22. Effect of D.09-08-027 on Incremental Customer Notification
In update testimony, dated August 31, 2009,25 PG&E requests an additional $1.170 million in incremental notification costs. PG&E explains that in D.09-08-027, the Commission approved the voluntary CPP program costs, but stated that the funding would end if CPP (PDP is a form of CPP) is approved in A.09-02-022. PG&E states that the amount of funding that would not continue for 2010 is $1.165 million. PG&E also indicates that it clearly stated in its original testimony that if full funding for voluntary CPP program was not approved in the 2009-2011 DR application, additional funding would be needed for implementation of PDP. Since the 2010 authorization in D.09-08-027 terminates with Commission approval of PDP, PG&E asserts that it now needs to have that funding reinstated as an incremental cost in this case.26
To the extent that there may be a disconnect between the Commission's underlying treatment of CPP costs in D.09-08-027 and the nature of incremental costs in this case, DRA and TURN indicate that it would be appropriate to address any error in a petition to modify D.09-08-027. According to DRA, what is not appropriate is for PG&E to inject issues from another case into this one without proper notice. Without affording all parties to this case the opportunity to review the record in D.09-08-027 and, if necessary, conduct discovery, submit testimony, and cross-examine, DRA asserts that the Commission should not assume that PG&E's characterization of cost disallowances in D.09-08-027 is correct.
TURN states that even if PG&E is correct that nothing in D.09-08-027 hinders it from requesting additional money in this case, its request for another $1.2 million in notification costs, which doubles its original PDP notification cost request, is excessive. According to TURN, there are 715 large customers on the voluntary CPP tariff. CPP customers comprise 6.4% of all large customers and 12.5% of the large customers that PG&E expects to enroll onto the PDP rates. TURN questions the need to double its budget to notify and assist just these customers. If the Commission does not reject PG&E's request entirely, TURN suggests that at most the Commission should allow an additional 12.5% of the original incremental request, which amounts to $150,000.
In response, PG&E states that TURN's recommendation is not consistent with PG&E's estimates for the amount of work that is needed for large customer notification, as explained in its testimony.
22.1. Discussion
In its update testimony, PG&E lists three categories of costs related to this update request.
One category relates to $0.106 million for contingencies. As discussed in Section 31 of this decision, contingencies are excluded from cost recovery in this proceeding, and PG&E's request will be reduced by $0.106 million for that reason.
A second category relates to $0.407 million that was identified as part of the 2010 PDP costs, included in the detailed description of the estimated cost components, and specifically excluded from the total customer notification costs requested in this application. Parties thus had the opportunity to review the reasonableness of the activities related to these costs. As noted above, no party opposed any of the event notification activities or the associated cost estimate as presented by PG&E. It is reasonable to include these costs as part of this proceeding, since they appear reasonable and have been excluded from the cost recovery originally anticipated by PG&E.
The third category of costs relates to $0.657 million for work that PG&E asserts continues to be needed to support customer notification when the voluntary CPP program is replaced with PDP. As opposed to the $0.407 million request, these costs were not specifically identified as part of PG&E's 2010 PDP costs, were not included in the detailed description of the estimated cost components, and were not specifically excluded from the total customer notification costs requested in this application. Since these costs were not specifically included in the total PDP notification costs estimated by PG&E, it is difficult to understand why they are necessary now.27 In its update, PG&E states that the $0.657 million amount is comprised of non-demand response labor (e.g., account services, supervision and oversight overhead and other administrative costs) that supports large customer CPP activities such as notification and information gathering, which will continue under PDP. However, due to the timing of the update and the associated request, parties did not have the opportunity to fully review these costs. Also, we do not find PG&E's update description of the costs to be compelling for the purpose of determining reasonableness or the extent that these specific costs were included or excluded in D.09-08-027.
Therefore, for additional customer notification costs, we will only include the $0.407 million that was specifically identified as part of the 2010 PDP costs and specifically excluded from the total customer notification costs requested in this application. However, PG&E is not precluded from recording any of the actual remaining costs in the DPMA. To the extent that these actual costs drive total project costs over the forecast cost cap, PG&E can, by its cost recovery proposal, seek recovery of the excess costs through an after-the-fact reasonableness review.
25 August 31, 2009 was the first day of evidentiary hearing.
26 Of the $1.165 million authorized in D.09-08-027, PG&E indicates that $0.101 million is no longer necessary, but added a 10%, or $0.106 million contingency to the remaining costs.
27 It is our understanding that, in general, PG&E estimated total PDP costs for various categories of expense, and those amounts were reduced by any costs that were being recovered in other proceedings.
