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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 5, 1996
Date of earliest event reported: November 21, 1996
SOUTHERN CALIFORNIA EDISON COMPANY
(Exact name of registrant as specified in its charter)
CALIFORNIA 1-2313 95-1240335
(State or other jurisdiction of (Commission (I.R.S. employer
incorporation or organization) file number) identification no.)
2244 Walnut Grove Avenue
(P.O. Box 800)
Rosemead, California 91770
(Address of principal executive offices, including zip code)
818-302-1212
(Registrant's telephone number, including area code)
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Item 5. Other Events
On November 21, 1996, the Board of Directors of Southern California
Edison Company (Edison), Edison International's electric utility
subsidiary, approved a plan to sell all 12 of its natural gas and oil-
fueled power plants. The plants, all located within Edison's service
territory, have a combined book value of approximately $700 million. A
copy of Edison's press release on the matter is attached as Exhibit 20.1
and incorporated herein by this reference. A copy of a press release from
Edison International (EIX) concerning this matter, the Palo Verde Nuclear
Generating Station (PVNGS) cost recovery matter discussed below, and other
information not part of this filing, is attached in relevant part as
Exhibit 20.2 and also incorporated herein by this reference.
On November 27, 1996, Edison filed its divestiture application with
the California Public Utilities Commission (CPUC). Under the application,
Edison proposes to auction the affected plants by grouping them into 4
"bundles," with no bidder being allowed to purchase more than 2 of the 4
"bundles." The auctions are to be held in two phases: the first three
bundles in the summer of 1997, followed by auction of the fourth bundle in
the fall of that same year. A copy of EIX's press release on the matter,
which press release also includes information on the PVNGS matter
discussed below (and other information not part of this filing), is
attached in relevant part as Exhibit 20.3 and incorporated herein by this
reference.
In addition, on November 15, 1996, Edison, The Utility Reform
Network (TURN) and the Office of Ratepayer Advocates of the CPUC (all of
the active parties in the PVNGS cost recovery proceeding), filed a
settlement agreement with the CPUC. The settlement is substantially the
same as the Memorandum of Understanding signed by the same parties on
November 1, 1996. On November 26, 1996, the assigned Administrative Law
Judge to the Palo Verde proceeding issued a proposed decision adopting the
settlement agreement upon which the CPUC may act as soon as December 20,
1996. Copies of EIX's press releases on the matter are included as
portions of attached Exhibits 20.2 and 20.3.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibits
Exhibit
Number Description
- ------- -----------
20.1 News Release -- Edison Plans to Divest 12 Power Plants in
California
20.2 Investor Relations News dated November 21, 1996
20.3 Investor Relations News dated December 4, 1996
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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.
SOUTHERN CALIFORNIA EDISON COMPANY
----------------------------------
KENNETH S. STEWART
ASSISTANT GENERAL COUNSEL
December 5, 1996
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EXHIBIT 20.1
Southern California Edison
An EDISON INTERNATIONAL Company
FOR IMMEDIATE RELEASE
Contact: Tom Higgins
(818) 302-2255
World Wide Web Address: http://www.edisonx.com
Edison Plans to Divest 12 Power Plants in California
ROSEMEAD, Calif., Nov. 21, 1996-The Board of Directors of Edison
International and its electric utility subsidiary, Southern California
Edison, today approved a plan to sell by auction 12 power plants in SCE's
service territory. This represents 100% of the utility's natural gas and
oil-fueled generation assets. Edison International and its subsidiaries
will not bid for these assets in the auctions scheduled to begin in summer
1997.
The 12 power plants, all located within SCE's California service
territory, have a total rated operating capacity of about 10,000 megawatts
and have a combined book value of about $700 million. Although SCE
believes the transaction would be the largest asset sale of generation
capacity in the electric industry's history, the plants to be sold
currently produce slightly less than 20% of the power delivered to Edison
customers and represent less than 10% of Edison's total current investment
in its California utility system.
The 12 plants are:
Alamitos Generating Station, Long Beach
Cool Water Generating Station, Daggett
Ellwood Generating Station, Santa Barbara
El Segundo Generating Station, El Segundo
Etiwanda Generating Station, San Bernardino
Highgrove Generating Station, San Bernardino
Huntington Beach Generating Station, Huntington Beach
Long Beach Generating Station, Long Beach
Mandalay Generating Station, Ventura
Ormond Beach Generating Station, Oxnard
Redondo Generating Station, Redondo Beach
San Bernardino Generating Station, San Bernardino
"We believe this plan is the best way to facilitate a smooth, timely
transition to a competitive electricity market and maximize value for our
shareholders and customers," said John Bryson, chairman and chief
executive officer of Edison International and SCE.
"In the future, the generation of power will be largely unregulated.
Although we are selling these regulated plants, Edison International--
through its competitive power generation company, Edison Mission Energy,
as well as through SCE--will continue to be a major participant in
generation markets throughout California, the nation, and the world. We
know this business and remain committed to it," Bryson said. Edison
Mission Energy is one of the largest independent power producers in the
world.
He said the utility will continue to own and operate its hydroelectric
power facilities in California and the San Onofre nuclear power plant near
San Clemente, and will continue to own a portion of the Palo Verde nuclear
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plant in Arizona. San Onofre and Palo Verde will make the transition to
competition under separate plans previously approved by the California
Legislature and the California Public Utilities Commission (CPUC). In
addition, Edison International has ownership interests in 14 power
projects in California through its Edison Mission Energy subsidiary, which
also develops and operates power plants worldwide.
The company had announced last March that it intended to voluntarily
divest 50% of its oil and gas-fueled plant assets, in accordance with the
CPUC's restructuring decision. That decision also required California
utilities to value their fossil power plants by the end of 2003. AB1890,
California's new electric industry restructuring legislation, requires
that valuation to be completed by the end of 2001. The divestiture plan
announced today is contingent on the overall electric industry
restructuring implementation process continuing on a satisfactory path,
according to Bryson.
SCE's ownership share in its coal-fueled Mohave and Four Corners ower
plants in Nevada and New Mexico, respectively, also will be valued in
accordance with the requirements of AB1890. Final determination about the
ownership of those plants will be made after additional analysis is
completed.
SCE will operate and maintain the 12 divested power plants for at
least two years following their sale, as mandated by California's
restructuring legislation. "This will ensure that nearly all the
employees operating these plants today will continue to have the
opportunity to further their careers in the generation business," said
Stephen Frank, president and chief operating officer of SCE. "In
addition, we will offer workforce transition programs to those Edison
employees who may be impacted by divestiture-related job reductions," he
said.
SCE will file a detailed plan for the sale of the 12 power plants with
the California Public Utilities Commission before the end of November.
New Harbor Inc. is advising the company on the transactions. Parties
interested in bidding on the power plants should contact John G. Paton,
managing director of New Harbor Inc., at (212) 486-3668 or Ted Craver,
Edison International vice president and treasurer, at (818) 302-1089.
# # #
Southern California Edison is one of six Edison International companies.
It is the nation's second largest electric utility, serving more than 11
million people in a 50,000-square-mile area within central, coastal and
southern California. The other related companies are Edison Mission
Energy, Edison Capital, Edison Source, Edison EV (Electric Vehicles),and
Edison Select.
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EXHIBIT 20.2
EDISON INTERNATIONAL
INVESTOR RELATIONS NEWS
November 21, 1996
SCE Plans to Divest 100% of Gas and Oil Power Plants in California
The Board of Directors of Edison International and its electric
utility subsidiary, Southern California Edison (SCE), today approved a
plan to sell, by auction, 12 power plants in SCE's service territory.
These plants represent 100% of the utility's natural gas and oil-fueled
generation assets. Edison International and its subsidiaries will not
bid for these assets in auctions scheduled to begin in the summer of
1997.
The 12 power plants have a total rated operating capacity of
9,562 megawatts (MW) and have a combined book value of about $700
million. The plants to be sold currently produce slightly less than 20%
of the power delivered to SCE customers and represents less than 10% of
SCE's total current investment in its California utility system.
Power Plants Locations Capacity Employees
- ------------ --------- -------- ---------
Alamitos Generating Station Long Beach 2,083 MW 100
Cool Water Generating Station Daggett 628 MW 60
Ellwood Energy Support Facility Santa Barbara 48 MW 0
El Segundo Generating Station El Segundo 1,020 MW 66
Etiwanda Generating Station San Bernardino 1,030 MW 58
Highgrove Generating Station San Bernardino 154 MW 3
Huntington Beach Gen. Station Huntington Beach 563 MW 42
Long Beach Generating Station Long Beach 530 MW 39
Mandalay Generating Station Ventura 570 MW 43
Ormond Beach Gen. Station Oxnard 1,500 MW 62
Redondo Generating Station Redondo Beach 1,310 MW 72
San Bernardino Gen. Station San Bernardino 126 MW 16
"We believe this plan is the best way to facilitate a smooth,
timely transition to a competitive electricity market and maximize value
for our shareholders and customers," said John Bryson, chairman and
chief executive officer of Edison International and SCE.
Through SCE and its competitive power generation company,
Edison Mission Energy, Edison International will continue to be a major
participant in generation markets throughout California, the nation, and
the world. "We know this business and remain strongly committed to it,"
Bryson said.
He said the utility will continue to own and operate its
hydroelectric power facilities in California and the San Onofre nuclear
power plant near San Clemente, and will continue to own a portion of the
Palo Verde nuclear plant in Arizona. San Onofre and Palo Verde will
make the transition to competition under separate ratemaking plans. In
addition, Edison International has ownership interests in 14 operating
projects in California (28 in the U.S. and 51 worldwide) through its
Edison Mission Energy subsidiary.
The company had announced last March that it intended to divest
50% of its oil and gas-fueled plant assets, in accordance with the
California Public Utilities Commission's (CPUC) restructuring decision.
That decision also required California utilities to value their fossil
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power plants by the end of 2003. AB1890, California's new electric
industry restructuring legislation, requires that valuation to be
completed by the end of 2001. The divestiture plan announced today is
contingent on the overall electric industry restructuring implementation
process continuing on a satisfactory path.
SCE's ownership share in its coal-fueled Mohave and Four
Corners power plants in Nevada and New Mexico, respectively, also will
be valued in accordance with the requirements of AB1890. Final
determination about the ownership of those plants will be made after
additional analysis is completed.
SCE will operate and maintain the 12 divested power plants for
at least two years following their sale, as mandated by California's
restructuring legislation. In addition, the company will offer
workforce transition programs to those SCE employees who may be impacted
by divestiture-related job reductions.
The gas and oil generation units would have received a return
on equity of approximately 7% under the December 20, 1995 CPUC
restructuring decision. Contribution to earnings from the gas and oil
portfolio under the restructuring decision would have been approximately
$25 million annually. The earnings per share impact, if any, will
depend on the sale price of the units sold and the competition
transition charge (CTC) recovery mechanism. SCE will file a detailed
plan for the sale of the 12 power plants with the CPUC on November 27.
Palo Verde All-Party Settlement Filed with CPUC
On November 15, all the active parties in the Palo Verde
Nuclear Generating Station (PVNGS) cost recovery proceeding, Southern
California Edison (SCE), the Office of Ratepayer Advocates (ORA), and
The Utility Reform Network (TURN), filed a Settlement Agreement with the
California Public Utilities Commission (CPUC). The Settlement was
substantially the same as the memorandum of understanding (MOU) signed
November 1.
The terms of the Settlement would achieve accelerated full
recovery of SCE's remaining investment in PVNGS (forecast to be $1.2
billion as of December 31, 1996) beginning in 1997 and extending through
2001 at a reduced rate of return (approximately 7.35% return on
ratebase). SCE will receive pass-through balancing account treatment
for it's portion of incremental costs for PVNGS over the five-year
"recovery period", January 1, 1997 through December 31, 2001, so long as
costs do not exceed a baseline forecast by 30% and/or the site gross
capacity factor does not fall below 55%. Additionally, PVNGS will
continue to operate under a Nuclear Unit Incentive Pricing Procedure for
purposes of calculating a reward only for capacity factor performance in
excess of 80%. SCE owns a 15.8% interest in PVNGS, which is operated by
Arizona Public Service (APS). The impact of the Settlement on SCE's
1997 net income is projected to be a decline of approximately $21
million. An Administrative Law Judge Proposed Decision (ALJ PD) and a
final CPUC decision are expected in the near future.
EXHIBIT 20.3
EDISON INTERNATIONAL
INVESTOR RELATIONS NEWS
December 4, 1996
ALJ Proposed Decision Adopts Palo Verde Settlement
The California Public Utilities Commission's (CPUC) Administrative
Law Judge (ALJ) assigned to the Palo Verde Nuclear Generating Station
(PVNGS) cost recovery proceeding issued a proposed decision on November
26. The proposed decision recommends that the CPUC adopt the Palo Verde
All-Party Settlement. (Details of the Settlement are outlined in EIX's
November 1 and 21 Investor Relations (I/R) Newsletters and the ALJ
proposed decision.) The proposed decision provides for the accelerated
recovery of SCE's remaining investment in Palo Verde and pass-through
balancing account treatment for its portion of incremental operating
costs over a five-year recovery period.
The ALJ has also proposed an abridged procedural schedule that
would permit the issuance of a final CPUC decision as early as December
20, 1996. Comments on the proposed decision are due December 9, with
reply comments due December 13. The ALJ proposed decision is eight
pages in length and is available upon request.
SCE Files Divestiture Application with CPUC
On November 27, Southern California Edison (SCE) filed an
application with the CPUC to voluntarily divest, by auction, 100% of its
gas and oil-fueled generation assets. (Details on the 12 plants to be
divested and SCE's plans for divestiture were published in EIX's
November 21 I/R Newsletter.) The application proposes that the plants
be sold in four bundles (or groupings), with no bidder, or consortium of
bidders, being allowed to purchase more than two of the four bundles.
SCE proposes that the first three bundles be auctioned simultaneously
during the summer of 1997.
The fourth bundle would contain those plants which must be run at
times for system reliability reasons (e.g. for voltage support). SCE
has concluded that after transmission upgrades costing approximately
$125 million, only two gas-fired stations would remain "must-run": the
Alamitos and Huntington Beach generating stations. (SCE has filed a
separate application with the CPUC regarding rate treatment of the
proposed transmission upgrades.) SCE proposes that the fourth bundle be
auctioned in the fall of 1997.
SCE envisions a three-stage divestiture process:
1) CPUC review and decision on SCE's 11/27/96 proposal, including
the auction protocols and procedures;
2) Auctions conducted and winning bidders selected in accordance
with approved procedures;
3) CPUC approval of the final sales.
- more -
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The following table shows the four bundles, and their respective
megawatts (MW), net book value, and original cost:
<TABLE>
<CAPTION>
Station Net Book Value Original
Capacity MW (as of 12/31/95)(a) Cost
(Summer) (thousands $) (thousands $)
----------- ------------------- -------------
"Ventura Bundle"
<S> <C> <C> <C>
ELLWOOD 48 2,128 7,843
MANDALAY 570 15,616 124,314
ORMOND BEACH 1500 164,180 306,537
---- ------- -------
Bundle Total 2118 181,924 438,694
"Eastern Bundle"
COOL WATER 628 94,919 224,612
ETIWANDA 1030 37,534 175,152
HIGHGROVE 154 (2,505) 25,815
SAN BERNARDINO 126 (1,771) 22,688
---- ------- -------
Bundle Total 1938 128,177 448,267
"South Bay Bundle"
REDONDO 1310 98,416 292,532
EL SEGUNDO 1020 74,514 187,499
LONG BEACH 530 94,886 180,607
---- ------- -------
Bundle Total 2860 267,816 660,638
"Local Reliability Bundle"
ALAMITOS 2083 153,112 379,613
HUNTINGTON BEACH 563 2,563 184,103
---- ------- -------
Bundle Total 2646 155,675 563,716
TOTAL 9562 733,592 2,111,315
==== ======= ========
</TABLE>
(a) These figures represent SCE's best current estimate. Because the
property included in the sales may differ somewhat from what is assumed
here, the final figures included in SCE's Affidavit of Compliance may
not be identical.
Highlights of Divestiture Schedule Proposed by SCE in its 11/27
Application
<TABLE>
<CAPTION>
<S> <C>
Calif. Environmental Quality Assessment (CEQA) determination 01/23/97
Intervenor/Staff testimony 01/30/97
SCE rebuttal testimony 02/11/97
Hearings 02/18-28/97
ALJ proposed decision 04/28/97
CPUC approval of auction process 06/11/97
Initial bids due on Bundles 1 - 3 06/30/97
Final bids due on Bundles 1 - 3 08/14/97
Winner Selection and contract execution for Bundles 1 - 3 08/21/97
Compliance filing on Bundles 1 - 3 08/27/97
Initial bids due on Bundle 4 09/09/97
Final bids due on Bundle 4 10/13/97
Winner selection and contract execution on Bundle 4 10/17/97
Compliance filing on Bundle 4 10/21/97
Final CPUC decision on Bundles 1 - 3 10/22/97
Final CPUC decision on Bundle 4 12/16/97
</TABLE>
