18. Impact of FAR Update on Shareholder
Funded Programs

The modifications approved in this decision must not alter the revenue recognition process for existing SoCalGas shareholder-funded incentive programs.⁹¹ Therefore, SDG&E/SoCalGas must continue using the existing accounting process for calculating base and incremental revenue for these programs, and the existing SoCalGas shareholder-funded incentive programs must remain unaffected by BTS implementation.⁹²

The SoCalGas shareholder-funded incentive programs provide customers discounts and other incentives to help customers to invest in gas technologies that improve operational efficiency and reduce costs. SoCalGas shareholders are responsible for reduced core revenues that may occur under the programs, and revenue gains are shared between ratepayers and shareholders.

Prior to the implementation of the FAR system in 2008, all revenue was derived from end-use customer transportation rates and was included in the calculation of base and incremental revenue for these programs. The implementation of the FAR system removed some of the revenue requirement from the end-use customer transportation rates but did not significantly affect SDG&E's/SoCalGas' recovery of the FAR revenue requirement or alter the revenue sharing mechanism for the programs.

SDG&E/SoCalGas state that they currently use and will continue using the existing accounting process for calculating base and incremental revenue for the shareholder-funded incentive programs, and include FAR revenues associated with base volumes and incremental volumes generated from the active contracts. It is reasonable that the revenue recognition process for existing SoCalGas shareholder-funded incentive programs should not be altered or affected by implementation of the modifications approved in this decision.

⁹¹ These programs are the Core Pricing Flexibility (also know as the Optional Pricing Tariffs or OPT) Program and the Noncore Competitive Load Growth Opportunities Program.

⁹² This adopts Recommendations No. 12 of Exhibit No. JRO-1.