2. Background
Pursuant to Assembly Bill (AB) 57 (Stats. 2002, Ch. 835), the Commission established the Energy Resource Recovery Account (ERRA) balancing account in 2002 in order to record the investor-owned utilities' fuel and purchased power revenues against actual recorded costs, excluding revenues collected for the California Department of Water Resources (CDWR).1 AB 57 also mandated a trigger threshold for the balance in the ERRA of 5% of the electric utility's actual recorded generation revenues for the prior calendar year:2
Until January 1, 2006, the commission shall ensure that any overcollection or undercollection in the power procurement balancing account does not exceed 5 percent of the electrical corporation's actual recorded generation revenues for the prior calendar year excluding revenues collected for the Department of Water Resources. The commission shall determine the schedule for amortizing the overcollection or undercollection in the balancing account to ensure that the 5 percent threshold is not exceeded. After January 1, 2006, this adjustment shall occur when deemed appropriate by the commission consistent with the objectives of this section.
Decision (D.) 02-10-062 implemented AB 57. Regarding Public Utilities Code Section 454.5(d)(3), the Commission directed the following:3
We direct PG&E [Pacific Gas and Electric Company], SDG&E [San Diego Gas & Electric Company] and Edison [Southern California Edison Company] to file expedited applications for approval in 60 days from the filing date when the new ERRA balance reaches four percent. The application will include a projected account balance in 60 days or more from the date of filing depending on when the balance will reach the five percent threshold. The application will also propose an amortization period for the five percent of not less than 90 days to ensure timely recovery of the projected ERRA balance. It should also include allocation of the over-and-under collection among customers for rate adjustment based on existing allocation methodology recognized by the Commission. Customer notice should be sent as soon as the application is filed for a rate increase or decrease.
D.07-05-008 added an additional rule to the trigger procedures by allowing SDG&E to file an advice letter seeking to maintain rates when it expected an overcollection or undercollection above the 4% trigger to self-correct below the trigger within 120 days of filing.
In order to determine the 4% trigger amount and the 5% threshold, pursuant to D.04-01-050, SDG&E is required to file an advice letter by April 1 of each year to establish the current year's trigger amount. In Advice Letter 2335-E, dated March 7, 2012, SDG&E reported that its 2011 electric commodity revenue, excluding CDWR revenue, was $1,085 million. Consequently, SDG&E's currently approved 4% trigger point is $43.4 million and the 5% ERRA threshold is $54.2 million. As explained below, the projected undercollection is above these trigger and threshold amounts, and (with regard to the additional "self-correction" review required by D.07-05-008) SDG&E does not expect self-correction to occur within 120 days of its April 2012 filing.
1 Public Utilities Code Section 454.5(d)(3), enacted by AB 57.
2 Id.
3 D.02-12-062 at 65.
