2. Procedural Background

This decision resolves issues in Pacific Gas and Electric Company's (PG&E) Phase II general rate case (GRC) application relating to marginal costs, revenue allocation and remaining rate design issues that were not resolved by the previous decision in this application which resolved the majority of residential rate design issues. This decision concludes the resolution of remaining Phase 2 issues.

PG&E filed its application on March 22, 2010, and served initial testimony on its marginal cost, revenue allocation, and rate design proposals. The application was protested on April 26, 2010, by the Division of Ratepayer Advocates (DRA), The Utility Reform Network (TURN), Disability Rights Advocates (DisabRA), Vote Solar, Solar Alliance, and South San Joaquin Irrigation District (SSJID). On May 19, 2010, a prehearing conference was held before Administrative Law Judge (ALJ) Pulsifer. Assigned Commissioner Peevey issued his Ruling and Scoping Memo dated May 26, 2010 (Scoping Memo) setting the scope of the proceeding and procedural schedule.

On June 30, 2010, PG&E filed a scheduled update of its March 22, 2010 application to revise illustrative rates to reflect the 2011 forecast of sales and rates in effect on June 1, 2010, and to make marginal cost revisions. The June 30, 2010 update figures served as the basis for all other parties' subsequent responsive testimony. Pursuant to ruling dated December 8, 2010, PG&E on January 7, 2011 again updated its showing on marginal costs, revenue allocation and non-residential rate design. By ruling dated January 19, 2011, parties' rebuttal testimony was submitted on March 4, 2011, with sur-rebuttal testimony due on March 25, 2011.

The Commission's DRA served testimony on September 8, 2010. On October 6, 2010, various intervenors served testimony. Hearings for marginal costs, revenue allocation and non-residential rate design were deferred to provide for settlement discussions. PG&E subsequently entered into a series of settlements covering all remaining Phase 2 issues, and filed motions for approval of the settlements, as summarized below.

Date of Motion	Scope of Settlement Agreement
a. March 14, 2011	Marginal Cost and Revenue Allocation
b. April 8, 2011	Medium and Large Light and Power (MLLP) Rate Design
c. April 8, 2011 (As amended September 22, 2011)	Small Light and Power (SLP) Rate Design
d. June 3, 2011	Streetlighting Rate Design Settlement Agreement
e. June 22, 2011	Schedule ES and Natural Gas Baseline Quantities
f. July 18, 2011	Agricultural Rate Design

Each of the settlements is supported by all active parties participating in each respective settlement with the exception of limited opposition to certain elements, noted below.

On May 9, 2011, comments in opposition to the MLLP Settlement were filed by The Solar Alliance, The Vote Solar Initiative, and Sierra Club California. PG&E filed a reply on May 24, 2011. Pursuant to ruling issued on June 8, 2011, evidentiary hearings were held on the disputed MLLP settlement issues on August 29 and 30, 2011. Opening briefs were filed on September 19, 2011, and reply briefs were filed on October 3, 2011.

On October 6, 2010, Lamont Public Utilities District (Lamont) submitted testimony proposing an expansion of Agricultural Rate Schedule E-37. On August 1, 2011, Lamont filed comments opposing the Agricultural Settlement. PG&E filed a response to Lamont on August 8, 2011. PG&E and Lamont subsequently submitted additional testimony relating to this dispute. Based on a stipulation for the admission of relevant exhibits, PG&E and Lamont mutually waived cross examination. Thus, no evidentiary hearings were held. Opening briefs were filed on October 10, 2011, and reply briefs were filed on October 18, 2011. Although no other parties sponsored testimony responding to Lamont's proposal, reply briefs in opposition to Lamont were filed by PG&E, TURN, California Large Energy Consumers Association (CLECA), and Energy Producers and Users Coalition (EPUC).

Western Manufactured Housing Communities Association (WMA) sponsored testimony in opposition to PG&E's proposed treatment of the Rate Schedule ET Discount for Master Meter Mobile Home Park Customers. TURN was the only other party who sponsored testimony on the Mobile Home Park (MHP) disputed issues. Hearings on the disputed MHP issues were held on August 17 and 18, 2011. Opening briefs were filed on September 23, 2011, and reply briefs were filed on October 7, 2011.

In view of parties' agreement to enter into settlements, the settling parties waived hearings. The ALJ granted hearings only on the specific contested issues as identified above. By ruling dated October 11, 2011, the ALJ granted motions to admit underlying testimony and other supporting exhibits on Phase 2 issues that were not subject to cross examination. The admission of this evidence completes the record and provides an evidentiary basis to evaluate the reasonableness of the settlements, and remaining Phase 2 disputed issues.