March 2, 2001 PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION
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2 Donald A. Fellows, Jr. Manager of Revenue and Tariffs March 2, 2001 ADVICE 1520-E (U 338-E) PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION SUBJECT: Sale and Transfer of Tools, Equipment, and Computer Hardware to Edison O&M Services In accordance with the California Public Utilities Commission (Commission) Decision No (D ), Ordering Paragraph 6, issued July 20, 2000, Southern California Edison Company (SCE) hereby submits this notice regarding the sale and transfer of certain assets to a recently created affiliate, Edison O&M Services. PURPOSE This advice filing submits to the Commission a detailed list and accounting of certain utility assets that were independently appraised and sold to its recently created affiliate, Edison O&M Services. In Ordering Paragraph 6 of D , SCE was directed to file an advice letter with the Commission within 60 days of the sale of the tools, equipment, and computer hardware containing a detailed accounting of the assets sold, cost information, and any proposed ratemaking adjustments. BACKGROUND On August 11, 1999, SCE filed Application No (A ) pursuant to Public Utilities Code Section 851 requesting approval of its plan to move certain generation-related employees and assets from SCE to a new non-utility affiliate. SCE requested that the Commission grant it a limited exemption from certain Affiliate Transaction Rules. Among other requests, SCE sought authorization to transfer O&M-related tools, equipment, and computer hardware to Edison O&M P.O. Box Walnut Grove Ave. Rosemead, California (626) Fax (626)
3 ADVICE 1520-E (U 338-E) March 2, 2001 Services at their independently appraised value rather than by an open competitive bidding process required by Affiliate Transaction Rule III.B.1. Subsequently, a Joint Recommendation was filed by the Office of Ratepayer Advocates (ORA), the Coalition of California Utility Employees (CCUE), and SCE on December 13, The Joint Recommendation clarified and settled certain aspects of SCE s proposal and, among other things, recommended that O&Mrelated tools, equipment, and computer hardware be transferred to Edison O&M Services at their independently-appraised value. On July 20, 2000, the Commission issued D , approving the Joint Recommendation. Edison O&M Services began operations on January 1, 2001, and assets were transferred, and employees moved, from SCE to the affiliate on that date. ASSET APPRAISAL AND TRANSFER As approved by D , the Joint Recommendation called for an independent appraisal of all of the O&M-related tools, equipment, and computer hardware transferred from SCE to Edison O&M Services. Furthermore, it was agreed that SCE and ORA (later the Energy Division was determined to have the appropriate jurisdiction) would meet and mutually agree upon the selection of the certified, independent appraiser. On August 7, 2000, SCE solicited qualified bidders to conduct the appraisal through a Request for Proposal (RFP) process. Of those solicited from the approved vendor list, two companies elected to bid: PricewaterhouseCoopers and Marshall and Stevens. Purchase Orders for the two independent appraisers were established in mid-september 2000 for appraisal services of the assets to be transferred to Edison O&M Services from each of SCE s local facilities, as well as assets at the remote Guam location. In a meeting to discuss the bidders and appraisal methodology, SCE and the Commission s Energy Division Director agreed to use multiple appraisals at the independently-determined fair market value and then average the results. The Final Appraisal Reports were submitted to SCE on February 28, A summary of these assets valued at their Fair Market Value in Continued Use is shown in Attachment A and was computed to be $4,867,236. Pursuant to the Joint Recommendation, Attachment B provides a listing, by asset class and location, of the transferred assets as shown on a cost basis on SCE s books. The net book value of these transferred assets is $2,148,005.
4 ADVICE 1520-E (U 338-E) March 2, 2001 PROPOSED RATEMAKING TREATMENT In A , SCE proposed that the difference between the appraised value and book value of the assets transferred to Edison O&M Services be recorded in the Transition Cost Balancing Account (TCBA). The Joint Recommendation reiterated this ratemaking treatment, and it was adopted in D Since the appraised value exceeds the book value of the transferred assets, SCE will credit the TCBA for an appropriate amount including income tax impacts. In its next Annual Transition Cost Proceeding filing, SCE will include workpapers supporting the amount credited to the TCBA. This advice filing will not increase any rate or charge, cause the withdrawal of service, or conflict with any other schedule or rule. EFFECTIVE DATE This advice filing is made in compliance with D and will become effective on the 40 th calendar day after the date filed, which is April 11, NOTICE Anyone wishing to protest this advice filing may do so by sending a letter which must be received no later than 20 days after the date of this advice filing. Protests should be mailed to: IMC Program Manager Energy Division California Public Utilities Commission 505 Van Ness Avenue, Room 4002 San Francisco, California Facsimile: (415) jjr@cpuc.ca.gov Copies should also be mailed to the attention of the Director, Energy Division, Room 4004 (same address as above). In addition, all protests should be and other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile to the attention of: Donald A. Fellows Manager of Revenue and Tariffs Southern California Edison Company 2244 Walnut Grove Avenue, Rm. 303 Rosemead, California Facsimile: (626) lawlerem@sce.com
5 ADVICE 1520-E (U 338-E) March 2, 2001 Bruce Foster Vice President of Regulatory Operations Southern California Edison Company 601 Van Ness Avenue, Suite 2040 San Francisco, California Facsimile: (415) fosterbc@sce.com 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 shall be submitted expeditiously. In compliance with General Order No. 96-A, copies of this advice filing are being furnished to the attached service list, including Interested Parties in the OIR /OIR Address change requests to the attached GO 96-A Service List should be directed to either Emelyn Lawler at (626) (Emelyn.Lawler@sce.com). Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by filing and keeping the advice filing open for public inspection at SCE s corporate headquarters. For questions, please contact Michael Unland at (626) (Michael.Unland@sce.com). Southern California Edison Company DAF:msu/eml Enclosures Donald A. Fellows, Jr.
6 Attachment A
7 Summary of Independent Appraiser's Valuation of Utility Assets transferred to Edison O Services Affiliate TABLE 1 (Tools, Test Equipment and Lab Equipment) Sub Section A B Description of Assets Quantity Fair Market Value Continued Use Misc. hand tools (e.g. hammers, screw drivers, wrenches, pliers, crow bars, benders,pipe bevelers, clamps, crimpers, cutters, gloves, hoists, levels, ratchets, respirators, saws, shears, sockets, tape measures, vise grips) 9,225 $314,132 Misc. electrical/pneumatic/hydraulic tools and equipment (e.g. drills, fans, gauges, grinders, paint guns, jacks, lights, meters, pumps, rheostats, sanders, saws, shears, vacuums, ventilators, heaters, hi-pressure washers) 3,220 $843,231 C Miscellaneous machinery (e.g. mills, drill presses, buffers) 225 $317,929 D Rigging/skyclimber equipment 4,417 $135,956 E Precision tools and testing equipment (e.g. electrical, mechanical) 1,271 $744,356 F Water and other chemical analysis equipment (e.g. balances, ion chromatographs, PH/conductivity meters) 177 $215,308 G Misc. lab equipment (e.g. burners, beakers) 205 $20,288 H I Metallurgical analysis equipment (e.g. metallograph, microscope, grinder) 18 $25,785 Welding equipment (e.g. tanks, regulators, torch handles, welding rod heaters) 815 $98,925 J Tool cabinets/carts/dollies 709 $59,883 K Work benches/sawhorses/stands/ladders 289 $131,912 L Instrumentation (e.g. transmitters, calibration instrumentation) 162 $70,267 M Control Room and other simulator systems for training (e.g. CEMS, instrument, electrical) 451 $390,605 Total - Tools, Test Equipment and Lab Equipment 21,184 $3,368,578 1 OF 4
8 Summary of Independent Appraiser's Valuation of Utility Assets transferred to Edison O Services Affiliate TABLE 2 (Computing Equipment and Related Hardware) Sub Section Description of Assets Quantity Fair Market Value Continued Use A Desktop & Laptop computers (including monitors, docking stations, jazz/zip/cd drives, modems) 629 $316,637 B Printers 136 $38,993 C Scanners 10 $1,896 D Fax machines 9 $1,330 E Copiers F Cameras (digital, video, 35mm, infrared) 12 $4,215 G Audio visual equipment (e.g. overhead projectors, televisions, tape recorders) 80 $64,310 H Miscellaneous (e.g. calculators, palm pilots) 35 $5,565 Total - Computing Equipment and Related Hardware 911 $432,946 TABLE 3 (Vehicles) Sub Section Description of Assets Quantity Fair Market Value Continued Use A Trailers (w/tools and equipment, office) 12 $77,550 B Cars/vans/pickup trucks 19 $277,459 C Fork Lifts 5 $40,100 Total - Vehicles 36 $395,109 2 OF 4
9 Summary of Independent Appraiser's Valuation of Utility Assets transferred to Edison O Services Affiliate TABLE 4 (Furniture and Office Equipment) Sub Section Description of Assets Quantity Fair Market Value Continued Use A Desks/credenzas 82 $29,556 B Cubicles C File Cabinets 268 $39,890 D Book Cases 15 $1,315 E Chairs 498 $79,678 F Tables 303 $57,510 G Whiteboards/bulletin boards 62 $6,856 H Misc. (e.g., stoves, coffe pots, ovens, refrigerators, shredders, typewriters, label machines, pictures,safes) 156 $60,430 I Storage racks and shelves 189 $61,150 Total - Furniture and Office Equipment 1,573 $336,383 TABLE 5 (Telecommunications Equipment) Sub Section Description of Assets Quantity Fair Market Value Continued Use A Telephones (e.g. cordless, cellular, 2-way radios) 357 $21,568 B Satellite/microwave communications devices 3 $1,150 Total - Telecommunications Equipment 360 $22,718 3 OF 4
10 Summary of Independent Appraiser's Valuation of Utility Assets transferred to Edison O Services Affiliate TABLE 6 (Standards & References, Procedures, and Training Materials) Sub Section A Description of Assets Quantity Fair Market Value Continued Use Training course curriculum for safety, environmental, technical and advanced skills training (e.g. lesson plans, presentations, workbooks, exams) 7,820 $82,787 B C Miscellaneous manuals ( e.g. OSHA, manufacturer instructions, engineering, turbine, boiler, electrical, systems manuals) 862 $3,304 MiscellaneousProcedures/Project Files (e.g. analytical chemistry procedures, archives) 804 $220 D Sales and Marketing Material 18 $28,801 E Other Reference material (e.g. EPRI reports, catalogs, chemical analysis references) 2,531 $29,246 Total - Standards & References, Procedures, and Training Materials 12,035 $144,358 TABLE 7 (Software) Sub Section Description of Assets Quantity Fair Market Value Continued Use A Various in-house developed software and data contained in commercially available software (e.g., spreadsheets, spreadsheet models, databases, outage management, project management, training tracking and monitoring) 16 $24,797 B Consumer type software 275 $142,348 Total - Software 291 $167,145 GRAND TOTAL 36,390 $4,867,236 4 OF 4
11 Attachment B
12 PAC035.PROGRAM.DATA(CPRONM) O&M SERVICES CPR/PLANT DETAIL LEDGER ITAC CAP CMP COMP ADDITION NET BOOK LOCN ACCT ACCOUNT DESCRIPTION YEAR IND YEAR QTY DIRECTS OVERHEADS TOTAL RESERVE VALUE Laboratory Equipment , , , , Laboratory Equipment , , , , Laboratory Equipment , , , , Laboratory Equipment , , , , Laboratory Equipment , , , , Laboratory Equipment , , , , Total 573, , , , D. C. Power System , , , Total 6, , , Miscellaneous Equipment ,139, , ,276, ,148, , Total 1,139, , ,276, ,148, , Grand Total 1,719, , ,857, ,671, , e Attach B omcost.xls ITAC 03/05/2001
13 PAC035.PROGRAM.DATA(CPRONM) O&M SERVICES CPR/PLANT DETAIL LEDGER WTR CAP CMP COMP ADDITION NET BOOK LOCN ACCT ACCOUNT DESCRIPTION YEAR IND YEAR QTY DIRECTS OVERHEADS TOTAL RESERVE VALUE Structures , , , , Total 15, , , , Office Furniture , , , Office Furniture , , , Total 26, , , Modular Furniture - Pedestal Panels , , , Modular Furniture - Pedestal Panels , , , Total 43, , , Personal Computers , , , , Total 12, , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , , Laboratory Equipment , , , , Total 410, , , , Miscellaneous Equipment Miscellaneous Equipment , , , , Total 35, , , , Office Furniture , , , Office Furniture , , , , Office Furniture Total 226, , , , Personal Computers , , , , Personal Computers , , , Total 19, , , , Office Equipment , , , Office Equipment , , , , Office Equipment , , , Total 39, , , , Stores Equipment , , , , Stores Equipment Total 39, , , , Tools and Work Equipment , , , Tools and Work Equipment , , , Total 12, , , , Grand Total 880, , , , , Page 2 of e Attach B omcost.xls WTR 03/05/2001
14 PAC035.PROGRAM.DATA(CPRONM) O&M SERVICES CPR/PLANT DETAIL LEDGER PGM CAP CMP COMP ADDITION NET BOOK LOCN ACCT ACCOUNT DESCRIPTION YEAR IND YEAR QTY DIRECTS OVERHEADS TOTAL RESERVE VALUE Stores Equipment , , , Stores Equipment , , , Stores Equipment , , , Stores Equipment , , , , Stores Equipment , , , Stores Equipment , , , Stores Equipment , , , Stores Equipment , , , Stores Equipment , , , Stores Equipment Stores Equipment Stores Equipment Stores Equipment , , , Stores Equipment , , , , Stores Equipment , , , Stores Equipment Stores Equipment , , , , Total 90, , , , Tools and Work Equipment , , , , Tools and Work Equipment , , , , Tools and Work Equipment , , , , Tools and Work Equipment , , , , Tools and Work Equipment , , , , , Tools and Work Equipment , , , , Tools and Work Equipment , , , Tools and Work Equipment , , , Total 1,692, , ,695, ,277, , Laboratory Equipment , , , Laboratory Equipment , , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment , , , Laboratory Equipment Laboratory Equipment , , , , Laboratory Equipment , , , , Laboratory Equipment , , , , Laboratory Equipment , , , Total 281, , , , Miscellaneous Equipment , , , , , Miscellaneous Equipment , , , , , Miscellaneous Equipment , , , , , Miscellaneous Equipment , , , , Miscellaneous Equipment , , , , Miscellaneous Equipment Miscellaneous Equipment , , , e Attach B omcost.xls Miscellaneous Equipment PGM Miscellaneous Equipment Page 22, of 6 1, , , , /05/2001
15 PAC035.PROGRAM.DATA(CPRONM) O&M SERVICES CPR/PLANT DETAIL LEDGER PGM ADDITION CAP CMP COMP NET BOOK LOCN ACCT ACCOUNT DESCRIPTION YEAR IND YEAR QTY DIRECTS OVERHEADS TOTAL RESERVE VALUE Miscellaneous Equipment , , , , , Miscellaneous Equipment , , , , , Miscellaneous Equipment , , , Miscellaneous Equipment , , , , , Total 231, , , , , Grand Total 2,295, , ,311, ,668, , Page 4 of e Attach B omcost.xls PGM 03/05/2001
16 PAC035.PROGRAM.DATA(CPRONM) O&M SERVICES CPR/PLANT DETAIL LEDGER PGM ADDITION CAP CMP COMP NET BOOK LOCN ACCT ACCOUNT DESCRIPTION YEAR IND YEAR QTY DIRECTS OVERHEADS TOTAL RESERVE VALUE Laboratory Equipment , , , Page 5 of e Attach B omcost.xls PGM (2) 03/05/2001
17 PAC035.PROGRAM.DATA(CPRONM) O&M SERVICES CPR/PLANT DETAIL LEDGER PPD ADDITION CAP CMP COMP NET BOOK LOCN ACCT ACCOUNT DESCRIPTION YEAR IND YEAR QTY DIRECTS OVERHEADS TOTAL RESERVE VALUE Personal Computers , , , , Personal Computers , , , , Personal Computers , , , Total 1,353, ,353, , ,009, Personal 144, , , Computer Software Personal Computer Software Total 145, , , Tools and Work Equipment Tools and Work Equipment , , , , Tools and Work Equipment , , , , Tools and Work Equipment , , , , Total 57, , , , Cellular 1, , Radio Telephone Cellular Radio Telephone , , , , Total 4, , , , Grand Total 1,560, ,560, , ,057, ,705, ,557, ,148, Page 6 of e Attach B omcost.xls PPD 03/05/2001
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