6.3.1. Bond Charge Remittance Procedures Established by D.07-03-025

DWR recommends that the Commission adopt a specific exception to the remittance procedure established in the Servicing Order for the current Bond Charge applicable to MDL to accommodate pending bilateral agreements. DWR states that, to the extent that a specific exemption from the remittance procedure is provided in an applicable Commission order, DWR's portion of the payments provided for in the NBC Agreement could be received by DWR without further modification to the Servicing Order.

DWR states, however, that it is not aware that the Commission has granted such an exemption for MDL customers as contemplated by the NBC Agreement or other bilateral agreements related to MDL customers, so as to be consistent with the Servicing Order. DWR states that, if the Commission does not articulate an exemption, a new remittance procedure applicable to the Servicing Order will also need to be articulated by the Commission.

DWR recommends including the following exemption in a decision approving the NBC Agreement to allow PG&E to continue its current practice for recovering DWR Bond and DWR Power charges in connection with bilateral agreements related to MDL customers and avoid the need to revise relevant provisions of the 2007 Servicing Order:²⁸

"Modesto Irrigation District and Merced Irrigation District have finalized and entered into such bilateral agreements to settle MDL obligations with PG&E, including DWR Bond Charge and DWR Power Charge. As a result, PG&E will remit such amounts to DWR in accordance with any Applicable Commission Orders and the terms of the NBC Agreement."

Applicants state that, while the remittances under the NBC Agreement differ from the remittances described in the Servicing Order, nothing in the Servicing Order prohibits the Commission from modifying the remittance approach described therein. Applicants agree with DWR that a decision approving the NBC Agreement should include a specific exemption from the remittance procedure in the Servicing Order because the NBC Agreement provides less than full recovery of the DWR Bond Charge.²⁹

Applicants, however, recommend that the decision in this Application include the following statement:

With respect to New Municipal Departing Load customers served by Modesto Irrigation District and Merced Irrigation District, PG&E shall remit such amounts to DWR consistent with the Agreement approved in this decision. To the extent that the collection and remittance procedures adopted here are inconsistent with those reflected in the Servicing Order adopted in D.07-03-025, the procedures adopted here should be followed with respect to New Municipal Departing Load customers served by Modesto Irrigation District and Merced Irrigation District.

Applicants state that DWR's proposed language is confusing because the reference to MDL (Municipal Departing Load) includes Transferred Municipal Departing Load, which is not addressed in the Application or the NBC Agreement, and because the DWR Power Charge is not applicable to NMDL customers served by the Districts. Applicants also state that the proposed reference to "any Applicable Commission Orders" is unduly vague.

Appendix D-1 of Attachment B of the 2007 Servicing Order for PG&E sets forth the specific methodologies for determining the forecast monthly billed dollar amount, the updated monthly billed dollar amount, and the actual billed dollar amount for the DWR Bond Charge on MDL customers. Appendix D-1 of Attachment B of the 2007 Servicing Order for PG&E provides that all MDL is subject to the DWR Bond Charge unless specifically exempt by a Commission order.³⁰ Because the approval of the NBC Agreement results in a different remittance procedure from that in D.07-03-025, it is appropriate to provide a specific exemption from the procedure prescribed Appendix D-1 of
Attachment B of the 2007 Servicing Order for PG&E.

Therefore, with respect to NMDL Customers served by the Districts, PG&E must remit such amounts to DWR for the NMDL Customers served by the Districts in accordance with the terms of the NBC Agreement approved in this decision. To the extent that the collection and remittance procedures adopted here are inconsistent with those reflected in the Servicing Order adopted in D.07-03-025, or any subsequent Servicing Order that may be adopted by the Commission, the procedures adopted here should be followed with respect to the NMDL Customers served by the Districts.

²⁸ We note that DWR recently submitted a request to the Commission to modify the 2007 Servicing Order and the operating orders and agreements. That request is being addressed in R.09-06-018.

²⁹ August 30, 2010, Applicants Response to Administrative Law Judge's Ruling at 2.

³⁰ D.07-03-025, Appendix A, Attachment B, Appendix D-1, Section A.3 at D-1-1. Emphasis added.