EXHIBIT 99.292
SCE'S UDC BUSINESS IN THE RESTRUCTURED
CALIFORNIA ENERGY MARKET
DISCUSSION POINTS
FOR MEETING WITH STEVE MCMENAMIN OF SCE
WEDNESDAY, MARCH 19, 1997
ROSEMEAD, CA
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IMPACT OF RESTRUCTURING IN CALIFORNIA ON UDC BUSINESS
- - Financial risks to UDC due to developing utility business protocols in
California
- - Keeping in synch with changing business protocols
- - Impact on the reliability of distribution system operation
- - Impact on distribution power quality
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PRINCIPAL FINANCIAL ASPECT OF UDC BUSINESS
CREATING RISK EXPOSURE
- - Payment to PX for energy received
- Potential overpayment to PX
- - Payment from customers for energy delivered
- Potential undercollection from customers
- Direct Access Customers (DACs)
- "Bundled Retail Customers" (BRCs)
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PAYMENT TO PX
- - Day-ahead settlement
- Paper transaction based on forecasted loads
- Generators gaming of the PX will flow though to UDC
- Could result in overpayment by UDC that may not be
recoverable under PBR
- UDC may be able to develop strategies to counter
gaming by generators
- - Hour-ahead settlement - essentially same as day ahead settlement
- - Real-time/imbalance settlement
- Accuracy of evaluating energy received would impact financial
settlement
- Evaluation based on balancing energy deliveries at
UDC boundaries
- Evaluation based on state-estimation method
- Evaluation based on energy metering at UDC boundary
with transmission
06/27/02 4
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PAYMENT TO PX:
ENERGY EVALUATION USING UDC BOUNDARY ENERGY BALANCING
- - Use energy transactions at all boundary points to calculate energy
received from PX
- Current thinking at WEPEX - UDC largely unable to verify
energy received
- Strong probability of erroneous results due to:
- Errors in accounting for transmission losses
- Errors due to load profile errors for transmission
level DACs
- - Could result in overpayment or underpayment by UDC to PX
- Some or all of the overpayment may not be recoverable due to
PBR
- Some or all of the underpayment could be kept by UDC due to
PBR
- Magnitude of overpayment/underpayment may be estimated
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PAYMENT TO PX:
ENERGY EVALUATION USING UDC BOUNDARY ENERGY BALANCING
[CHART]
06/27/02 6
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PAYMENT TO PX:
ENERGY EVALUATION USING STATE-ESTIMATION TECHNIQUES
- - Use known analytical methods to estimate energy received from
transmission system
- Straightforward and inexpensive
- - Accuracy of models, data and measurements may NOT be acceptable for
energy metering and payment purposes
- Further studies required to verify suitability for revenue
metering in specific situations
- State-estimation results could be used to verify energy
received
06/27/02 7
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PAYMENT TO PX:
ENERGY EVALUATION USING STATE-ESTIMATION TECHNIQUES
[CHART]
06/27/02 8
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PAYMENT TO PX:
ENERGY METERING AT UDC BOUNDARY WITH TRANSMISSION
- - Installing revenue metering at all interfaces between the UDC and
transmission system
- Will accurately know energy received from PX
- Minimizes potential for overpayment/underpayment
- Major expenditure for installation and operation of metering
equipment
- Who pays for this cost?
- SCE could study costs and benefits
06/27/02 9
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PAYMENT TO PX:
ENERGY EVALUATION USING UDC BOUNDARY ENERGY BALANCING
[CHART]
06/27/02 10
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REVENUE FROM UDC CUSTOMERS
- - Principal components of UDC rate
- Energy Charge (EnC): Payment to PX (demand charge?)
- Customer Service Charge (CSC): Cost of call centers, meter
reading, outage management, energy theft, etc., etc.
- Distribution Wire Charge (DWG): distribution system losses,
distribution facilities depreciation
- Transmission Access Fee (TAF)
- Competitive Transition Charge (CTC)
- EnC + CSC + DWG + TAF + CTC < PBR -
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REVENUE FROM UDC CUSTOMERS
- - Each UDC rate component could cause over/under-collection by UDC due
to:
- Inaccurate load profiles for DACs
- Most components of UDC rate are affected by profile
- Ability of "profiled" DACs to game their forecasts
- Transfer cost impacts of uncertainty in actual load
variation to UDC
- Unpredictable energy consumption patterns by BRCs
- "Unfavorable/inconsistent" allocation of rate components to
DACs and BRCs
06/27/02 12
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REVENUE FROM UDC CUSTOMERS - CONTINUED
- - UDC may have to absorb all or part of over/under-collection due to PBR
- - SCE could study the impacts on individual rate components and identify
mitigation strategies
06/27/02 13
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CONCLUDING REMARKS
- - Utility industry restructuring will impact all aspects of SCE's UDC
business
- - Some of these impacts could have negative financial ramifications for
SCE
- Overpayment to PX
- Undercollection from customers
- PBR mechanism that would not allow recovery of part or all of
"lost revenues" or cuts into the CTC collection
06/27/02 14
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CONCLUDING REMARKS - CONTINUED
- - Strategies, methodologies, and information systems could be developed
to mitigate adverse impacts faced by UDCs:
- Influence still ongoing restructuring process in California -
Perot Systems can advise
- Influence developments of rules and protocols related to the
technical and financial operation of the UDC - Perot Systems
Corporation (PSC) and Policy Assessment Corp. (PAC) Corp. can
advise
- Study potential market operating scenarios that could
adversely influence the financial health of the UDC and
develop counter measures - PSC and PAC can help with study and
development work
- Improve on the accuracy of energy forecast and measurements -
PSC and PAC can help here with study and development work
- Establish and enforce the correlation between cost/revenue and
DACs' loads - PSC can help here with study and development
work
06/27/02 15
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