7. Implementation of Changes in Indifference Methodologies

We shall implement the changes in methodologies adopted in this decision in accordance with the procedure set forth in the Administrative Law Judge (ALJ) April 14, 2011 Ruling, as amended by the subsequent ruling dated April 22, 2011. In accordance with Pub. Util. Code § 310, the directives of the April 14, and April 22, 2011 Rulings are hereby affirmed by the Commission.

Pursuant to these ALJ rulings, the IOUs' previously adopted 2011 PCIA rates were made subject to true-up once the IOUs calculate and implement revised 2011 PCIA rates determined in accordance with the revised methodologies adopted in this proceeding. The effective date of the true-up for SCE and SDG&E was to be the date their 2011 ERRA rates become effective. For PG&E, the effective date was to be the date of the April 14, 2011 Ruling.

The following implementation process shall apply to SCE and SDG&E for purposes of finalization and implementation of the revised PCIA for 2011 made pursuant to the methodologies adopted in this proceeding. SCE and SDG&E shall calculate the difference attributable to the revised PCIA compared with the PCIA previously adopted in their 2011 ERRA proceedings. This difference shall be applied by issuing bill adjustments to transactions beginning from the effective date of the PCIA rate change adopted in their respective ERRA proceedings for 2011 through the effective date of the revised PCIA implemented pursuant to the revisions adopted in this proceeding. This resulting difference shall be incorporated into the prospective 2011 PCIA rates based upon the revised PCIA methodology. .

Since PG&E implemented 2011 PCIA rates prior to the ALJ ruling dated April 14, 2011, PG&E's adjustment for the PCIA methodology change cannot be applied retroactively prior to April 14, 2011. Instead, the PCIA adjustment for PG&E shall be applied beginning from the effective date of the April 14, 2011 Ruling going forward. In the ALJ ruling, PG&E was directed to utilize a deferred account to track the difference in PCIA methodology under the previously adopted versus revised PCIA methodology based upon this proceeding.

The calculation of PG&E's 2011 PCIA will be adjusted to reflect the difference between the currently adopted 2011 PCIA versus the PCIA amounts that would result utilizing the revised methodology adopted in this proceeding.

For PG&E, any difference between the existing 2011 PCIA rate versus the rate that would result from the revised methodology to be adopted through this proceeding was to be calculated in a deferred account. The resulting adjustment shall be passed through as a PCIA rate adjustment upon the adoption of a revised PCIA methodology in this proceeding.

Upon the implementation of the revised PCIA determined pursuant to this proceeding, each of the IOUs should promptly adjust its 2011 PCIA rate prospectively to be consistent with the revised PCIA methodology. Once PG&E implements the revised PCIA consistent with the methodologies adopted in this proceeding, PG&E shall promptly revise its previously adopted 2011 PCIA rate to incorporate this deferred difference.

SCE argues that if the Commission affirms the April 14 Ruling, the Commission should also require a retroactive true-up of the IOUs' TBS rates as of the effective dates of the 2011 PCIA true-up. This decision determines that the TBS rate shall be modified to be consistent with the modifications adopted for the indifference rate calculation. There is no dispute that TBS must be modified to be fully compensatory for procurement related costs, consistent with the changes to the indifference amount calculation. The April 14, and April 22, rulings, however, only authorized the true-up of PCIA rates, but omitted any mention of TBS rates. Accordingly, without a prior ruling calling for a TBS rate true up, we cannot retroactively authorize an adjustment for TBS rates for periods prior to the effective date of this Commission order

PG&E was scheduled to file its 2012 ERRA Forecast application in June 2011 to implement rates effective January 1, 2012. Although the 2012 ERRA Forecast is filed in June, updated testimony is typically filed in November to reflect more recent information. Therefore, relevant rate effects resulting from the Commission decision in this proceeding must be reflected as an update or amendment in PG&E's November 2011 ERRA update filing. These changes will be reflected in PG&E's 2012 rates to become effective January 1, 2012.