Should the Commission alter the “trigger mechanism” and/or earnings benchmark contained in the PBR?
Positions of Parties As mentioned above, the “trigger mechanism” leads to changes in ROE and changes in rates depending on the movement of a “trigger” set at interest rates based on Moody’s Aa utility bonds. Edison states that the current “trigger mechanism” for modifying the ROE earnings benchmark contained in the PBR should continue unchanged during the limited period of the PBR extension.18 In its testimony, Edison demonstrates that the trigger mechanism accurately tracks Edison’s authorized return on common equity over the 20-year period from 1978 to 1997, a period prior to the adoption of the PBR. Edison further notes that: “If the trigger mechanism had been in place during this period, it would have reset the return on common equity six times over the 20-year period. On average, the return generated by the Trigger Mechanism would have been 13 basis points below the returns actually authorized by the Commission.”19 Edison therefore concludes that this mechanism has rewarded shareh
