40. 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. Comments were filed on January 4, 2010 by EPUC and on January 11, 2010 by PG&E, DRA, TURN, DACC, FEA, EnerNOC, CFBF, and AECA. Reply comments were filed on January 15, 2010 by FEA and on January 19, 2010 by PG&E, DRA, and TURN.
To the extent that comments merely reargued the parties' positions taken in their briefs, those comments have not been given any weight. The comments that focused on factual, technical, and legal errors have been considered, and, if appropriate, changes have been made.
40.1. Scope of Reasonableness Reviews
In its comments, PG&E asserts that reasonableness reviews provided in the PD should not be full-blown, traditional reasonableness reviews. PG&E indicates that it developed its PDP project in compliance with the Commission's direction to implement default PDP by May 1, 2010 and February 1, 2011, and the timing of the PDP-related IT work is severely constrained by these implementation dates. Also, the Version 2.3 CC&B upgrade timing is governed by the Commission's proposed May 1, 2011 implementation date for real-time pricing. Further, all the IT capital work is affected by the complexity involved in coordinating the upgrade work with PDP-related work, and vice versa.
Absent the need to comply with the Commission's schedule, PG&E states it would have proposed a more moderately-paced implementation schedule that would have permitted a more complete and thorough development of the IT work streams. It is PG&E's position that the Commission's timeline has required a rushed IT implementation schedule, which increases uncertainty, risk, and unforeseen factors. For these reasons, as well as the fact that dynamic pricing and PDP are regulatory mandates, PG&E asserts that the review of PDP project costs above the authorized costs should only address whether the costs can be verified, are for PDP-related work, and are incremental to funding or activities authorized elsewhere.
Similarly, PG&E requests that review of costs incurred to implement any additional, out-of-scope work that is added, as a result of the final decision, to the PDP project also should focus on whether the costs can be verified, are for PDP-related work added by the final decision, and are incremental to funding or activities authorized elsewhere.
In reply comments, FEA states that PG&E's recommendation with respect to the scope of any reasonableness review would ignore whether any such PDP costs subject to review were in fact necessary or optimal, is at odds with the Commission's responsibility to ensure just and reasonable rates, and should be rejected.
Similarly, DRA states that PG&E's proposal would tie the Commission's hands in determining whether PG&E had appropriately managed and controlled its IT and other costs, and the Commission should not put ratepayers at risk for any imprudently-incurred costs, regardless of whether the schedule was "rushed" or for any other reason.
TURN states that it is not convinced that the "rushed timeline" argument applies to the software IT work necessary to implement the additional CSOL and customer notification requirements for residential customers. This is because the proposed decision extends the existing SmartRate for another year so that no additional changes will occur for residential customers until the new voluntary residential PDP rate goes into effect in February 2011, and it would appear that there should be no need for rushed implementation of the notification requirements.
We will not limit the reasonableness review as requested by PG&E. The purpose of the reviews is to provide PG&E the opportunity to justify and recover costs in excess of what we can, at this point, determine are reasonable. These additional costs include any overruns that PG&E may incur including costs for additional work required by this decision but not contemplated PG&E in its request. The specific nature and amounts of these costs are not known at this time. We agree with PG&E that it is necessary to provide verification of the costs and to demonstrate that the costs are for PDP related work and are incremental to funding or activities authorized elsewhere. However, in order to determine whether or not the actual additional costs are reasonable, it is also necessary and our responsibility to consider the principal elements of any reasonableness review. That is whether or not the costs were necessary and, if so, whether or not they were optimally incurred. Regarding PG&E's time restraint and other concerns, we will certainly consider what was known, or should have been known, as well as the circumstances that existed, at the time the costs were incurred, but such concerns are insufficient reason for limiting the scope of the review.
