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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: October 3, 1996
Date of earliest event reported: September 23, 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 September 23, 1996, California Governor Pete Wilson signed Assembly
Bill 1890, providing for the restructuring of the California electric
utility industry. The legislation, building upon the California Public
Utilities Commission's (CPUC) December 20, 1995 restructuring decision,
opens electric power generation in California to competition commencing
January 1, 1998, while leaving in place the regulatory system governing
its transmission and distribution. A copy of the Governor's office press
release on the signing of the legislation is attached hereto as Exhibit
20.1, with press releases from Southern California Edison Company (Edison)
on the matter attached as Exhibits 20.2 and 20.3.
In addition, on September 20, 1996, the CPUC adopted a new mechanism
for setting electric rates for transmission and distribution called
Performance-Based Ratemaking (PBR). Under the PBR (scheduled to take
effect on January 1, 1997), adjustments to Edison's approved revenue
requirements shall be made based on various factors, including
productivity, service quality, safety, inflation, and unforeseen external
events. Resulting gains and losses are to be shared between Edison's
shareholders and customers in a prescribed manner. A copy of a press
release issued by Edison on September 23 describing the new ratemaking
method is attached hereto as Exhibit 20.4.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibits
Exhibit
Number Description
- ------- -----------
20.1 News Release -- Wilson Signs Historic Legislation Restructuring
Electic Industry
20.2 News Release -- Edison Applauds Gov. Wilson's Signing of Historic
Electricity Restructuring Bill
20.3 Investor Relations News -- Electric Utility Industry
Restructuring Bill Signed by Governor
20.4 News Release -- Edison Applauds CPUC Incentive-Based Rate
Decision
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
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KENNETH S. STEWART
ASSISTANT GENERAL COUNSEL
October 3, 1996
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Exhibit 20.1
GOVERNOR'S OFFICE
WILSON SIGNS HISTORIC LEGISLATION RESTRUCTURING ELECTRIC INDUSTRY
Ending California's Utility Monopoly
Creating the Nation's First Plan to Deregulate Electricity through
Competition
FOR IMMEDIATE RELEASE CONTACT: Sean Walsh
Monday, September 23, 1996 Ron Low
(916)445-4571
SAN DIEGO - Governor Pete Wilson today signed historic legislation, AB
1890 by Assemblyman Jim Brulte (R-Rancho Cucamonga), which will break up
California's utility monopoly, open the state's $21 billion electricity
market to competition and guarantee a 20 percent rate cut for residential
and small business customers by the year 2002.
"Every time a resident of this state flicks on the electric switch,
they pay 40 percent more than residents across the United States," Wilson
said. "The legislation I am signing today will end that by ushering in
a new era of competition, making California the first state in the nation
to dismantle its electric monopoly. This landmark legislation is a major
step in our efforts to guarantee lower rates, provide consumer choice and
offer reliable service, so no one literally is left in the dark."
By breaking up the investor-owned utility monopolies, consumers will
now be able to choose their energy providers by shopping for the best
price in a competitive marketplace. Currently, California's electrical
rates are 40 percent higher that the national average, 50 percent higher
than Texas, 65 percent higher than Nevada, and 120 percent higher than
Oregon, three of California's leading competitors in the west. The
deregulation of electricity, along with reforms to the business climate,
will make California even more attractive to investors and job creators.
"For any new business looking to grow or move to California, this is
a powerful new stimulant," Wilson said. "Every extra dollar spent on
higher electricity rates is one less dollar invested in purchasing new
equipment or expanding payrolls."
"By dealing with this difficult issue in a comprehensive way,
California will be a pace-setter in the national deregulation movement.
This is one of the most significant bi-partisan accomplishments of the
1995-1996 legislative session," Wilson added.
The deregulation of the electrical industry will sale California
schools over $123 million by the year 2002 -- enough money to hire 3,500
new teachers, build 1,600 new classrooms or purchase over 1.5 million sets
of reading materials.
Enactment of this legislation modifies a plan passed last December by
the California Public Utilities Commission (PUC) which changed forever the
system of charging for electricity. The plan was the culmination of more
than three years of work -- which began with a mandate from the Governor
to the Public Utilities Commission to lower the price of electricity and
end excessive and expensive over-regulation. That mandate translated into
a detailed blueprint for implementing competition in the power industry.
The legislation signed today by Wilson lays out a five-year transition
period during which the state's utility industry will be opened to true
competition.
During the transition, residential users and small commercial
businesses are guaranteed a rate reduction of 10 percent starting
January 1, 1998, followed by another 10 percent reduction by 2002, the end
of the 5-year transition period. The reduction does not apply to the
publicly owned utilities in the state such as the Sacramento Municipal
District (SMUD) or the Los Angeles Department of Water and Power.
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"Large and small customers will be free to choose from a variety of new
independent suppliers or they can stay with their current utility,
depending on who makes the best offer," Wilson added.
Congress began the process of increasing competition in the utility
industry in 1992 with the passage of the Energy Policy Act. In response
to those federal changes, California is leading the nation in moving down
the path toward a deregulated industry. Dozens of other states are
considering similar legislation.
The legislation also establishes an Independent System Operator (ISO)
to ensure there is a consistently reliable source of power for California
consumers and to provide safeguards against the types of outages recently
witnessed in large parts of the west. The ISO will operate under
stringent guidelines and will be backed by required expenditures by the
affected utilities.
Wilson acknowledged the efforts of Assemblyman Jim Brulte for drafting
the legislation and Senator Bill Leonard, Senator Steve Peace and
Assemblyman Mickey Conroy for working to get the legislation passed.
Wilson also thanked Assemblyman Steve Kuykendall, Assemblywoman Diane
Martinez, and Senator Byron Sher for their work on the Conference
Committee.
"We're doing more than signing a new law, we are shifting the balance
of power in California," Wilson concluded. "We've pulled the plug on
another outdated monopoly and replaced it with the promise of a new era
of competition."
Wilson has also signed three other bills relating to electrical
restructuring and reforming the Public Utilities Commission -- AB 2501 by
Assemblyman Steve Kuykendall (R-Long Beach), SB 960 by Senator Bill
Leonard (R-Upland) and SB 1322 by Senator Charles Calderon (D-Montebello).
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Exhibit 20.2
Southern California Edison
An Edison International Company
For Immediate Release
Contact: Kevin Kelly
(818) 302-7970
World Wide Web Address: http://www.edisonx.com
Edison Applauds Gov. Wilson's Signing of Historic Electricity
Restructuring Bill
ROSEMEAD, Calif., September 23, 1996 -- Southern California Edison
today commended Governor Pete Wilson for signing the widely supported
Assembly Bill 1890, which will dramatically restructure the electricity
industry statewide.
"This historic legislation is the product of consensus building and
compromise," said John E. Bryson, Edison's chairman and chief executive
officer. "We commend Governor Wilson, the State Legislature, the numerous
customer groups, other utilities, municipalities and other stakeholders
for their hard work and cooperative spirit in the formation of this new
law.
"The new legislation ensures a timely and fair transition to a
competitive electricity market," Bryson said. "Moreover, it will help
lower rates for millions of customers and provides a fair opportunity for
utilities to compete to serve customers in a restructured energy
marketplace."
The restructuring legislation garnered broad support among various
stakeholders, because:
o it provides for a rapid and orderly transition to a
competitive marketplace in power generation;
o it assures an open and transparent power marketplace serving
both large and small customers;
o it provides substantial early rate relief for the state's
residential and small commercial consumers;
o it will help protect system reliability;
o it treats utility employees fairly and recognizes their
valuable contributions to maintaining reliable electric
service in the state;
o it removes uncertainties concerning the timing of the
transition;
o it provides utilities with a fair opportunity to recover costs
they incurred in meeting their legal obligation to serve all
customers under the state's regulatory system.
The new law will open electric power generation in California to
competition while leaving in place the regulated system of transmission
and distribution of power. This new, competitive generation market should
contribute to lowering electric rates for all consumers.
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"We accept the challenges involved in moving into the new
competitive marketplace, and with the skills and experience of Edison
employees, our focus on high-quality service and reliability, and our
enduring, long-term commitment to California, we will succeed."
The new law is generally consistent with the California Public
Utilities Commission's (CPUC) Dec. 20, 1995 restructuring order. The
CPUC, Federal Energy Regulatory Commission, U.S. Department of Energy, and
state of California, as well as other governmental and regulatory
agencies, each have oversight relative to specific aspects of the state's
electric power industry.
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Southern California Edison is one of the five 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, and Edison EV (Electric
Vehicles).
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Exhibit 20.3
Southern California Edison
Edison Mission Energy
Edison Capital
Edison Source
Edison EV
INVESTOR RELATIONS NEWS
September 23, 1996
Electric Utility Industry Restructuring Bill
Signed by Governor
Today, Governor Pete Wilson signed the widely supported Assembly Bill
1890 which restructures the California electricity industry.
"This historic legislation is the product of consensus building and
compromise," said John E. Bryson, Edison's chairman and chief executive
officer. "We commend Governor Wilson, the State Legislature, the numerous
customer groups, other utilities, municipalities and other stakeholders
for their hard work and cooperative spirit in the formation of this new
law."
"The new legislation ensures a timely and fair transition to a
competitive electricity market," Bryson said. "Moreover, it will help
lower rates for millions of customers and provides a fair opportunity for
utilities to compete to serve customers in a restructured energy
marketplace."
The legislation builds upon the California Public Utilities
Commission's (CPUC) December 20 restructuring decision, adopting several
modifications. Consistent with the CPUC decision, it provides for the
establishment of an Independent System Operator (ISO) and Power Exchange.
The legislation also includes the following key differences from the CPUC
decision:
o accelerated recovery of most stranded costs by December 31, 2001
(as compared to 2005 in the CPUC decision);
o the use of ten-year "rate reduction bonds" to securitize a
portion of the transition costs to be paid by residential and
small commercial customers enabling SCE to receive approximately
$2 billion at the start of the new competitive market to reduce
residential and small commercial customers' rates 10% beginning
in January 1998;
o a rate freeze through 2001 for larger customers who continue to
purchase their power under current utility tariffs.
* * * *
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Exhibit 20.4
Southern California Edison
An Edison International Company
For Immediate Release
Contact: Tom Higgins
(818) 302-2255
Edison Applauds CPUC Incentive-Based Rate Decision
ROSEMEAD, Calif., Sept. 23, 1996 -- Southern California Edison today
applauded the California Public Utilities Commission's approval of a new
and better way to set electric rates. The new system, called Performance-
Based Ratemaking (PBR), will provide Edison an incentive to increase
efficiency and lower costs, because the resulting savings will be shared
by Edison shareholders and customers.
Effective January 1997, PBR will apply to the portion of Edison's
revenue requirement that covers transmission and distribution operations -
- - separating these costs from those associated with power generation.
"Our customers and shareholders will benefit significantly from
PBR," said John E. Bryson, Edison's chairman and chief executive officer.
"Our efforts to improve service and reduce costs will reward both groups,
thus achieving our long-standing goal of aligning customer and shareholder
interests.
"PBR provides the utility with greater long-term incentives for
lower rates, increases management flexibility and accountability, rewards
utilities for providing increased customer value, and reduces the cost and
complexity of regulatory proceedings," Bryson noted.
Under PBR, the process of determining rates for the non-generation
portion of Edison's revenue requirement will be based on adjustments to
the revenue requirement approved in Edison's 1995 General Rate Case.
These adjustments will be based on:
o rewards and penalties for performance in productivity, safety
and service quality areas, such as reliability and customer
satisfaction;
o inflation, as reflected by the Consumer Price Index, with an
adjustment to assure customers of continued productivity
improvements;
o adjustments for the effects of energy efficiency programs and
unforeseen, external factors, such as changes in tax laws or
accounting rules.
Edison's transmission and distribution revenue requirement -- as
approved in the 1995 General Rate Case -- is about $2.1 billion of the
utility's $7.3-billion total requirement.
A net revenue sharing mechanism in the new PBR system determines how
customers and shareholders will share gains and losses from transmission
and distribution operations.
Edison's authorized rate of return on equity will be adjusted based
on changes in interest rates for AA utility bonds.
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Beginning in 1998, the transmission portion will be separated from
the non-generation revenue requirement and subject to ratemaking under the
rules of the Federal Energy Regulatory Commission.
####
Southern California Edison is one of five 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, and Edison EV (Electric Vehicles).
