2012 Edison Revenue Allocation
and Residential Rate Design 



In June 2011, Edison filed an Application requesting CPUC approval to update generation and distribution marginal costs  which in turn are used to set revenues for the respective customer classes.  Marginal costs are a forward looking method used to calculate the costs of service. Edison proposed changes to the revenue allocation from present rates, ranging from an 8% decrease to an 8% increase depending on the customer class (this does not reflect Edison’s 2012 GRC revenue requirement increases).

See summary Table comparing Edison’s rate change requests with DRA’s recommendations.

Edison estimated that Revenue Requirements changes from its Rate Design proceeding and other proceedings could lead to a 10.3% increase in revenue requirements by 2013.

Evidentiary hearings were conducted on September 20, 2012 at the CPUC on the issues of revenue allocation and residential rate design settlements.

On July 27, 2012, parties to this proceeding filed a Settlement with the CPUC on the issues of Marginal Costs, Cost Allocation and a Settlement on Residential Rate Design

On September 7, 2012 parties to this proceeding filed a Settlement on Small Commercial Rate Design.


ORA Policy Position

DRA supports Edison’s proposal that Critical Peak Pricing and Real-Time Pricing, in which energy rates vary depending on the time of day, remain voluntary for small commercial customers. However, DRA recommends improvements to how Edison calculates its marginal costs in order to reduce the revenues allocated to residential and small commercial customers, to mitigate utility bill impacts. 

DRA supports the multi-party settlement pending before the CPUC, which makes significant improvements to Edison’s original proposal.

The CPUC should:

  • Place a cap on the revenue allocation equal to a maximum increase of 5% more than the system average change, resulting in a 0.9% decrease in residential average rates and an 11.8% decrease in small commercial average rates.
  • Approve Edison’s proposal to combine tiers 4 and 5, but reject its request to decrease baseline allowances, resulting in reduced upper tier residential rates with fewer impacts to other residential customers in this class (Edison should not calculate baseline allowances separately for multifamily and single-family residences).
  • Reduce Edison’s rate proposal for on-to-off-peak rate differentials for small commercial Time-of-Use customers.

See DRA’s December 20, 2011 Testimony.


Proceeding Status

A final CPUC decision is expected in early 2013.

See Proceeding docket.