14. Surcharge Issues

14.1. Overcollections

DRA notes that several SMJUs have collected substantially more money in public purpose program surcharges than they have spent, causing them to carry large balances over time. With a three-year program cycle, DRA proposes that the Commission consider requiring SMJUs to adjust surcharges annually to reduce the need for ratepayers to contribute more than is necessary annually for LIEE and CARE.

According to DRA, PacifiCorp carried over nearly 20% of its 2007 budget into 2008. Combined with its previous year carryover, PacifiCorp held $76,050 in 2008 from unspent budgets in prior years. Southwest carried over $563,000 from 2007 to 2008, and $593,000 from 2006 to 2007, over 50% of its approved budget. Sierra carried over $33,000 from 2006 to 2007 and $46,000 from 2007 to 2008.³¹

Discussion: Bear Valley agrees with DRA's proposal that we require the SMJUs to spend CARE and LIEE carry-over funds in the subsequent year and adjust the CARE and LIEE surcharge annually to account for any carryovers.³² Since the surcharge is set by Advice Letter, this recommendation appears reasonable, and we adopt it for the four largest SMJUs, Bear Valley, Southwest, Sierra and PacifiCorp. The smallest SMJUs, Alpine and West Coast, may continue their current practice.

14.2. Specific Surcharge Proposals

Southwest Gas and Bear Valley propose special treatment of their surcharges, both of which DRA opposes.

Southwest: Southwest asks to "change the calculation of the CARE component of its public purpose program surcharge to reflect statewide treatment of its LIEE program costs," which it states will "allow Southwest to more freely move its authorized LIEE program funds to the areas where those programs are needed most."³³ DRA does not oppose Southwest's request.

Discussion: We grant Southwest's request but require the company to recalibrate its LIEE and CARE surcharges annually to minimize the overcollections the company carries forward each year. To the extent Southwest's request sought to allow fund shifting between CARE and LIEE budgets, we deny the request.

Bear Valley: Bear Valley asks to recover its CARE and LIEE program funding through the public purpose program (PPP) surcharge. DRA does not oppose Bear Valley's request.

Discussion: Currently, Bear Valley does not collect its CARE- and LIEE-related funds through a PPP surcharge. It proposes to establish a two-way balancing account for CARE and a one-way balancing account for LIEE.

It is Commission policy for all SMJUs that CARE balancing accounts are two-way balancing accounts where the actual funds spent on CARE programs are recovered. LIEE funds are recovered through one-way balancing accounts where the approved budgeted amounts by the Commission are recovered. Any LIEE funds spent over the approved budgeted amount are disallowed and any under-spent funds are carried over to the future years. We therefore approve its establishment of a two-way CARE balancing account and a one-way LIEE balancing account. Such accounts are consistent with Commission practice.

In 2006, by approving its Advice Letter 201E, the Commission authorized Bear Valley to establish appropriate balancing accounts to recover its LIEE- and CARE-related costs. Bear Valley asserts that currently it has the following two un-recovered LIEE components of those costs: (1) the accumulated balance in its LIEE balancing account of $285,300, and (2) funds to cover its proposed annual LIEE program budget of $188,125. In addition it claims that it has an under-collection of $318,000 in its CARE balancing account.

For the funding requested in its current filing and the recovery of its CARE and LIEE balancing accounts, we direct Bear Valley to file an Advice Letter within 90 days from the date of this decision. The Advice Letter must clearly define the recovery mechanisms to recover all costs prudently incurred and excluding any costs that had been previously disallowed by the Commission in its past decisions. The recovery mechanism must conform to the Commission decisions, policies and practices applicable to such programs.

We continue the Commission's past policy of not allowing fund-shifting between the utilities' CARE and LIEE programs.

³¹ DRA Protest, p. 12.

³² Reply of [Bear Valley] to the Protest of [DRA], filed August 25, 2008, p. 3.

³³ Southwest Gas Application, p. 28.