The Application
Pacific Gas and Electric Company (PG&E) requests approval of electric bill credits under the Energy Resource Recovery Account (ERRA) trigger mechanism. PG&E requests a Commission decision no later than October 15, 2009, approving PG&E's bill credit plan whereby PG&E will give bundled electric customers one-time bill credits in the November/December 2009 billing cycle based on the expected December 31, 2009 ERRA overcollection.
Under current forecasts PG&E's ERRA balance is on track to be overcollected by approximately $424.4 million as of December 31, 2009.1 This amount would translate into an average bill credit of about $35 for PG&E's residential electric customers. PG&E's bill credit plan will put money back in the hands of PG&E's electric customers faster than the normal ERRA trigger process of amortization in rates would. In Decision (D.) 02-10-062 (pages 59-66), the Commission adopted an ERRA trigger mechanism which requires the utility to file an ERRA trigger application when the ERRA balance reaches or exceeds four percent of the prior year's recorded ERRA generation revenues and the utility forecasts the balance will reach five percent. PG&E's ERRA trigger amounts for 2009 are $209.0 million and $261.3 million, respectively, with an August 14, 2009 forecast of a year-end 2009 ERRA overcollection of $398.6 million. This forecast indicated PG&E would file an ERRA trigger application in October for a Commission decision in December, presumably with the ERRA overcollection amortized in rates over a period of three or more months beginning in January 2010. Instead of waiting until October to file an ERRA trigger application for amortization of the overcollection beginning in January,2 PG&E proposes to issue one-time bill credits in November and December.3 If the aggregate amount of the bill credits equals the currently forecast year-end 2009 ERRA overcollection of $424.4 million, then PG&E's residential electric customers would receive an average bill credit of about $35.
The key provisions of PG&E's original bill credit plan filed with this application are:
1. If, after factoring in recorded data through September 2009 and other forecasted electric rate changes effective January 1, 2010, the estimated bundled system average electric rate increase on January 1, 2010 is three percent4 or less (excluding the ERRA balance) and the forecasted ERRA overcollection is greater than $200 million (slightly less than the four percent ERRA trigger threshold), then PG&E will provide a one-time bill credit to customers in the amount of the forecasted ERRA overcollection.
2. If the estimated bundled system average electric rate increase on January 1, 2010 is greater than three percent (excluding the ERRA balance), PG&E will first use the forecasted ERRA overcollection to reduce the estimated rate increase to three percent. If, after the adjustment, the remaining forecasted ERRA overcollection is still greater than $200 million, PG&E will provide a one-time bill credit to customers in the amount of the remaining forecasted ERRA overcollection.
3. If, after the adjustment, the remaining forecasted ERRA overcollection is less than $200 million, PG&E will not proceed with the bill credit plan. Instead, PG&E may file a trigger application to amortize the ERRA overcollection over a period not less than 90 days. Otherwise, the end-of-year 2009 ERRA overcollection would be returned to customers through the Annual Electric True-Up process.5
PG&E requests a Commission decision no later than October 15, 2009, approving PG&E's bill credit plan so that PG&E is able to give bundled electric customers one-time bill credits in the November/December 2009 billing cycle based on the expected December 31, 2009 ERRA overcollection.
1 PG&E's estimate when it filed this application was $398.6 million. PG&E's more current estimate as of September 16, 2009, was $424.4 million. As noted in PG&E's comments on the proposed decision, the actual aggregate bill credit may vary somewhat from this amount.
2 Decision 02-12-074 states (at page 42), "[W]e authorize PG&E to file an expedited trigger application at any time that its forecasts indicate it will face an undercollection in excess of the 5% threshold. That is, we no longer require PG&E's ERRA undercollections to reach four percent before we will entertain a trigger application."
3 Note of this application was served on parties to the underlying proceeding which created the trigger requirements.
4 As of June 30, 2009, a three percent increase in the estimated bundled system average rate is approximately $375 million.
5 On September 1, 2009, PG&E filed its Annual Electric True-Up (AET) for electric rates effective January 1, 2010. The AET provides the Commission with a preliminary estimate of electric rates on January 1, 2010, incorporating: (1) amounts previously authorized to be recovered in rates; (2) the forecast December 31, 2009, balances for amortization in 2010; and (3) electric rate changes being considered in a number of pending proceedings and advice letters. In December PG&E will file a supplemental AET advice letter reflecting more current information.
