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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 24, 1998
CALIFORNIA INFRASTRUCTURE AND ECONOMIC
DEVELOPMENT BANK SPECIAL PURPOSE TRUST SCE-1
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(Issuer of Certificates)
SCE FUNDING LLC
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 333-30785 95-4640661
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2244 WALNUT GROVE AVENUE, ROOM 180, ROSEMEAD, CA 91770
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (626) 302-1850
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index Located on Page 3
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Items 1 through 4, 6 and 8 through 9 are not included because they are not
applicable.
ITEM 5. OTHER EVENTS.
On November 24, 1997, individuals representing The Utility Reform
Network ("TURN"), Public Media Center and the Coalition Against Utility Taxes
filed a voter initiative (Proposed Initiative No. SA 97 RF 0064) with the
California Attorney General which seeks, among other things, to prohibit the
collection of any customer charges for the Certificates or, alternatively,
requires Southern California Edison Company ("Edison"), the Registrant or the
California Infrastructure and Economic Development Bank Special Purpose Trust
SCE-1 (the "Trust") to offset such charges with an equal credit to ratepayers.
In addition, the proposed initiative states that "any underwriter or bond
purchaser who purchases rate reduction bonds after November 15, 1997 . . . shall
be deemed to have notice of the [proposed initiative]." Attached as Exhibit 99.1
is a copy of the proposed initiative filed with the California Attorney General.
In February 1998, the California Secretary of State released the title and
summary prepared for the proposed initiative by the office of the California
Attorney General. Under the California Constitution, 433,269 valid signatures
are required to qualify the proposed initiative for the November 1998 statewide
ballot. In May 1998, the sponsors of the proposed initiative commenced filing
the proposed initiative petition sections with various county elections
officials. County elections officials determined that the proposed initiative
petition sections contained more than 700,000 total unverified signatures. The
California Secretary of State instructed county elections officials, using the
random sample verification method, to determine the number of valid signatures
on the petition sections and certify those totals to it. On June 24, 1998, the
California Secretary of State announced that the proposed initiative qualified
for the November 1998 ballot.
On May 22, 1998, the Californians for Affordable and Reliable Electric
Service, A Coalition of California Business Organizations and Utilities
("CARES"), filed a petition for writ of mandate with the Court of Appeal of the
State of California, Third Appellate District (Californians for Affordable and
Reliable Electric Service v. Bill Jones, et al., No. 3 Civ. C029528). CARES is
sponsored by the California Business Roundtable, the California Chamber of
Commerce, San Diego Gas & Electric Company, the California Manufacturers
Association, Pacific Gas and Electricity Company, The California Retailers
Association, and Edison. The CARES petition challenges the proposed initiative
as illegal and unconstitutional on its face, and seeks to remove the proposed
initiative from the November 1998 ballot. On May 27, 1998, the proponents of
the proposed initiative filed a preliminary opposition to petition for writ of
mandate. CARES filed a response to the preliminary opposition on May 29, 1998.
As of June 30, 1998, the Court has not acted upon the CARES petition.
If the proposed initiative is not removed from the November 1998
ballot pursuant to the CARES petition and is voted into law, further litigation
would ensue. Under the terms of the Servicing Agreement between the Registrant
and Edison, as the Servicer, the Servicer is required to take such legal or
administrative actions as may be reasonably necessary to block or overturn any
attempts to cause a repeal of, modification of or supplement to the statute (the
"Statute") providing for the certificates (the "Certificates") issued by the
Trust, the financing order dated September 3, 1997 (the "Financing Order")
issued by the California Public Utilities Commission, or the rights of holders
of the property right authorized by the Statute and the
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Financing Order (referred to as transition property), by legislative enactment,
voter initiative or constitutional amendment that would be adverse to holders of
the Certificates. The costs of such actions would be payable out of collections
of the nonbypassable charges established by the Financing Order and the related
issuance advice letter as an operating expense of the Registrant.
The qualification of the proposed initiative for the November 1998
ballot could have a material adverse effect on the secondary market for the
Certificates, including the price and liquidity thereof. If the Court of Appeal
of the State of California, Third Appellate District denies the CARES petition,
it could have a further material adverse effect on the secondary market for the
Certificates, including the price and liquidity thereof. If the proposed
initiative is voted into law and is not immediately overturned or is not stayed
pending judicial review of its merits, the collection of charges necessary to
pay the Certificates while the litigation is pending could be precluded, which
would adversely affect the Certificates, the secondary market for the
Certificates, including the pricing and liquidity thereof, the dates of maturity
thereof, and accordingly the weighted average lives thereof. In addition, if the
proposed initiative were to be voted into law and be upheld by the courts, it
could have a further material adverse effect on the Certificates, the secondary
market for the Certificates, including the pricing and liquidity thereof, the
dates of maturity thereof and the weighted average lives thereof, and the
holders of the Certificates could incur a loss on their investment.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired. Not applicable
(b) Pro Forma Financial Information. Not applicable
(c) Exhibits
<TABLE>
<CAPTION>
Sequential
Exhibit Numbered
Number Exhibit
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<S> <C> <C>
99.1 Proposed Initiative (No. SA 97 RF 0064)
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SCE FUNDING LLC
By: /s/ Theodore F. Craver, Jr.
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Theodore F. Craver, Jr.
President
Dated: July 1, 1998
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EXHIBIT 99.1
PROPOSED INITIATIVE NO. SA 97 RF 0064
THE UTILITY RATE REDUCTION AND REFORM ACT
SECTION I. Findings and Declarations
The People of California find and declare as follows:
The cost and dependability of California's electric utility service are
threatened by a new law that was intended to reduce regulation of electric
utility companies in this state.
Any change in the way electricity is sold should benefit all electric utility
customers, including residential and small business customers, and should result
in a fair and competitive marketplace.
Instead of creating a fully competitive market for electricity, the new law
unfairly favors existing electric utility monopolies by forcing customers to pay
rates more than 40 percent higher than the market price in order to bail out
utilities for their past bad investments.
As a result of this $28 billion bailout for electric utility companies, the
average California household will pay more than $250 more per year for
electricity than they would in a fully competitive market.
Residential and small business customers should not be required to bear the
costs of bonds used by utility companies to pay for past bad investments.
It is against public policy for residential and small business customers to be
required to pay for the imprudent and uneconomic decisions of electric utility
companies to invest in nuclear power plants which the public did not want and
which threaten the health and safety of this state.
Under the new law, deregulation of electric utility companies may result in
marketing abuses that harm residential and small business customers. Such abuses
may include the selling of information about these customers to other companies
for profit.
Therefore, the People of California declare that it is necessary to protect
residential and small business customers from unfair and unjustified taxes and
surcharges that will force them to subsidize electric utility companies. It is
also necessary to ensure that residential and small business customers directly
benefit from deregulation of electric utility companies.
SECTION 2. Purpose
The purpose of this chapter it to:
1. Reduce residential and small commercial electricity rates by 20 percent to
assure that these customers receive a direct benefit from the transition to the
competitive marketplace for electricity.
2. Prohibit taxes, surcharges, bond payments or any other assessment from
being added to electricity bills to pay off utility companies' past bad
investments in nuclear power plants and other generation related costs.
3. Prohibit bonds from being used to force residential and small business
customers to pay for past bad investments by electric utility companies.
4. Provide for fair and public review of California Public Utilities
Commission decisions related to electricity price and services.
5. Protect the privacy of utility customers and provide the information
consumers need to obtain low cost and high quality electric service.
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SECTION 3. The following Sections are added to the Public Utilities Code:
Electric Utility Rate Reduction
Section 368.1
(a) No later than January 1, 1999, electricity rates for residential and small
commercial customers shall be reduced so that these customers receive rate
reductions of at least 20 percent on their total electricity bill as compared to
the rate schedules in effect for these customers on June 10, 1996.
(b) The rate reductions described in subsection (a) shall be achieved through
cutting payments to electric corporations for their nuclear and other uneconomic
generation costs as described in Sections 367.1 and 367.2.
(c) No utility tax, bond payment, surcharge, or any other assessment in any form
shall be levied against any electric utility customer to pay for the rate
reductions described in subsections (a) and (b).
Prohibition Against Utility Taxes, Bond Payments, Surcharges or Any Other
Assessments To Pay For Nuclear Power Plants
Section 367.1
(a) Effective immediately, costs for nuclear generation plants and related
assets and obligations shall not be paid for by electric utility customers,
except to the extent that such costs are recovered by the sale of electricity at
competitive market prices as reflected in independent Power Exchange revenues or
in contracts with the Independent System Operator.
(b) No utility tax, bond payment, surcharge or other assessment in any form
shall be levied against any electric utility customer for the recovery of
nuclear costs described in subsection (a).
(c) This section shall not apply to reasonable nuclear decommissioning costs as
referenced in Section 379 of the Public Utilities Code.
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LIMITATION ON UTILITY TAXES, BOND PAYMENTS, SURCHARGES, AND ANY OTHER
ASSESSMENTS TO PAY FOR ELECTRIC UTILITY COMPANY INVESTMENTS IN NON-NUCLEAR
GENERATION ASSETS
SECTION 367.2
(a) Effective immediately, costs for non-nuclear generation plants and related
assets and obligations shall not be recovered from electric utility customers
under the cost recovery mechanism provided for by sections 367 through 376 of
the Public Utilities Code except to the extent that such costs are recovered by
the sale of electricity at competitive market rates from independent Power
Exchange revenues or from contracts with the Independent System Operator, unless
the electric utility first demonstrates to the satisfaction of the Commission at
a public hearing that failure to recover such costs would deprive it of the
opportunity to earn a fair rate of return.
(b) This section shall not apply to costs associated with renewable non-nuclear
electricity generation facilities described in Section 381(c)(3), or to costs
associated with power purchases from qualifying facilities pursuant to the
Public Utility Regulatory Policies Act of 1978 and related commission
decisions.
PROHIBITION AGAINST UTILITY TAXES, BOND PAYMENTS, SURCHARGES AND ANY OTHER
ASSESSMENT TO PAY FOR SECURITIZATION BONDS.
SECTION 840.1
Notwithstanding current Sections 840 through 847 of the Public Utilities Code:
(a) No electric corporation, affiliate of an electric corporation or any other
financing entity shall assess or collect any utility tax, bond payment,
surcharge or any other assessment authorized by a Public Utilities Commission
financing order issued pursuant to Sections 840 through 847 of the Public
Utilities Code for the purpose of paying principle, interest or any other costs
of any bonds authorized by those sections.
(b) The Public Utilities Commission shall not issue any financing order pursuant
to Sections 840 through 847 after the effective date of this measure.
(c) Any electric corporation, affiliate of an electric corporation or any other
financing entity which is subject to a financing order issued under Section 841
that is determined by a court of competent jurisdiction to be enforceable
despite subsection (a) of this section, shall offset any utility tax, bond
payment, surcharge, or other assessment described in subsection (a) collected
from any customer with an equal credit to be applied concurrently with the
collection of the utility tax, bond payment, surcharge or other assessment.
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Section 841.1
Any underwriter or bond purchaser who purchases rate reduction bonds after
November 24, 1997 issued pursuant to current Sections 840 through 847 shall be
deemed to have notice of the provisions of Sections 367.1, 367.2, 368.1, and
840.1
Public Participation and Judicial Review For Consumer Protection and Electric
Company Accountability
Section 1170.5
(a) Any action or proceeding of the Public Utilities commission pursuant to
Section 367.1, 367.2, 368.1 and 840.1 of the Public Utilities Code shall require
a public hearing where evidence is taken by and discretion is vested in the
Public Utilities Commission.
(b) Any change to the amount of above-market costs for non-nuclear generation
plants and related assets and obligations being recovered from utility customers
shall only be made after the electrical corporation has provided notice to the
public pursuant to Section 454 of the Public Utilities Code.
(c) Any action or proceeding to attack, review, set aside, void or annul a
determination, finding, or decision of the Public Utilities Commission relating
to electric restructuring under Chapter 2.3 of Part I of Division 1 of the
Public Utilities Code and financing of transition costs as described in Article
5.5 of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code shall be
in accordance with the provisions of Section 1094.5 of the Code of Civil
Procedure. In any such action the writ of mandate shall lie from the court of
appeals to the Public Utilities Commission. The court shall not exercise its
independent judgement but shall only determine whether the determination,
finding or decision of the Public Utilities Commission is supported by
substantial evidence in light of the whole record.
Electric Utility Customer Privacy Protection
Section 394.1
The confidentiality of residential and small commercial customer information
shall be fully protected as provided by law. No entity providing electricity
services including an electric corporation shall provide information about a
residential or small commercial customer to any third party without the express
written consent of the customer.
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Electric Utility Customer Information
Section 393
The Public Utilities Commission shall require each electric utility or electric
service provider to provide such information or materials with each utility bill
issued to residential and small commercial customers as the Commission
determines to be necessary to assist consumers in obtaining low costs, high
quality electric service options, including electric service options that reduce
environmental impacts such as those that rely on renewable energy sources and to
protect consumers' interest in all matters concerning safe and dependable
delivery of electric service.
Definitions
Section 330.1 Definitions of Charges
(a) "Utility tax" "bond payments" "surcharge", "assessment" or "involuntary
payment" mean any charge that serves to permit an electric corporation to
recover the value of uneconomic assets from ratepayers, and includes but is not
limited to a "fixed transition amount" as defined by Section 840(d), and the
"competition transition charge" that the nonbypassable charge referred to in
Sections 367 and 376, inclusive.
(b) For purposes of Sections 330.1, 367.1, 367.2, 368.1, 393, and 840.1, the
terms "electric utility", "electric utility company", and "electric corporation"
have the same meaning as the term "electrical corporation" as defined in
Section 218 of the Public Utilities Code.
Repeal of Existing Law
Sections 367(a), 368(d), 368(h) of the Public Utilities Code are repealed
SECTION 4. Initiative Integrity
(a) This act shall be broadly construed and applied in order to fully promote
its underlying purposes, and to be consistent with the United States
Constitution and the Constitution of the State of California. If any provision
of this initiative conflicts directly or indirectly with any other provisions of
law, including but not limited to the cost recovery mechanism provided for by
Sections 367 through 376 of the Public Utilities Code, or any other statute
previously enacted by the Legislature, it is the intent of the voters that those
other provisions shall be null and void to the extent that they are inconsistent
with this initiative and are hereby repealed.
(b) No provision of this act may be amended by the Legislature except to further
the purpose of that provision by a statute passed in each house by roll call
vote entered in the journal, two thirds of the membership concurring, or by a
statute that becomes effective only when approved by the electorate. No
amendment by the Legislature shall be deemed to further the purposes of this act
unless it furthers the purpose of the specific provision of this act that is
being amended. In any judicial action with respect to any legislative
amendment, the court shall exercise its independent judgment as to whether or
not the amendment satisfies the requirements of this subsection.
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(c) If any provision of this act or the application thereof to any person or
circumstances is held invalid, that invalidity shall not effect other provisions
or applications of the act that can be given effect in the absence of the
invalid provision or application. To this end, the provisions of this act are
severable.
(d) It is the will of the People that any legal challenges to the validity of
any provision of this act be acted upon by the courts upon an expedited basis.
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