SUBJECT: Southern California Edison Company's Additional ... · SUBJECT: Southern California Edison...

STATE OF CALIFORNIA GAVIN NEWSOM, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

September 10, 2019

Advice Letter 224-G/3958-E

and 224-G-A and 3958-E-A

Gary A. Stern, Ph.D.

Managing Director, State Regulatory Operations

Southern California Edison Company

631 Rush Street

Rosemead, CA 91770

SUBJECT: Southern California Edison Company's Additional Modifications to

Electric Preliminary Statement Part M and Gas Preliminary Statement H

as a Result of Public Law 115-97, the Federal Tax Cuts and Jobs Act.

Dear Dr. Stern:

Advice Letter 224-G with supplemental 224-G-A and 3958-E with supplemental 3958-E-A

are effective as of January 1, 2018.

Sincerely,

Edward Randolph

Deputy Executive Director for Energy and Climate Policy/

Director, Energy Division

P.O. Box 800 8631 Rush Street Rosemead, California 91770 (626) 302-9645 Fax (626) 302-6396

Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations

February 25, 2019

ADVICE 224-G/3958-E (U 338-E)

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION

SUBJECT: Southern California Edison Company’s Additional Modifications to Electric Preliminary Statement Part M and and Gas Preliminary Statement H as a Result of Public Law 115-97, the Federal Tax Cuts and Jobs Act

Southern California Edison Company (SCE) hereby submits for filing the following modifications to its tariffs. The revised tariff sheets are listed on Attachment A and are attached hereto.

PURPOSE

This advice letter notifies the California Public Utilities Commission (Commission or CPUC) that the definitions in Sections 2.b and c of Electric Preliminary Statement Part M, Income Tax Component of Contribution Provision, and Gas Preliminary Statement Part H, Income Tax Component of Contribution Provision, have been changed as a result of Section 13312 of Public Law 115-97, the 2017 Tax Cuts And Jobs Act (TCJA). Finally, Section 5 of Gas Preliminary Statement Part H regarding State Taxes is obsolete because California has incorporated the taxable CIAC provisions as of January 10, 1992 as stipulated in Section 1 of Gas Preliminary Statement Part H and, as such, has been deleted.

BACKGROUND

Internal Revenue Code (IRC) Section 118(a) generally permits contributions paid to a corporation by nonshareholders to be excluded from the corporation’s taxable income. IRC Section 118(b) is an exception to Section 118(a) and generally requires contributions in aid of construction (CIAC) (for the provision of utility services) to be included in a utility’s taxable income. The Commission authorized SCE in Decisions 87-09-026 and 87-12-028 to collect from nonshareholders an additional component apart from CIAC, i.e., the income tax component of the contribution (ITCC), to recover the costs associated with funding the additional initial income tax amount. Section 1 of SCE’s Electric Preliminary Statement Part M and Gas Preliminary Statement Part H reflect these decisions and provide that the collection of the CIAC will also include the collection of the related ITCC amount.

ADVICE 224-G/3958-E (U 338-E) - 2 - February 25, 2019

Over the years, SCE received favorable private letter rulings from the Internal Revenue Service that provided certain exceptions to the general taxable provision of IRC Section 118(b) for CIAC payments or transfers by governmental agencies where a benefit to the public as a whole was clearly shown as the primary purpose of the CIAC. The favorable private letter rulings concluded that these particular transactions were nontaxable contributions pursuant to IRC Section 118(a) by non-shareholders. These particular exceptions to the general taxable provision of IRC Section 118(b) were subsequently incorporated in SCE’s policy and Electric Preliminary Statement Part M and Gas Preliminary Statement Part H with the definitions of “Government Agency” in Section 2.b and “Public Benefit Exemption” in Section 2.c.

The TCJA was enacted into law on December 22, 2017. Section 13312 of TCJA amended Section 118(b) to include the following additional paragraph to taxable subsection (b) of Section118:

“(2) any contributions by any governmental entity or civic group (other than a contribution made by a shareholder as such).”

As a result of the this change to IRC Section 118(b) by TCJA, payments from governmental agencies are no longer exempt as nontaxable contributions by non-shareholders pursuant to IRC Section 118(a). IRC Section 118(b)(2) applies generally to CIAC made after the enactment of TCJA. This advice letter makes the changes to the definitions in SCE’s Electric Preliminary Statement Part M and Gas Preliminary Statement Part H Sections 2.b and c as necessary to incorporate IRC Section 118(b)(2) as a result of the TCJA.

Although the amendments made to IRC Section 118(b) by the TCJA preclude CIAC by governmental entities or civic groups to a utility from being exempt from taxable income to the utility under IRC Section 118(a), the tax code continues to include other sections that conditionally apply exceptions to the taxable treatment when certain requirements are satisfied, regardless of whether the contribution is made by a government entity or civic group. IRC Section 1033 [Involuntary Conversions] states that no taxable gain is recognized if property is involuntarily converted into similar property as a result of its seizure, requisition, condemnation or threat or imminence thereof by an entity that has authority to readily obtain property for public good upon the award and payment of just compensation. By this advice letter now, SCE now includes an exception for Involuntary Conversions in SCE’s Electric Preliminary Statement Part M and Gas Preliminary Statement Part H to the extent certain CIAC transactions satisfy the requirements of IRC Section 1033.

PROPOSED TARIFF CHANGES

This advice letter revises Sections 2.b and c of SCE’s Electric Preliminary Statement Part M and Gas Preliminary Statement Part H. The definition of “Government Agency” in


Section 2.b is deleted and replaced with the definition of “Eminent Domain Agency” applicable to CIAC as follows:1

Eminent Domain Government Agency: For purposes of administering this part of the Preliminary Statement, an Eminent Domain Government Agency is any shall include the Federal, Government, any federally recognized Native American Tribe, or a California state, county, or local governmental or quasi-governmental agency or a federally-recognized Native American tribe that has the general authority or is able to readily obtain the authority to condemn property for public good upon the award and payment of just compensation.

The definition of “Public Benefit Exemption” in Section 2.c is deleted and replaced with the definition of “Involuntary Conversion” applicable to CIAC as follows:

Involuntary Conversion Public Benefit Exemption: Where, in the opinion of SCE, payments or other forms of compensation received by SCE from an Eminent Domain Agency satisfy the requirements of Internal Revenue Code Section (IRC §) 1033 as an Involuntary Conversion, the value of such payments, property or other permissible forms of compensation will not be treated as taxable income by SCE and, as a result, the ITCC component of the Contribution will not be collected. Generally, the nontaxable provisions of IRC §1033 are satisfied if (1) the Eminent Domain Agency initiates condemnation proceedings, or (2) SCE receives notice of intent by the Eminent Domain Agency to acquire the property before the initiation of condemnation proceedings, or (3) it can be demonstrated that it was reasonable to believe that SCE was compelled to dispose of the property by the impending consequences. a benefit to the public as a whole is clearly shown by the Government Agency making the Contribution for a project. Internal Revenue Service (IRS) Notice 87-82 dated December 3, 1987 excludes from the Public Benefit Exemption any Government Agency Contribution associated with projects causing new or increased usage of utility service.

Section 4 of Electric Preliminary Statement Part M is amended as follows:

Applicability. The ITCC shall apply to contributions under the tariffs, including but not limited to, street and area lighting rate schedules and Rules 2, 13, 14, 15, 16, 20, and 21, unless one or more of the exemptions described herein apply a Public Benefit Exemption or other applicable exemptions exist as determined by SCE.

Section 4 of Gas Preliminary Statement Part H is amended as follows:

Applicability. The ITCC shall apply to contributions under the tariffs, including but not limited to, Rules 13, 15, and 16 unless one or more of the exemptions described herein apply or other applicable exemptions exist as determined by SCE.

1 Strikeout text denotes deleted text and underlined text denotes new text.


In addition, Section 5 of Gas Preliminary Statement Part H regarding State Taxes is no longer applicable because California incorporated the taxable provisions beginning January 10, 1992 as stipulated in Section 1 of Gas Preliminary Statement Part H and has been deleted:

State Taxes. Under the current California state law, Contributions are not taxable at the time of the Contribution. In the event legislation is enacted to conform state law to federal law, SCE may increase the amount it collects from the Contributor to include its estimate of the tax resulting therefrom. In the event state law is applied retroactively, SCE may collect such tax for the retroactive period through general rates.

No cost information is required for this advice filing.

Except as noted above, this filing will not increase or decrease any rate or charge, conflict with any other schedules or rules, or cause the withdrawal of service.

TIER DESIGNATION

Pursuant to General Order (GO) 96-B, Energy Industry Rule 5.1(10) and 5.1(3), this advice letter is submitted with a Tier 1 designation.

EFFECTIVE DATE

Consistent with Section 7.3.1 of GO 96-B, this advice filing will become effective as of January 1, 2018.

NOTICE

Anyone wishing to protest this advice filing may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this advice filing. Protests should be submitted to:

CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California 94102 E-mail: [email protected] Facsimile: (415) 703-2200

Copies should also be mailed to the attention of the Director, Energy Division, Room 4004 (same address as above).


In addition, protests and all other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of:

Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770 Telephone: (626) 302-9645 Facsimile: (626) 302-6396 E-mail: [email protected] Laura Genao Managing Director, State Regulatory Affairs

c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California 94102 Facsimile: (415) 929-5544 E-mail: [email protected]

There are no restrictions on who may file a protest, but the protest shall set forth specifically the grounds upon which it is based and must be received by the deadline shown above.

In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice filing to the interested parties shown on the attached Electric GO 96-B service list. Address change requests to the GO 96-B service lists should be directed by electronic mail to [email protected] or at (626) 302-4039. For changes to all other service lists, please contact the Commission’s Process Office at (415) 703-2021 or by electronic mail at [email protected].

Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by filing and keeping the advice filing at SCE’s corporate headquarters. To view other SCE advice letters filed with the Commission, log on to SCE’s web site at https://www.sce.com/wps/portal/home/regulatory/advice-letters.


For questions, please contact Alfred Lopez at (626) 302-8797 or Grace Chi at (626) 302-3397 or by electronic mail at [email protected] or [email protected].

Southern California Edison Company

/s/ Gary A. Stern, Ph.D.s/ Russell G. Worden Gary A. Stern, Ph.D.

GAS:al/gc/sl:cm Enclosures

ADVICE LETTER S U M M A R YENERGY UTILITY

Company name/CPUC Utility No.:

Utility type:Phone #:

EXPLANATION OF UTILITY TYPE

ELC GAS

PLC HEAT

MUST BE COMPLETED BY UTILITY (Attach additional pages as needed)

Advice Letter (AL) #:

WATERE-mail: E-mail Disposition Notice to:

Contact Person:

ELC = ElectricPLC = Pipeline

GAS = GasHEAT = Heat WATER = Water

(Date Submitted / Received Stamp by CPUC)

Subject of AL:

Tier Designation:

Keywords (choose from CPUC listing):AL Type: Monthly Quarterly Annual One-Time Other:If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #:

Does AL replace a withdrawn or rejected AL? If so, identify the prior AL:

Summarize differences between the AL and the prior withdrawn or rejected AL:

Confidential treatment requested? Yes NoIf yes, specification of confidential information:Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/access to confidential information:

Resolution required? Yes No

Requested effective date: No. of tariff sheets:

Estimated system annual revenue effect (%):

Estimated system average rate effect (%):

When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting).

Tariff schedules affected:

Service affected and changes proposed1:

Pending advice letters that revise the same tariff sheets:

1Discuss in AL if more space is needed.

CPUC, Energy DivisionAttention: Tariff Unit505 Van Ness AvenueSan Francisco, CA 94102 Email: [email protected]

Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless otherwise authorized by the Commission, and shall be sent to:

Name:Title:Utility Name:Address:City:State:Telephone (xxx) xxx-xxxx:Facsimile (xxx) xxx-xxxx:Email:

Name:Title:Utility Name:Address:City:State:Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx:Email:

Zip:

Zip:

mailto:EDTariffUnit%40cpuc.ca.gov?subject=

ENERGY Advice Letter Keywords

Affiliate Direct Access Preliminary StatementAgreements Disconnect Service ProcurementAgriculture ECAC / Energy Cost Adjustment Qualifying FacilityAvoided Cost EOR / Enhanced Oil Recovery RebatesBalancing Account Energy Charge RefundsBaseline Energy Efficiency ReliabilityBilingual Establish Service Re-MAT/Bio-MATBillings Expand Service Area Revenue AllocationBioenergy Forms Rule 21Brokerage Fees Franchise Fee / User Tax RulesCARE G.O. 131-D Section 851CPUC Reimbursement Fee GRC / General Rate Case Self GenerationCapacity Hazardous Waste Service Area MapCogeneration Increase Rates Service OutageCompliance Interruptible Service SolarConditions of Service Interutility Transportation Standby ServiceConnection LIEE / Low-Income Energy Efficiency StorageConservation LIRA / Low-Income Ratepayer Assistance Street LightsConsolidate Tariffs Late Payment Charge SurchargesContracts Line Extensions TariffsCore Memorandum Account TaxesCredit Metered Energy Efficiency Text ChangesCurtailable Service Metering TransformerCustomer Charge Mobile Home Parks Transition CostCustomer Owned Generation Name Change Transmission LinesDecrease Rates Non-Core Transportation ElectrificationDemand Charge Non-firm Service Contracts Transportation RatesDemand Side Fund Nuclear UndergroundingDemand Side Management Oil Pipelines Voltage DiscountDemand Side Response PBR / Performance Based Ratemaking Wind PowerDeposits Portfolio Withdrawal of ServiceDepreciation Power Lines

Gas Tariff Sheets

Public Utilities Commission 224-G Attachment A

Cal. P.U.C. Sheet No. Title of Sheet

Cancelling Cal. P.U.C. Sheet No.

1

Revised 2132-G Preliminary Statement Part H Revised 2047-G Revised 2133-G Preliminary Statement Part H Revised 1892-G Revised 2134-G Table of Contents Revised 2104-G

Southern California Edison Revised Cal. PUC Sheet No. 2132-G Rosemead, California (U 338-E) Cancelling Revised Cal. PUC Sheet No. 2047-G

PRELIMINARY STATEMENT Sheet 1

(Continued) (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 224-G R.O. Nichols Date Filed Feb 25, 2019 Decision President Effective 1P6 Resolution

H. INCOME TAX COMPONENT OF CONTRIBUTION PROVISION 1. General. All Contributions in Aid of Construction and Advances For Construction

(Contributions) made to SCE pursuant to its tariffs shall include a cost component to cover SCE’s estimated liability for Federal Income Tax resulting there from. California Corporate Franchise Tax (CCFT) shall be collected beginning January 10, 1992.

2. Definitions. a. Contributions: Contributions shall include, but are not limited to, cash,

services, facilities, labor, property, and income taxes thereon provided to SCE by a person or agency (Contributor). The value of all Contributions shall be based on SCE’s estimates. Contributions shall consist of two components as follows:

(1) Income Tax Component of Contribution (ITCC); and (2) The balance of the Contribution (Balance of Contribution). b. Eminent Domain Agency: For purposes of administering this part of the

Preliminary Statement, an Eminent Domain Agency is any Federal Government, state, county, or local governmental or quasi-governmental agency, or a federally-recognized Native American tribe, that has the general authority or is able to readily obtain the authority to condemn property for public good upon the award and payments of just compensation.

c. Involuntary Conversion: Where, in the opinion of SCE, payments or other

forms of compensation received by SCE from an Eminent Domain Agency satisfy the requirements of Internal Revenue Code Section (IRC §) 1033 as an Involuntary Conversion, the value of such payments, property or other permissible forms of compensation will not be treated as taxable income by SCE and, as a result, the ITCC component of the Contribution will not be collected. Generally, the nontaxable provisions of IRC §1033 are satisfied if (1) the Eminent Domain Agency initiates condemnation proceedings, or (2) SCE receives notice of intent by the Eminent Domain Agency to acquire the property before the initiation of condemnation proceedings, or (3) it can be demonstrated that it was reasonable to believe that SCE was compelled to dispose of the property by the impending consequences.

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(Continued)

(To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 224-G R.O. Nichols Date Filed Feb 25, 2019 Decision President Effective 2P6 Resolution

H. INCOME TAX COMPONENT OF CONTRIBUTION PROVISION (Continued) 3. Determination of ITCC.

a. The ITCC shall be calculated by multiplying the Balance of the Contribution by the applicable Tax Factor, as follows. For Contributions received by SCE on or after January 1, 2018, the Tax Factor shall be 0.24 (24%).1/

b. The tax factors included herein are established using Method 5 as set forth in and pursuant to the Commission's Decision No. 87-09-026 as modified by Decision No. 87-12-028. Should the Internal Revenue Service (IRS) deem Method 5 to be a violation of the tax normalization rules, any penalties, interest or taxes incurred by SCE shall be recovered through general rates.

4. Applicability. The ITCC shall apply to contributions under the tariffs, including but not

limited to, Rules 13, 15, and 16 unless one or more of the exemptions described herein apply or other applicable exemptions exist as determined by SCE.

5. Interest Rate. When interest is payable under this Part of the Preliminary Statement

by the Contributor to SCE or by SCE to the Contributor, the Interest Rate shall be 1/12 of the most recent month's interest rate on Commercial Paper (prime, three months), published in the Federal Reserve Statistical Release, G.13. Should publication of the interest rate on Commercial Paper (prime, three months) be discontinued, interest will so accrue at the rate of 1/12 of the most recent month's interest rate on Commercial Paper, which most closely approximates the rate that was discontinued and which is published in the Federal Reserve Statistical Release, G.13, or its successor publication.

__________________________

1/ The Tax Cuts and Jobs Act of 2017 (Act) reduced the Federal corporate income tax rate to 21 percent from 35 percent beginning January 1, 2018 and, for regulated electric utility companies such as SCE, required the use of Modified Accelerated Cost Recovery System tax depreciation (i.e., without bonus) for capitalized property acquired and placed in service after September 27, 2017. To ease the administrative burden associated with this change, SCE will not reissue ITCC invoices to reflect the higher ITCC rate for Contributions received between September 28 and December 31, 2017 that did not qualify for the 50 percent 2017 bonus depreciation as a result of the Act. §13201(h)(1) of the Act states that property subject to a binding contract as of the effective date of this provision will not be treated as acquired after September 27, 2017.

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TABLE OF CONTENTS Sheet 1

(Continued) (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 224-G R.O. Nichols Date Filed Feb 25, 2019 Decision President Effective 1P5 Resolution

Cal. P.U.C. Sheet No. TITLE PAGE .................................................................................................................................. 2134-G TABLE OF CONTENTS - RATE SCHEDULES ........................................................................... 2021-G TABLE OF CONTENTS - LIST OF CONTRACTS AND DEVIATIONS ...................................... 1980-G TABLE OF CONTENTS - RULES ................................................................................................. 2105-G TABLE OF CONTENTS - SAMPLE FORMS ............................................................................... 1981-G PRELIMINARY STATEMENT: A. Territory Served by the Utility ............................................................................................... 1388-G B. Types and Classes of Service ............................................................................................. 1388-G C. Procedure to Obtain Service ................................................................................................ 1388-G D. Interest ................................................................................................................................... 1388-G E. Symbols ................................................................................................................................ 1388-G F. Baseline Service .......................................................................................................... 1389-1826-G G. Santa Catalina Island Gas Cost Adjustment Clause (GCAC) ................. 1391-1392-1393-2059-G H. Income Tax Component of Contributions Provision ................................................... 2132-2133-G SERVICE AREA MAP ......................................................................................................................... 3-G

RATE SCHEDULES Schedule Cal. P.U.C. No. Title of Sheet No. DE Domestic Service to Utility Employees .................................................................. 1398-G G-1 Domestic Service ........................................................................................... 2088-2089-G G-1-CARE Domestic Service ........................................................................................... 2090-1132-G G-2 General Service ............................................................................................. 2091-1401-G G-OBR Santa Catalina Island On-Bill Repayment Pilot Program….. 2020-1633-1634-1635-G ............................................... ………………………………1636-1637-1638-1813-1814-G GM Domestic Service, Multifamily Accommodation ..................................................... 1402-G G-SE Service Establishment Charge ............................................................................... 1403-G RF-G Surcharge to Fund Public Utilities Commission Reimbursement Fee .................. 2035-G

LIST OF CONTRACTS AND DEVIATIONS Cal. P.U.C. Sheet No. List of Contracts and Deviations ...................................................................................................... 696-G

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Electric Tariff Sheets

Public Utilities Commission 3958-E Attachment A

Cal. P.U.C. Sheet No. Title of Sheet

Cancelling Cal. P.U.C. Sheet No.

1

Revised 66021-E Preliminary Statement Part M Revised 63114-E Revised 66022-E Preliminary Statement Part M Revised 60068-E Revised 66023-E Table of Contents Revised 65886-E

Southern California Edison Revised Cal. PUC Sheet No. 66021-E Rosemead, California (U 338-E) Cancelling Revised Cal. PUC Sheet No. 63114-E


(Continued) (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3958-E R.O. Nichols Date Submitted Feb 25, 2019 Decision President Effective Jan 1, 2018 1P7 Resolution

M. INCOME TAX COMPONENT OF CONTRIBUTION PROVISION

1. General. All Contributions in Aid of Construction and Advances For Construction (Contributions) made to SCE pursuant to its tariffs shall include a cost component to cover SCE's estimated liability for Federal and State Income Tax resulting there from. SCE shall collect the Federal Income Tax on Contributions made on or after February 11, 1987 for unit costs under Rule 15, and January 1, 1987 for all other Contributions. California Corporate Franchise Tax (CCFT) shall be collected beginning January 1, 1992.

2. Definitions.

a. Contributions: Contributions shall include, but are not limited to, cash,

services, facilities, labor, property, and income taxes thereon provided to SCE by a person or agency (Contributor). The value of all Contributions shall be based on SCE's estimates. Contributions shall consist of two components as follows:

(1) Income Tax Component of Contribution (ITCC); and

(2) The balance of the Contribution (Balance of Contribution).

b. Eminent Domain Agency: For purposes of administering this part of the

Preliminary Statement, an Eminent Domain Agency is any Federal, state, county, or local governmental or quasi-governmental agency or a federally- recognized Native American tribe that has the general authority or is able to readily obtain the authority to condemn property for public good upon the award and payment of just compensation.

c. Involuntary Conversion: Where, in the opinion of SCE, payments or other

forms of compensation received by SCE from an Eminent Domain Agency satisfy the requirements of Internal Revenue Code Section (IRC §) 1033 as an Involuntary Conversion, the value of such payments, property or other permissible forms of compensation will not be treated as taxable income by SCE and, as a result, the ITCC component of the Contribution will not be collected. Generally, the nontaxable provisions of IRC §1033 are satisfied if (1) the Eminent Domain Agency initiates condemnation proceedings, or (2) SCE receives notice of intent by the Eminent Domain Agency to acquire the property before the initiation of condemnation proceedings, or (3) it can be demonstrated that it was reasonable to believe that SCE was compelled to dispose of the property by the impending consequences.

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(Continued)

(To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3958-E R.O. Nichols Date Submitted Feb 25, 2019 Decision President Effective Jan 1, 2018 2P8 Resolution

M. INCOME TAX COMPONENT OF CONTRIBUTION PROVISION (Continued)

3. Determination of ITCC.

a. The ITCC shall be calculated by multiplying the Balance of the Contribution by the applicable Tax Factor, as follows. For Contributions received by SCE on or after January 1, 2018 the Tax Factor shall be 0.24 (24%).1/

b. The Tax Factor is established using Method 5 as set forth in and pursuant to

the Commission's Decision No. 87-09-026. Should the IRS deem Method 5 to be a violation of the tax normalization rules, any penalties, interest or taxes incurred by SCE shall be recovered through general rates.

c. SCE will file an Advice Letter for any changes which would cause an increase

or decrease of five percentage points or more in the ITCC Tax Factor. 4. Applicability. The ITCC shall apply to contributions under the tariffs, including but not

limited to, street and area lighting rate schedules and Rules 2, 13, 14, 15, 16, 20, and 21, unless one or more of the exemptions described herein apply or other applicable exemption exists as determined by SCE.

5. Interest Rate. When interest is payable under this Part of the Preliminary Statement by

the Contributor to SCE or by SCE to the Contributor, the Interest Rate shall be 1/12 of the most recent month's interest rate on Commercial Paper (prime, three months), published in the Federal Reserve Statistical Release, G.13. Should publication of the interest rate on Commercial Paper (prime, three months) be discontinued, interest will so accrue at the rate of 1/12 of the most recent month's interest rate on Commercial Paper, which most closely approximates the rate that was discontinued and which is published in the Federal Reserve Statistical Release, G.13, or its successor publication.

_______________________________

1/ The Tax Cuts and Jobs Act of 2017 (Act) reduced the Federal corporate income tax rate to 21 percent from 35

percent beginning January 1, 2018 and, for regulated electric utility companies such as SCE, required the use

of Modified Accelerated Cost Recovery System tax depreciation (i.e., without bonus) for capitalized property

acquired and placed in service after September 27, 2017. To ease the administrative burden associated with

this change, SCE will not reissue ITCC invoices to reflect the higher ITCC rate for Contributions received

between September 28 and December 31, 2017 that did not qualify for the 50 percent 2017 bonus

depreciation as a result of the Act. §13201(h)(1) of the Act states that property subject to a binding contract as

of the effective date of this provision will not be treated as acquired after September 27, 2017

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TABLE OF CONTENTS Sheet 1

(Continued) (To be inserted by utility) Issued by (To be inserted by Cal. PUC) Advice 3958-E R.O. Nichols Date Submitted Feb 25, 2019 Decision President Effective Jan 1, 2018 1P6 Resolution

Cal. P.U.C. Sheet No.

TITLE PAGE ............................................................................................................................. 11431-E TABLE OF CONTENTS - RATE SCHEDULES .... 66023-64842-65130-65887-65888-65889-65890-E ........................................................................................................... 65891-65892-65499-E TABLE OF CONTENTS - LIST OF CONTRACTS AND DEVIATIONS ................................... 65499-E TABLE OF CONTENTS - RULES ................................................................................. 64703-65313-E TABLE OF CONTENTS-INDEX OF COMMUNITIES, MAPS, BOUNDARY DESCRIPTIONS 62213-E TABLE OF CONTENTS - SAMPLE FORMS.. .................. 62213-64447-58835-65710-65147-64448-E

........................................................................................................... 64044-63577-64440-E

PRELIMINARY STATEMENT:

A. Territory Served ......................................................................................................... 22909-E B. Description of Service ................................................................................................ 22909-E C. Procedure to Obtain Service ..................................................................................... 22909-E D. Establishment of Credit and Deposits ....................................................................... 22909-E E. General .......................................................................... 45178-45179-45180-53818-45182-E F. Symbols ..................................................................................................................... 45182-E G. Gross Revenue Sharing Mechanism ....... 26584-26585-26586-26587-27195-27196-54092-E

.................................................................................................. 51717-53819-27200-27201-E H. Baseline Service ........................................................... 52027-52028-52029-52030-52031-E I. Charge Ready Program Balancing Account ................................................... 65510-65511-E J. Not In Use ............................................................................................................................. -E K. Nuclear Decommissioning Adjustment Mechanism ........................................ 36582-57779-E L. Purchase Agreement Administrative Costs Balancing Account ........... 55207-51922-55208-E M. Income Tax Component of Contributions ....................................................... 66021-66022-E N. Memorandum Accounts .... 21344-65676-61164-58221-49492-61165-61166-61167-53821-E

........ 50418-42841-61168-64869-64870-44950-44951-44952-44953-42849-42850-42851-E ........ 65677-65678-55623-61171-42856-61172-61173-52033-50419-55048-61174-42863-E ........ 42864-56204-56205-51235-45920-51236-61175-50209-42872-42873-50421-46539-E ........ 42876-42877-42878-42879-42880-42881-42882-54534-53371-56253-44959-42887-E ........ 53321-53322-61176-52551-52552-49928-56235-56236-56237-55144-55145-44029-E

........ 53016-57156-57157-51163-51164-51165-51166-51167-51168-51169-51170-51171-E ................................ 51244-55806-56393-56394-56395-56396-56397-56398-56399-58978E O. California Alternate Rates for Energy (CARE) Adjustment Clause ................. 34705-41902-E .................................................................................................. 36472-38847-56788-64913-E P. Not In Use ................................................................................. 27670-27671-27673-27674-E

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ATTACHMENT B

Relevant Sections of H.R. 1, Tax Cuts and Jobs Act of 2017

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SUBJECT: Southern California Edison Company's Additional ... · SUBJECT: Southern California Edison...

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