2. Background
Since 2003, the cost and recovery of PG&E's (PG&E) retirement plan has traditionally been addressed in its General Rate Case (GRC) proceedings with a forecasted 100% funded goal at the end of a three-year GRC cycle.1
The Commission found in PG&E's 2003 test-year GRC's decision that the need for ratepayer contributions to PG&E's Retirement Plan Trust should be determined based on the funding status of its Retirement Plan Trust.2 Consistent with that finding, there was no allowance for 2003 test-year pension costs because PG&E's Retirement Plan Trust was funded 110%, a 10% overfunding. From 1994 through 2005, customer rates did not include any funding for retirement plan contributions. Other than a PG&E contribution to the retirement plan for a voluntary retirement incentive, PG&E made no pension contributions during that time period.
Subsequently, on July 13, 2005, PG&E filed a petition to modify Decision (D.) 04-05-055 for authority to (1) resume pension contributions beginning on January 1, 2006 for four years because its Retirement Plan Trust was estimated to be approximately 98.1% funded on January 1, 2005 and projected to further decline to 86.0% in 2010 unless contributions resumed, and (2) file an application separate from its 2007 test-year GRC to justify annual-pension contributions for the years 2006 through 2009. By D.05-12-046, dated December 15, 2005, PG&E was authorized to file an application seeking authority to fund its estimated pension costs for the 2006 year only. Its request to file an application to recover pension contributions separate from its 2007 test-year GRC was denied on the basis that pension contributions are expense line items normally evaluated in GRC proceedings and PG&E has not made a compelling case otherwise.3
On December 2, 2005, PG&E filed its 2007 test-year GRC and 18 days later on December 20, 2005 filed is separate application for authorization to fund and recover 2006 pension contributions. Interested parties to those proceedings negotiated a settlement agreement pertaining to pension contribution issues in both applications that resulted in a March 21, 2006 consolidation of both applications for the limited purpose of considering the proposed pension contribution settlement agreement.
Subsequently, D.06-06-014 was issued on June 15, 2006 approving the uncontested pension contribution settlement agreement that provided for PG&E to make and recover pension contributions from 2006 to year-end 2009 on a projected basis to bring the funded status of PG&E's Pension Plan to 100% by January 1, 2010. The 2007 test-year GRC decision (D.07-03-044) further extended the pension-contribution settlement approved by D.06-06-014 through year end 2010 because that GRC decision added 2010 as an additional attrition year thereby extending that GRC to a four-year cycle.
1 An exception to the three-year GRC cycle occurred in PG&E's 2007 test year GRC. A D.07-03-044 adopted settlement agreement extended that GRC proceeding an additional year to four years thereby moving its next test year GRC to 2011 from 2010.
2 D.04-05-055 (2004), mimeo. at pp. 83 - 86.
3 D.05-12-046, mimeo. p. 11, Conclusion of Law # 2.
