Discussion
Following the filing of the Amended 2009 ERRA Forecast Application, SDG&E and DRA engaged in discovery and meet-and-confer efforts. These efforts focused on how SDG&E's 2009 ERRA revenue requirement had been affected by considerable decreases in the price of natural gas during the latter part of 2008. Over the course of these meetings, SDG&E considered and ultimately agreed to change its gas price forecast so as to reflect more of the recent drop in the price of natural gas. Specifically, SDG&E agreed to use a gas price of $5.83, based on a forward curve ending with December 19, 2008.4 As a result of using a lower gas price forecast, various ERRA-related cost figures had to be recalculated. Specifically, using the updated data that Energy Division provided, the 2009 market benchmark price is $70.48/megawatt hours (MWh), whereas the prior 2009 ERRA forecast was based on a 2008 rate of $77.17/MWh.5 (See SDG&E's Amended 2009 ERRA Forecast Application.)
The 2009 market benchmark is used to calculate above or below market costs associated with SDG&E's combined total portfolio. SDG&E indicated that it would provide its PCIA calculations for 2009 once the 2009 market benchmark was provided. (See Exhibit 6.) SDG&E's proposed 2009 PCIA rates, applicable to the respective classifications of departing load, are set forth in Attachment A to Exhibit 8. SDG&E has no forecasted departing load for the remaining classifications set forth in Attachment A to Exhibit 8, and thus forecasts zero PCIA revenues for 2009. The impact of the above referenced gas price and market benchmark changes is that SDG&E's final 2009 ERRA revenue requirement is $874.555 million and its final 2009 ongoing CTC revenue requirement is $44.414 million. (See Attachment A to Exhibits 9 and 9(c).)
The final issue addressed by the parties was SDG&E's proposed modification to the ERRA triggering rules whereby, beginning with the consolidated rate change for January 1, 2010, SDG&E would include the forecasted December 31 ERRA balance in its Electric Account Update (filed in October of each year), if such balance is below the ERRA trigger amount. SDG&E explains that this modification will allow the ERRA balance to self-correct more quickly and reduce the number of SDG&E trigger-related filings resulting in, among other things, ratepayers receiving any year-end over-collections quicker.6
While DRA states that it is not opposed to this change in principle, it conditions its agreement to the change on a regular showing by SDG&E that the end-of-year balance in the ERRA proceeding takes into account any known changes in the forward gas prices and any other cost assumptions not reflected in its original forecast in the ERRA application. DRA's only stated rationale for this condition is that it is consistent with DRA's support for "contextual analysis." SDG&E argues that DRA's condition is unnecessary and unduly burdensome in that it would require that every subsequent ERRA application be updated prior to a final decision.
We see merit both in DRA's contention that updated information should be considered in future applications and in SDG&E's concern that waiting for additional information could delay future proceedings. In light of the willingness to work with DRA to integrate the updated information into its current forecast that SDG&E has shown in this proceeding, and the substantial loss of credibility that SDG&E's forecast could suffer were it to exclude any available informational updates, it would appear that incentives already exist to accomplish the result that DRA seeks. We do not think it necessary or prudent to craft a rule addressing a problem that does not necessarily exist, and will therefore limit our modification to that requested by SDG&E.
4 SDG&E's October 1, 2008, ERRA Forecast Application used an average gas price of $8.53, based on the average of the previous 22 trading days' 2009 forward curves ending August 29, 2008.
5 The method of calculating the market benchmark is set forth in D.06-07-030 and, as modified in D.07-01-030, must be based upon the average of forward energy prices recorded for the entire month of October. SDG&E's calculation of the 2009 market benchmark is set forth in Attachment B to Exhibit 8.
6 See Exhibits 5 and 5(c).
