Revenue Requirement and Allocation Principles. All of SCE’s rate groups have received significant revenue requirement increases that either have occurred or are expected to occur and to be reflected in rates over the period from December 2005 through June 2006. These revenue changes have had disparate impacts on different rate groups when applied based on the functional System Average Percent Change (SAPC) methodology in accordance with the settlement agreement adopted in D.▇▇-▇▇-▇▇▇ in Phase 2 of SCE’s 2003 GRC. In order to avoid further litigation and to mitigate potentially adverse impacts on any particular rate group in this proceeding, the Settling Parties have agreed on how SCE’s total revenue requirement shall be allocated to each rate group effective with Commission approval of this Agreement. Based on an estimate of SCE’s expected system revenue requirement as of June 2006, the Phase 2 Revenue Allocation Agreement produces a specific rate group revenue change relative to the revenues assigned to each rate group as of December 2005.
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