5. SDG&E's Proposed Modification to its ERRA Trigger Calculation

SDG&E also proposed a modification to its ERRA trigger calculation to allow offsets of: 1) an ERRA under-collected balance with a NGBA over-collected balance; and 2) an ERRA over-collected balance with a NGBA under-collected balance. SDG&E proposes to advise the Commission that it has implemented a NGBA-offset by including both the standard ERRA trigger calculation and the NGBA-offset trigger calculation in SDG&E's monthly ERRA compliance report to the Commission.

DRA does not oppose SDG&E's proposed modification to its ERRA trigger calculation, but DRA recommends that this be a "one-time modification" to the trigger calculation, and be applicable to the NGBA only. Since SDG&E only requested that the ERRA be offset by the NGBA, we assume DRA's recommendation that this item be applicable to the NGBA reinforces limitations on the use of this offset to only this balancing account. DRA did not explain, though, what "one-time" stands for - e.g., whether it means that the modification should only be applied for one month or one year.

Under the current rules, SDG&E's ERRA is subject to a trigger mechanism that requires the filing of a rate change application when SDG&E's monthly forecast indicates that the ERRA will face an under-collection or over-collection in excess of 5% of the prior year's recorded electric revenues, excluding the DWR revenue. The current rules also require that in any month when the balance in the ERRA reaches 4% of the prior year's recorded electric revenues, excluding DWR revenue, SDG&E must promptly apply for recovery of the projected ERRA over or under-collected balance.¹⁴

Offsetting an ERRA under/over-collection with an NGBA over/under-collection could promote rate stability in a given year by potentially minimizing the amount and the number of rate changes customers may face, and minimizing the number of ERRA trigger-related filings made by SDG&E. This modification to the trigger calculation could potentially save both money and time for ratepayers, the Commission, and the utility.

Given the potential benefits of this modification, we authorize SDG&E to institute its requested modification to its ERRA trigger calculation when performing the monthly ERRA trigger calculation as follows:

1) Offset an ERRA under-collected balance with a NGBA over-collected balance; or

2) Offset an ERRA over-collected balance with a NGBA under-collected balance;

3) Offset the ERRA balance with the NGBA balance prior to dividing it by the prior year's annual recorded electric revenues, excluding DWR revenue; and

4) Advise the Commission that it has implemented a NGBA-offset by including both the standard ERRA trigger calculation and the NGBA-offset trigger calculation in its monthly ERRA compliance report to the Commission.

Since the term "one-time" is not clear, we do not adopt DRA's request to make this a "one-time modification" of SDG&E's trigger mechanism.

¹⁴ D.07-05-008 modified the trigger mechanism and established a new process which authorized SDG&E to notify the Commission through an Advice Letter filing, instead of an application, when the ERRA balance exceeds its 4% trigger point and SDG&E does not seek a change in rates, if the ERRA balance is projected to self-correct below the trigger point within 120 days. SDG&E currently calculates the trigger percentage by taking the month-end ERRA balance and dividing it by the prior year's annual recorded electric revenues, excluding DWR revenue. SDG&E is proposing to offset the ERRA balance with the NGBA balance prior to dividing it by the prior year's annual recorded electric revenues, excluding DWR revenue.