Modifications to CSI Revenue Requirement

The schedule of collections from ratepayers to fund CSI was initially established in D.06-01-024. This collection schedule, or "revenue requirement," has been modified several times since that 2006 decision, most recently in
D.11-07-031. (See D.11-07-031, Table 5 at 47.) As noted in the ALJ Ruling, the Commission must now modify the revenue requirement in light of the $200 million budget increase allowed by SB 585. In addition, SB 585 requires the $200 million in additional program budget to be funded first by money already held in interest and forfeited application fees before any additional funds are collected from customers.

Energy Division Staff collected information from the CSI PAs and found that as of June 30, 2011, total accumulated interest and forfeited funds from the CSI Program equals $34.2 million.⁷ Therefore, the ALJ Ruling noted that the revenue requirement for CSI, i.e., total customer collections, needs to be adjusted by only $165.8 million, i.e., the difference between $200 million and the $34.2 million in interest and forfeited funds. In addition, since the additional $200 million in CSI funds will go to nonresidential projects which receive PBI payments over five years, the funds will not actually be needed until sometime in the future. Therefore, the ALJ Ruling proposed adjusting the revenue requirement for the final years of CSI collections, namely 2015 and 2016, since funds are not immediately required.

The ALJ Ruling proposed specific adjustments to the revenue requirement adopted in D.11-07-031. There was no initial opposition to the revenue requirement proposed in the ALJ Ruling.

In comments on the proposed decision, SDG&E requested that it be allowed to suspend collections of its revenue requirement for 2012 because SDG&E estimates that at the end of 2011, it will have an over collection of CSI funds of approximately $53 million. SDG&E proposes that it collect nothing for CSI in 2012, and the $25 million it would have collected would be added to collections for 2013 through 2016. According to SDG&E, this will provide a small rate reduction to customers in 2012 without impacting the funds available or success of the CSI program. DRA supports SDG&E's proposal. SDG&E's proposal is reasonable and we will adopt it.

Therefore, Table 5 of D.11-07-031 should be modified as follows (with changes shown in gray shading in Table 4 below) to collect the additional $200 million authorized by SB 585 according to the budget allocation adopted in the previous section of this decision and to adjust SDG&E's revenue collections:

Table 4:

Modification of Table 5 of D.11-07-031

Revised Annual CSI Revenue Requirements

(In Millions of Dollars)

Further, the ALJ Ruling noted that the amount of interest and forfeited funds held by PG&E, SCE and SDG&E will change annually. As the interest and forfeited funds continue to grow, less funding will need to be collected from ratepayers in the final program year of 2016. Therefore, the ALJ Ruling proposed that the Commission require the PAs to report annually to Energy Division by advice letter the total amount of interest and forfeited funds. Energy Division would then monitor these advice letter filings and revise the 2016 revenue requirement by resolution as needed to reflect updated amounts for interest and forfeited funds.

SCE and PG&E comment that the CSI PAs already provide the requested information to Energy Division in their Semi-Annual CSI Expense Report in January and July of each year. Thus, they suggest that the PAs use this existing method of reporting rather than a new advice letter filing. We agree that a new report and advice letter filing are not necessary. The CSI PAs should continue to report semi-annually in their CSI Expense Reports the amount of accumulated interest and forfeited funds from the CSI Program. The Energy Division shall monitor this amount, and should no more than once annually propose adjustments to the revenue requirement adopted in this decision for Commission consideration by resolution.

Finally, the Community Environmental Council proposes that the Commission monitor rebate levels closely to assess whether earlier revenue collection may be necessary to cover higher than expected rebate requests, as has occurred in recent years. It suggests that monitoring is needed to avoid any potential break in the program, such as the one that occurred in 2010 when the CSI PAs created a waitlist for non-residential projects in some utility territories. The Energy Division already monitors the CSI budget closely and may suggest necessary program changes at any time. The Community Environmental Council's suggestions of earlier revenue collection would not have prevented the current CSI waiting list and program disruption because total CSI nonresidential incentive funds were reserved and the only remedy was legislation, namely SB 585, to increase the CSI budget.

⁷ This $34.2 million in interest and forfeited funds is comprised of $11 million held by PG&E, $17.9 million held by SCE, and $5.3 million held by SDG&E.

⁸ The numbers in the total row of this table are rounded, but actual collections by the three utilities would not exceed the actual numbers in row 15 of Table 1 of this ruling.