SUBJECT: Request by SCE for Approval to Grant Easement and License Pursuant to G.O.173

STATE OF CALIFORNIA Edmund G. Brown Jr., Governor PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA 94102-3298 October 14, 2015 Advice Letter 3266-E Russell G. Worden Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, CA 91770 SUBJECT: Request by SCE for Approval to Grant Easement and License Pursuant to G.O.173 Dear Mr. Worden: Advice Letter 3266-E is effective as of October 12, 2015. Sincerely, Edward Randolph Director, Energy Division

Russell G. Worden Managing Director, State Regulatory Operations August 28, 2015 ADVICE 3266-E (U 338-E) PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION SUBJECT: Request by Southern California Edison Company for Approval to Grant Easement and License Pursuant to General Order 173 PURPOSE Pursuant to General Order 173, 1 Southern California Edison Company ( SCE ) respectfully requests an order from the California Public Utilities Commission ( Commission ) authorizing SCE to grant both an easement and a revocable license under Public Utilities Code Section 851 to Arizona Public Service Company ( APS ) and Central Arizona Water Conservation District (collectively, with APS, the Grantees ). The easement would, pursuant to conditions fully set forth in the proposed form of easement attached hereto as Exhibit A (the Easement ), grant the Grantees rights to construct, operate and maintain electrical facilities in an easement area located on the Palo Verde Nuclear Generating Station ( Palo Verde ) property. Palo Verde is coowned by SCE, APS, Salt River Project Agricultural Improvement and Power District, El Paso Electric Company, Public Service Company of New Mexico ( PSCNM ), The Department of Water and Power of the City of Los Angeles and Southern California Public Power Authority (collectively, the Co-Owners ). The revocable license, pursuant to conditions fully set forth in the proposed form of license attached hereto as Exhibit B (the License ), would allow the Grantees to enter onto the easement area to begin construction of their project while two of the Co-Owners seek the external approvals necessary for their granting of the Easement. The License will be terminated when the Easement is fully executed and becomes effective. 1 General Order 173 makes permanent the former pilot program regulations for Section 851 advice letters, as adopted or amended in CPUC Resolutions ALJ-186, ALJ-202, ALJ-244 and ALJ-272 (Section 851 Pilot Program). The General Order authorizes regulated utilities to request CPUC approval of Section 851 transactions transferring interests in utility property valued at $5 million or less by advice letter.

The easement and license area (the Easement Area ) consists of 30.799 acres and is a 200-foot-wide corridor adjacent to the existing SCE Devers-Palo Verde No. 1 500 kilovolt ( kv ) transmission line on the Palo Verde site in Maricopa County, Arizona. A legal description and depiction of the Easement Area are set forth in the proposed form of the Easement attached hereto. SCE believes that the granting of the Easement and the License and the use of the Easement Area by the Grantees will not affect the Co-Owners and SCE s use and operation of their facilities on the Palo Verde property. SCE s utility service will not be affected as a result of Commission approval of the Easement and License. BACKGROUND SCE owns land, buildings and other facilities in connection with its provision of electric services to its customers in southern and central California. SCE owns 15.8 percent (15.8%) of the ownership interest in Palo Verde, where it is a tenant-in-common with the other Co-Owners. The Grantees have requested that the Co-Owners grant the Easement and License in order for Grantees to construct electric facilities as part of their planned Palo Verde to Delaney 500 kv transmission line (the Project ). The Project will provide the Phoenix metropolitan area with needed electrical power and will strengthen the entire APS Phoenix electrical system by providing an additional electrical transmission source to the area. The Project originates at the Palo Verde ANPP High Voltage Switchyard. The Easement, which SCE has executed, is effective only upon approval by the Commission. If the Commission authorizes SCE to grant the Easement and the License, SCE will execute the License. The License will be immediately effective, allowing the Grantees to begin construction of the Project on the Easement Area. APS s and PSCNM s interests in the Palo Verde property are subject to sale-leaseback agreements. Those agreements require that APS and PSCNM obtain consent to grant the Easement from each of their lessors, which they anticipate will take several months. Once they have obtained all of the required consents, they will execute the Easement. The Easement will become effective upon the execution of it by all the Co-Owners (and approval of it by the Commission) and, upon full execution, will then be recorded in the Official Records of Maricopa County, Arizona. The sale-leaseback agreements allow the execution of the License without lessor approval. The Easement would be issued in perpetuity as is customary for easements. The Easement and License reserve the right for the Co-Owners to cultivate, graze, use and occupy the Easement Area for any purpose consistent with the Easement and License, including the right to use portions of the Easement Area for utility or roadway purposes and for improvements such as paving, sidewalks, landscaping and curbing which do not interfere with Grantees facilities. SCE believes that the granting of the Easement and License to the Grantees is in the best interests of SCE s ratepayers and shareholders as doing so will provide additional

ratepayer revenue. It also will provide a public benefit by providing needed electrical power to the western Phoenix metropolitan area. INFORMATION AS REQUIRED UNDER RULES 3 AND 4 OF GENERAL ORDER 173 Rule 3 Requirements SCE is permitted to file this advice letter seeking CPUC approval under Section 851 because it believes it has satisfied the eligibility requirements set forth in Rule 3 of General Order 173: 3a: The activity proposed in the transaction will not require environmental review by the CPUC as a Lead Agency under California Environmental Quality Act (CEQA). CEQA is not applicable to this transaction as the physical effects of the Project are wholly within the State of Arizona. The Project has been reviewed by the Arizona Corporation Commission, which granted it a Certificate of Environmental Compatibility in its Decision 68063 dated August 17, 2005. The Bureau of Land Management also reviewed the Project s environmental assessment (AZ-020-2004-0056) and issued a Finding of No Significant Impact dated October 26, 2005. 3b: The transaction will not have an adverse effect on the public interest or on the ability of the utility to provide safe and reliable service to customers at reasonable rates. This transaction is in the public interest because it will strengthen electric service for the greater Phoenix metropolitan area. It will not diminish the safety or reliability of SCE or Palo Verde electric systems operations. 3c: Any financial proceeds from the transaction will either be booked to a memorandum account for distribution between shareholders and ratepayers during the next general rate case or be immediately divided between shareholders and ratepayers based on a specific distribution formula previously approved by the Commission for that utility. The financial proceeds received by SCE from the granting of the Easement and License will be allocated between SCE s shareholders and ratepayers through the Gross Revenue Sharing Mechanism as described in SCE s response to Rule 4e below. 3d: If the transaction results in a fee transfer of real property, the property does not have a fair market value in excess of $5 million. Not applicable because this transaction does not involve the fee transfer of property.

3e: If the transaction results in the sale of a building, the building does not have a fair market value in excess of $5 million. Not applicable because no building is being sold in this transaction. 3f: If the transaction is for the sale of depreciable assets, the assets do not have a fair market value in excess of $5 million. Not applicable because the transaction does not involve the sale of depreciable assets. 3g: If the transaction is a lease or a lease-equivalent, the total net present value of the lease payments, including any purchase option, does not have a fair market value in excess of $5 million, and the term of the lease will not exceed 25 years. Not applicable because the transaction does not involve a lease or leaseequivalent of property. 3h: If the transaction conveys an easement, right-of-way, or other less than fee interest in real property, the fair market value of the easement, right-of-way, or other interest in real property, the fair market value of the easement, right-of-way, or other interest in the property does not exceed $5 million. The fair market value of the Easement is $41,578.65. SCE s pro-rata portion of the proceeds is $6,569.43. The fair market value of the Easement and the appraisal are described in SCE s response to Rule 4i below. 3i: The transaction does not materially impact the ratebase of the utility. The value of this transaction is low and will not materially impact SCE s ratebase. 3j: If the transaction is a transfer or change in ownership of facilities currently used in regulated utility operations, the transaction will not result in a significant physical and operational change in the facility. Not applicable because there will be no transfer or change in ownership of facilities currently used in SCE s operations in this transaction. 3k: The transaction does not warrant a more comprehensive review that would be provided through a formal Section 851 application. This transaction is typical of transactions for which General Order 173 was developed. This transaction does not contain any issues that would trigger a need for a more comprehensive review through a formal Section 851 application.

Rule 4 Requirements Rule 4 requires that the following information be included in advice letters submitted under General Order 173: 4a: Identity and addresses of all parties to the proposed transaction: Arizona Public Service Company Palo Verde Nuclear Generating Station P.O. Box 52034, MS 7602 Phoenix, AZ 85072-2034 Central Arizona Water Conservation District P.O. Box 43020 Phoenix, AZ 85080 El Paso Electric Company P.O. Box 982 El Paso, TX 79960 Los Angeles Department of Water & Power P.O. Box 51111, Rm. 1263 Los Angeles, CA 90051-0100 Public Service Company of New Mexico 2401 Aztec NE Building A, MS Z120 Albuquerque, NM 87107 Salt River Project Agricultural Improvement and Power District P.O. Box 52025, POB 002 Phoenix, AZ 85072-2025 Southern California Edison Company 2244 Walnut Grove Avenue Rosemead, CA 91770 Southern California Public Power Authority P.O. Box 51111, Rm. 1263 Los Angeles, CA 90051-0100 4b: A complete description of the property including present location, condition and use: A legal description of the Easement Area is attached to the proposed form of the Easement attached hereto. It is a 200 foot-wide corridor that totals

30.799 acres on the Palo Verde property, adjacent to SCE s Devers-Palo Verde No. 1 500 kv transmission line. The Easement Area is currently undeveloped, vacant land. The Easement will have no effect on existing transmission facilities. 4c: Transferee s intended use of the property: The Grantees intend to construct, operate and maintain a 500 kv transmission line on the Easement Area. 4d: Complete description of financial terms of the proposed transaction: The Easement is valued at $41,578.65. The compensation will be allocated prorata among the Co-Owners: Party Percentage Interest Payment APS 29.1% $12,099.39 Salt River Project 17.4% $7,272.11 El Paso Electric Company 15.8% $6,569.43 SCE 15.8% $6,569.43 PSCND.99-09M 10.2% $4,241.02 LA DWP 5.7% $2,369.98 So Cal Public Power Authority 5.91% $2,457.30 4e: Description of how financial proceeds of the transaction will be distributed: D.99-09-070 approved a settlement between SCE and the Office of Ratepayer Advocates ( ORA ) concerning SCE s application for a revenue sharing mechanism for certain other operating revenue. The adopted Gross Revenue Sharing Mechanism allocates revenues resulting from non-tariffed products and services between shareholders and ratepayers. In the settlement, SCE and ORA agreed to classify all existing non-tariffed products and services as either active or passive. The gross revenue from active products and services is allocated 90 percent to shareholders and 10 percent to ratepayers; passive products and services are allocated 70 percent to shareholders and 30 percent to ratepayers. The classifications are listed in Attachment A to the settlement agreement and

were subsequently affirmed in Resolution E-3639 (effective May 15, 2000, approving Advice Letter 1286-E/1286-E-A). They were also filed as Preliminary Statement G to SCE s tariffs. Products or services offered under the Secondary Use of Transmission Right of Ways and Land and the Secondary Use of Distribution Right of Ways, Land, Facilities and Substations categories have been deemed passive for revenue sharing purposes. Accordingly, the revenue from the proposed Easement will be treated as passive and will be split between SCE s shareholders and ratepayers on a seventy percent (70%) to thirty percent (30%) basis once the annual threshold of gross revenues has been met. In addition, all incremental costs associated with this activity will be paid for by shareholders. 4f: A statement on the impact of the transaction on ratebase and any effect on the ability of the utility to serve customers and the public: Due to the small amount of revenue derived from this transaction compared to SCE s ratebase, the transaction will not materially impact SCE s ratebase. SCE believes that the granting of the Easement and License will have no effect on SCE s ability to serve its customers or the public as the allowed uses under the Easement and License will have no effect on SCE s transmission or distribution facilities. 4g: For sales of real property and depreciable assets, the original cost, present book value, and present fair market value, and a detailed description of how the fair market value was determined (e.g. appraisal): Not applicable. 4h: For leases of real property, the fair market rental value, a detailed description of how the fair market rental value was determined, and any additional information necessary to show compliance with Rule 3(g): Not applicable. 4i: For easements or rights-of-way, the fair market value of the easement or right-ofway and a detailed description of how the fair market value was determined: The Co-Owners agreed to a value for the Easement based on an appraisal which had been completed for a 2014 purchase by APS of SCE surplus land located near Palo Verde (discussed further in Section 4j below). The appraisal was completed by Jeff Teplitsky, who is a certified General Real Estate Appraiser. The appraisal used the sales comparison approach to evaluate the subject property and compared the subject property to similar use property near the subject property. The appraiser determined that the estimated market value was $1,800 per acre.

The Co-Owners agreed that an easement such as the one being granted to the Grantees is valued at 75% of the fee property value. The Co- Owners multiplied 30.799 acres by $1,800, which equaled $55,438.20, then multiplied it by.75, giving the Easement a valuation of $41,578.65. A copy of the APS letter describing the valuation process and the appraisal for the surplus property is attached hereto as Exhibit C. 4j: A complete description of any recent past (within the prior two years) or anticipated future transactions that may appear to be related to the present transaction, such as sales or leases of real property that are located near the property at issue or that are being transferred to the same transferee; or for depreciable assets, sales of similar assets or sales to the same transferee: SCE sold surplus property it owned near the Palo Verde property to APS in two separate transactions in 2014. The first was the sale of 24.98 acres of vacant land (APN 401-47-001B) on July 30, 2014. The purchase price was $50,000. The second transaction was the sale of 8.306 acres of vacant land (APN 401-47-006A) on August 14, 2014. The purchase price was $17,500. SCE had originally intended to have SCE s Devers-Palo Verde No. 2 transmission line built on the excess parcels, but the project route was eventually sited in a different location. The parcels had never been developed. Attached hereto as Exhibit D are depictions showing the location of the sale parcels. 4k: Sufficient information and documentation (including environmental documentation) to show that all of the eligibility criteria stated in Rule 3 have been met: As presented in the discussion on Rule 3, SCE believes that all applicable eligibility criteria stated in Rule 3 have been satisfied. 4l: The filing utility may submit additional information to assist in the review of the advice letter, including recent photographs, scaled maps, drawings, etc.: No additional information is being submitted. 4m: Environmental Information: If the applicant believes that the transaction is not a project under CEQA, the applicant shall include an explanation of its position. SCE believes that the granting of the Easement and License is exempt from review under CEQA because the Project has no physical effect within the State of California. As discussed in Section 3a, the Project has been reviewed by the Arizona Corporation Commission and the Bureau of Land Management.

TIER DESIGNATION Pursuant to Section 851, General Order 96-B, and General Order 173, this advice letter is submitted with a Tier 2 designation. EFFECTIVE DATE Pursuant to the review process outlined in General Order 173, SCE requests that this advice letter filing become effective thirty (30) days after filing. NOTICE Anyone wishing to protest this advice filing may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this advice filing. Protests should be submitted to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California 94102 E-mail: jnj@cpuc.ca.gov and mas@cpuc.ca.gov Copies should also be mailed to the attention of the Director, Energy Division, Room 4004 (same address above). In addition, protests and all other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of: Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770 Facsimile: (626) 302-4829 E-mail: AdviceTariffManager@sce.com

Michael R. Hoover Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California 94102 Facsimile: (415) 929-5544 E-mail: Karyn.Gansecki@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 must be received by the deadline shown above. In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice filing to the interested parties shown on the attached GO 96-B list and, in accordance with General Order 173, on the Energy Division, the Commission Division of Ratepayer Advocates, the Commission CEQA Team (clu@cpuc.ca.gov; jnr@cpuc.ca.gov; jmu@cpuc.ca.gov), and Maricopa County. Address change requests to the GO 96-B service list should be directed by electronic mail to AdviceTariffManager@sce.com or at (626) 302-3719. For changes to all other service lists, please contact the Commission s Process Office at (415) 703-2021 or by electronic mail at Process_Office@cpuc.ca.gov. Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by filing and keeping the advice filing at SCE s corporate headquarters. To view other SCE advice letters filed with the Commission, log on to SCE s web site at https://www.sce.com/wps/portal/home/regulatory/advice-letters. For questions, please contact Claire Keane at (626) 302-6654 or by electronic mail at claire.keane@sce.com. Southern California Edison Company /s/ Russell G. Worden Russell G. Worden RGW:ck:cm Enclosures

CALIFORNIA PUBLIC UTILITIES COMMISSION ADVICE LETTER FILING SUMMARY ENERGY UTILITY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/cpuc Utility No.: Southern California Edison Company (U 338-E) Utility type: Contact Person: Darrah Morgan ELC GAS Phone #: (626) 302-2086 PLC HEAT WATER E-mail: Darrah.Morgan@sce.com E-mail Disposition Notice to: AdviceTariffManager@sce.com EXPLANATION OF UTILITY TYPE ELC = Electric GAS = Gas PLC = Pipeline HEAT = Heat WATER = Water (Date Filed/ Received Stamp by CPUC) Advice Letter (AL) #: 3266-E Tier Designation: 2 Subject of AL: Request by Southern California Edison Company for Approval to Grant Easement and License Pursuant to General Order 173 Keywords (choose from CPUC listing): Compliance AL filing type: Monthly Quarterly Annual One-Time Other If AL filed in compliance with a Commission order, indicate relevant Decision/Resolution #: Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: Summarize differences between the AL and the prior withdrawn or rejected AL: Confidential treatment requested? Yes No If yes, specification of confidential information: Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/access to confidential information: Resolution Required? Yes No Requested effective date: 09/27/2015 No. of tariff sheets: -0- Estimated system annual revenue effect: (%): Estimated system average rate effect (%): When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: Service affected and changes proposed 1 : Pending advice letters that revise the same tariff sheets: None 1 Discuss in AL if more space is needed.

Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this filing, unless otherwise authorized by the Commission, and shall be sent to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California 94102 E-mail: EDTariffUnit@cpuc.ca.gov Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770 Facsimile: (626) 302-4829 E-mail: AdviceTariffManager@sce.com Michael R. Hoover Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California 94102 Facsimile: (415) 929-5544 E-mail: Karyn.Gansecki@sce.com

EXHIBIT A Form of the Easement

EXHIBIT B Form of the License

EXHIBIT C Appraisal Documents

EXHIBIT D Depiction of the Previously Sold Parcels