7. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. No comments were filed.

1. There is a full and complete record in A.06-12-009 and A.06-12-010 which support the adopted settlements in D.08-07-046.

2. The SDG&E and SoCalGas settlements included allowances for pensions and other benefits. Actual expenses in excess of the allowances are recorded in Pension Balancing Accounts and Post-Retirement Benefits Other than Pensions Balancing Accounts.

3. The value of SDG&E's and SoCalGas' pension funds has significantly declined requiring larger than expected contributions.

4. The expenses for other benefits have risen requiring larger than expected contributions.

5. There were no revenue requirement allowances for surety bonds or letters of credit as a part of the adopted settlements.

6. Any increased expense for pension or other benefits can be recovered in the Annual Regulatory Account Advice Letter which preserves the relative allocation of the incremental costs across all customer classes.

1. The Commission can authorize amortizing the under-collection in a balancing account on an annual basis.

2. An application is required for a proposed increase in rates to recover the expenses associated with surety bonds or letters of credit in the Pension Balancing Account for either SDG&E or SoCalGas.

3. Recovery of already incurred expenses associated with surety bonds or letters of credit related to the decline in value of SDG&E's pension fund would violate the prohibition on retroactive ratemaking.

4. The Annual Regulatory Account Advice Letter preserves the relative allocation of the incremental costs across all customer classes.

ORDER

IT IS ORDERED that:

1. The Test Year 2008 Settlement for San Diego Gas & Electric Company adopted in Decision (D.) 08-07-046 is modified to allow the annual amortization of pension contributions recorded in the Pension Balancing Account incremental to the contributions included in the settlement revenue requirement.

2. The Test Year 2008 Settlement for San Diego Gas & Electric Company adopted in D.08-07-046 is modified to allow the annual amortization of
Post-Retirement Benefits Other than Pensions recorded in Post-Retirement Benefits Other than Pensions Balancing Account the incremental to the expenses included in the settlement revenue requirement.

3. Within 10 days from the effective date of this order, San Diego Gas & Electric Company shall file a Tier 1 advice letter with revised tariff sheets modifying its preliminary statement to add language describing the mechanism to amortize incremental pension contributions and incremental Post-Retirement Benefits Other than Pensions expenses in the Annual Balancing Account Advice Letter. The revised tariff sheets shall become effective upon filing subject to Energy Division determining that they are in compliance with this order.

4. The Test Year 2008 Settlement for Southern California Gas Company adopted in D.08-07-046 is modified to allow the annual amortization of pension contributions recorded in the Pension Balancing Account incremental to the contributions included in the settlement revenue requirement.

5. The Test Year 2008 Settlement for Southern California Gas Company adopted in D.08-07-046 is modified to allow the annual amortization of
Post-Retirement Benefits Other than Pensions recorded in Post-Retirement Benefits Other than Pensions Balancing Account the incremental to the expenses included in the settlement revenue requirement.

6. Within 10 days from the effective date of this order, Southern California Gas Company shall file a Tier 1 advice letter with revised tariff sheets modifying its preliminary statement to add language describing the mechanism to amortize incremental pension contributions and incremental Post-Retirement Benefits Other than Pensions expenses in the Annual Balancing Account Advice Letter. The revised tariff sheets shall become effective upon filing subject to Energy Division determining that they are in compliance with this order.

7. San Diego Gas & Electric Company is prohibited from recording any expenses associated with surety bonds or letters of credit in its Pension Balancing Account.

8. Application (A.) 06-12-009, A.06-12-010, and Investigation 07-02-013 remain open to address an unrelated petition to modify.

This order is effective today.

Dated September 10, 2009, at San Francisco, California.

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