1. Background
California Pacific Electric Company, LLC (CalPeco) acquired Sierra Pacific Power Company's (Sierra) electric distribution system within California and the Kings Beach Generating Station, effective as of January 1, 2011.2 As part of the transaction, CalPeco agreed to "operate within the existing rate case cycles now in effect for Sierra, including for general rates and [Energy Cost Adjustment Clause] ECAC rates."
Sierra, and now CalPeco, is required to file a general rate case (GRC) every three years, pursuant to Decision (D.) 89-10-040 and as affirmed by D.07-07-004.
The Commission's most recent GRC, covering a test year of 2009, was implemented by D.09-10-041. That decision adopted a PTAM attrition method for 2010 and 2011, the two years following the test year. The Attrition Component of the PTAM is based on the September Global Insight U.S. Economic Outlook forecast for consumer price index (CPI), minus 0.5% productivity factor (but not less than zero). Rate changes under the PTAM would be filed by advice letter starting in October 2009 with an effective date of January 1, 2010.
CalPeco asserts that it originally planned to file its GRC application in August 2011-the timeframe that Sierra would have filed its GRC application had it remained the owner of the utility. However, after discussions with the Division of Ratepayer Advocates (DRA), CalPeco asserts that it determined that it would be in the best interests of CalPeco's ratepayers if it deferred CalPeco's next GRC application by approximately six months.
CalPeco filed Advice Letter 10-E on October 14, 2011 and requested authority to utilize the PTAM to increase rates employing an attrition factor in those years in which a GRC application is not filed. DRA protested CalPeco's Advice Letter 10-E on November 3, 2011 asserting that CalPeco should "submit its request in an application rather than an advice letter filing." CalPeco voluntarily withdrew its Advice Letter 10-E on November 10, 2011 stating that it would "seek the same approval sought in Advice Letter 10-E through the application process." CalPeco's Application requests approval of the same increase to general rates to also become effective on the date of this decision as CalPeco initially requested in Advice Letter 10-E and consistent with the PTAM approved in D.09-10-041.
2 CalPeco adopted Sierra's Post Test Year Adjustment Mechanism (PTAM) as part of its acquisition of Sierra in D.10-10-017. See Joint Application of Sierra Pacific Power Company (U903E) and California Pacific Electric Company, LLC for Transfer of Control and Additional Requests Relating to Proposed Transaction, D.10-10-017, Appendix 3, Regulatory Commitment 3(c) (Oct. 14, 2010).
