4. Edison will remove the revenue requirement in rates as of 1/31/96
for items identified as SONGS 2 & 3 sunk costs. Starting 2/1/96,
the SONGS 2 & 3 sunk costs shall be placed in rates and recovered
over 8 years.
5. DRA and Edison shall negotiate terms and conditions in the final
settlement document consistent with those in the SONGS 1 model to
address the permanent closure of SONGS 2 and/or 3.
6. From 2/1/96 through 12/31/03, Edison must accept on behalf of its
customers all of its share of SONGS 2 & 3 output. The following
Incremental Cost Incentive Pricing ("ICIP"), by year, subject to
verification is:
For: 1996 - 3.80 cents/kWh 2000 - 4.05 cents/kWh
1997 - 3.85 cents/kWh 2001 - 4.10 cents/kWh
1998 - 4.00 cents/kWh 2002 - 4.15 cents/kWh
1999 - 4.00 cents/kWh 2003 - 4.15 cents/kWh
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1 The amount to be amortized will consist of Edison's SONGS 2 & 3 sunk
costs recorded as of 1/1/96 and will include amounts for Marine
Mitigation costs - $41 million; Design Basis Documentation - $31
million; COD Adjustment - $17 million; and MS Inventory - $52
million.
7. Subsequent to 12/31/03, Edison may sell power generated by SONGS 2
and 3 to any customer.
8. Subsequent to 2/1/96, there will be no apparent need for SONGS 2 or
3 reasonableness reviews. Edison retains the option to produce
power at any level or permanently close either SONGS 2 and/or 3 at
any time.
9. The Nuclear Unit Incentive Procedure for SONGS 2 & 3 shall terminate
at the completion of Fuel Cycle 7 operations.
10. Edison will continue traditional cost-of-service rate recovery of
SONGS 2 & 3 decommissioning expenses, unamortized loss on reacquired
debt, and DOE decommissioning expense from EPAct 1992. Edison may
also seek recovery of assessments, retrospective premiums or other
costs associated with worker or third party claims.
11. Edison's 1995 base rate revenue requirement2 will be reduced by $67
million from the currently estimated 12/31/94 authorized level of
$3,932 million, resulting in an ALBRR of $3,865 million. This will
include funding DSM programs and activities at $65 million, of which
$14 million will be transferred to Customer Service O&M expense.
RD&D programs and activities will be funded at $28 million.
12. If a PBR mechanism is effective by 1/1/96, attrition will not be
required.
By: Bruce C. Foster 9/2/94 By: James D. Pretti 9/2/94
Southern California Edison Division of Ratepayer
Company Advocates
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2 Nominal dollars.