The Protests
In its protest the Division of Ratepayer Advocates (DRA) opposed PG&E's bill credit plan. To mitigate frequent fluctuating rate changes for PG&E customers, DRA proposed that the entire overcollection be used to offset PG&E's 2010 ERRA revenue forecast and be incorporated into 2010 rates. However, should a one-time credit be approved, DRA supported the PGR method.
The Utility Reform Network (TURN) and California Farm Bureau Federation (CFBF) jointly protest PG&E's application. They urge the Commission to apply whatever amount of ERRA overcollection exists as of the end of 2009 as an offset to any non-ERRA revenue requirement increases that would otherwise be authorized for rate recovery in 2010. In this way the Commission could mitigate, and perhaps avoid altogether, any rate increase that would otherwise take effect on January 1, 2010. If the ERRA overcollection turns out to be an amount greater than necessary to avoid a rate increase, the remainder could be returned to customers as a one-time bill credit in early 2010. However, should a one-time credit be approved, TURN supports the PGR method.
Subsequently, DRA indicated its support for PG&E's PGR proposal to provide its ratepayers with a one-time refund of over-collected ERRA funds. DRA reviewed this application taking into account factors such as current economic conditions and the level and timing of rate stability. DRA asserts that the Commission has factored conditions other than rate design in some decisions regarding refund of ERRA surplus funds. The Commission considered economic conditions in its decision on the disposition of Southern California Edison (SCE) ERRA over-collections when it stated that: "Given the current economic conditions in the nation and in the State of California, it is clear that the benefits of this injection of funds [a one-month refund] into the Southern California economy today outweigh the minimal benefits of ensuring a more stable system average rate (SAR)."7
Given current economic conditions, DRA believes it is critical to strengthen the safety net for low income customers. It argues that economic conditions have continued to worsen since the last PG&E rate decision such that cost causation principles should be taken into account. DRA supports the PGR method proposed by PG&E to provide bill credits to all Tier 1 through Tier 5 customers. DRA does not consider this particular adjustment a breach of DRA's rate design policy, but rather, recognition of the current economic reality.
TURN also supports the PGR method of refunds. TURN argues that the PGR is the approach PG&E had originally proposed and would credit customers proportionally to the amount of generation revenue each customer contributed during 2009, the period when the overcollection accrued. As PG&E's testimony describes it, "the PGR method would provide some benefits to residential customers taking service under CARE, as well as to residential customers taking service under non-CARE rates who consume primarily in Tiers 1 and 2." On the other hand, the GCR method limits bill credits to those non-CARE residential customers whose tiered rates are in Tier 3 or higher, and so would exclude substantial numbers of residential customers from seeing any amount of bill credit from the ERRA overcollection.
TURN says the Commission should adopt the PGR method for allocating the residential share of the ERRA overcollection among PG&E customers. PG&E selected the one-time bill credit approach in part to provide "immediate economic relief to customers." (PG&E Application Testimony, p. 2-2.) TURN submits that in the current economic conditions, all PG&E residential customers would welcome such relief, including CARE customers and non-CARE customers whose consumptions levels permit them to stay within Tier 2 levels. Under the GCR method, those customers would not share in the one-time bill credit at all.
TURN admits that had the ERRA overcollection trigger worked in its normal fashion and current ratemaking practices remain in place for 2010, PG&E's CARE and non-CARE Tier 1 and Tier 2 residential customers may not have directly benefited from the refund of the overcollection.8 And, it is clear that the Commission has the authority to provide for a one-time credit rather than fold the 2009 overcollection into 2010 authorized revenue requirements to be amortized in rates throughout the next calendar year; we certainly have the authority to select the PGR method rather than the GCR approach.
7 Opinion Approving Southern California Edison Company's 2008 Energy Resources Rocovery Account Forecast and Ordering Refund of Overcollection of Ratepayer Funds, D.08-03-019, pg. 8 in A.07-08-004.
8 If the overcollection was folded into the other rate changes expected to go into effect on January 1, 2010, and AB 1X rate protections remain unchanged, the benefits would flow only to non-CARE residential customers whose consumption falls within Tiers 3, 4, or 5.
