6. Assignment of Proceeding

Michel Peter Florio is the assigned Commissioner, and Seaneen M. Wilson is the assigned ALJ in this proceeding.

1. DWR submitted its 2012 revenue requirement determination to the Commission on August 4, 2011.

2. A PHC was held on September 1, 2011 to discuss the processing of DWR's 2012 revenue requirement determination.

3. DWR's revised 2012 revenue requirement determination was submitted to the Commission on October 27, 2011.

4. The main difference between the August 4, 2011 determination of $931 million and the October 27, 2011 revised 2012 revenue requirement determination of $ 923 million is due to a decrease in the Bond Charge Revenue Requirement of $8 million.

5. DWR's revised 2012 revenue requirement determination contains the information needed to determine the revenue requirement allocated to utility customers for calendar year 2012.

6. The Bond Charge is designed to recover DWR's costs associated with its bond financing activities from the utilities' customers.

7. DWR's revised 2012 revenue requirement for bond-related costs is $852 million, which results in a Bond Charge of $0.00513 per kWh.

8. The Power Charges are designed to provide the funds necessary to satisfy DWR's revised 2012 revenue requirement for the cost of electric power sold to the utilities' customers.

9. DWR's revised 2012 revenue requirement for the Power Charge is approximately $71 million, which results in the allocated Power Charges to the customers of PG&E, SCE, and SDG&E as shown in Appendix A, page 2.

10. In 2012, DWR is forecast to collect approximately $103 million from PG&E's customers, $74 million from SDG&E's customers, as shown in Appendix A, page 1.

11. As DWR contracts expire and are novated, DWR's required operating reserves are also reduced. With the novation of these contracts, utilities will experience a "negative revenue requirement", which will require operating reserves to be returned to the IOU's customers, resulting in a reduction of customer rates.

12. DWR will return approximately $354 million to PG&E customers and approximately $497 million to SCE customers in 2012. The negative revenue requirement allocated to SDG&E customers of approximately $32 million to SDG&E customers in 2012 will reduce the Power Charge paid by SDG&E customers.

1. The Commission's obligation is to calculate, revise, and impose the Bond Charge and Power Charges on the customers of the three electric utilities.

2. The methodology authorized in D.10-12-006 to return negative revenue requirement to PG&E customers should be adopted for 2012.

3. The methodology agreed to between DWR and SCE to return the negative revenue requirement to SCE customers should be adopted for 2012 and be effective January 1, 2012.

4. The negative revenue requirements returned to PG&E and SCE customers for the year 2012, based on the methodologies adopted herein, should be adopted.

5. The negative revenue requirements allocated to SDG&E customers, which will reduce the Power Charge paid by SDG&E customers in 2012, should be adopted.

6. DWR's requested 2012 Bond Charge should be adopted and allocated to the customers of PG&E, SCE, and SDG&E.

7. DWR's requested 2012 Power Charge should be adopted and allocated to the customers of PG&E and SDG&E.

8. This decision construes, applies, implements, and interprets the provisions of AB1X, and relates to the implementation of DWR's revenue requirement and the establishment and implementation of the Bond Charge and Power Charges necessary to recover that revenue requirement.

9. The following issues should be addressed in a subsequent decision:

a. SCE raised the issue of how to allocate $130 million of the funds paid to DWR by Sempra for the 2010 global settlement, which resolved the 2000-2001 California Energy Crisis claims by the California Parties against Sempra. In particular, the Sempra Settlement resolved claims related to the long-term energy delivery contract between Sempra Generation and DWR, which was administered by SCE. SCE proposes that these funds should be allocated to the California Parties using a two-step process. The first step of SCE's proposal would be to determine a rate (dollar amount) per MWh contracted, by taking the total benefit amount ($130 million) and dividing by the total number of MWhs stipulated throughout the life of the contract. The next step of SCE's proposal would be to determine the allocation of MWhs across the contract delivery period, which is complicated by differing cost allocation methodologies during different timeframes of the contract.

b. PG&E and SCE each raise the issue of how to allocate the discount funds addressed by the Sempra Continental Forge class action settlement of approximately $269 million. These funds represent amounts unrelated to the California Energy Crisis Claims concerning the Sempra contract discussed in Item b above. PG&E is concerned that DWR has received but not distributed the Continental Forge funds for the period 2006-2011. PG&E proposes that these Continental Forge funds should be distributed to the IOUs using the permanent allocation percentages authorized in D.08-11-056. SCE proposes that the parties meet to discuss how to resolve the allocation of Continental Forge funds.

ORDER

IT IS ORDERED that:

1. The allocation to Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company, as shown in Appendix A of this decision, of the California Department of Water Resources' 2012 revenue requirement determination as revised on October 27, 2011, is $923 million.

a. As shown in Appendix A of this decision, the 2012 Power Charges allocated to the electric customers of Pacific Gas and Electric Company and San Diego Gas & Electric Company are set at $0.08475, and $0.04083 per kilowatt-hour, respectively, and shall go into effect on January 1, 2012.

b. The California Department of Water Resources will return approximately $354 million to Pacific Gas and Electric Company's electric customers in 2012, approximately $497 million to Southern California Edison Company's customers, and approximately $32 million to San Diego Gas & Electric Company customers in 2012. This results in a reduction to the Power Charges allocated to Pacific Gas and Electric Company's electric customers of $252 million and a reduction to the Power Charges allocated to Southern California Edison Company's customers of $441 million. Even with the return of $32 million to San Diego Gas & Electric Company customers, these customers will still pay Power Charges of $74 million in 2012.

c. The 2012 Bond Charge allocated to the electric customers of Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company is set at $0.00513 per kilowatt-hour, and shall go into effect on January 1, 2012.

2. The methodology authorized in Decision 10-12-006 to return negative revenue requirement to Pacific Gas & Electric Company for 2012 is adopted.

3. The proposed methodology agreed to between the California Department of Water Resources and Southern California Edison Company to return the negative revenue requirement to Southern California Edison Company for 2012 is adopted, and will become effective on January 1, 2012.

4. The negative revenue requirements returned to Pacific Gas & Electric Company and Southern California Edison Company for the year 2012, based on the methodologies adopted herein, are adopted.

5. Within ten days of today's date, Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company shall file Tier 1 advice letters, as provided for in General Order 96-B, with revised tariffs that reflect the adopted Bond Charge. These new tariffs shall be effective beginning January 1, 2012.

6. Within ten days of today's date, Pacific Gas and Electric Company and San Diego Gas & Electric shall file Tier 1 advice letters, as provided for in General Order 96-B, with revised tariffs that reflect the adopted Power Charges. These new tariffs shall be effective beginning January 1, 2012.

7. Public Utilities Code Section 1731(c) (applications for rehearing are due within 10 days after the date of issuance of the order or decision) and Public Utilities Code Section 1768 (procedures applicable to judicial review) are applicable to this decision.

8. The following issues will be addressed in a subsequent decision:

a. Southern California Edison Company raised the issue of how to allocate $130 million of the funds paid to California Department of Water Resources by Sempra for the 2010 global settlement, which resolved the 2000-2001 California Energy Crisis claims by the California Parties against Sempra. In particular, the Sempra Settlement resolved claims related to the long-term energy delivery contract between Sempra Generation and California Department of Water Resources, which was administered by Southern California Edison Company. Southern California Edison Company proposes that these funds should be allocated to the California Parties using a two-step process. The first step of Southern California Edison Company's proposal would be to determine a rate (dollar amount) per megawatt-hour contracted, by taking the total benefit amount ($130 million) and dividing by the total number of megawatt-hours stipulated throughout the life of the contract. The next step of Southern California Edison Company's proposal would be to determine the allocation of megawatt-hours across the contract delivery period, which is complicated by differing cost allocation methodologies during different timeframes of the contract.

b. Pacific Gas and Electric Company and Southern California Edison Company each raise the issue of how to allocate the discount funds addressed by the Sempra Continental Forge class action settlement of approximately $269 million. These funds represent amounts unrelated to the California Energy Crisis Claims concerning the Sempra contract discussed in Item b above. Pacific Gas and Electric Company is concerned that California Department of Water Resources has received but not distributed the Sempra Continental Forge class action settlement funds for the period 2006-2011. Pacific Gas and Electric Company proposes that these Sempra Continental Forge class action settlement funds should be distributed to the investor-owned utilities' using the permanent allocation percentages authorized in Decision 08-11-056. Southern California Edison Company proposes that the parties meet to discuss how to resolve the allocation of Sempra Continental Forge class action settlement funds.

9. Rulemaking 11-03-006 remains open.

This order is effective today.

Dated December 1, 2011, at San Francisco, California.

Previous PageTop Of PageGo To First Page