12. Reporting Requirements
PG&E proposes to provide annual reports to the Commission on Cornerstone's progress. These reports would include discussion of work completed during the prior calendar year and the cost of that work, and a forecast of work to be performed in the current calendar year. The report will also present the current trends in the escalated cost of the plant and equipment being installed. PG&E states that after experiencing the volatile escalation of costs over the last three years for transformers and other equipment that resulted from the increased cost of copper, PG&E is concerned that additional increases that are outside of its control might increase costs above the forecasts presented in this application. If that concern proves true, PG&E proposes that its fifth annual report would present PG&E's revised forecast of remaining work and the associated costs. Based on that report/forecast the Commission could determine the reasonableness of the revised Project cost estimate and determine whether to authorize PG&E to continue with the work up to the new forecast amount or discontinue work when the forecast cost presented in this Application is reached. Conversely, if PG&E completes the work at a lower cost than authorized, the reduction in revenue requirement would be credited to customers.
12.1. Discussion
Because of the manner in which we have authorized funding for Cornerstone, there is a need for reporting requirements. As proposed by PG&E, it should provide annual reports that discuss work completed during the prior calendar year and the cost of that work, and a forecast of work to be performed in the current calendar year. The report should also include an accounting of the specific projects that have been funded or are being funded22 and a description of how the final projects were selected including that related to alternatives, cost-effectiveness and priorities.23 This will provide assurance to the Commission that PG&E is using its authorization as intended and in a responsible manner. Reports should be submitted annually by March 1, in each of the years 2011 through 2014, for work done in the prior year. For example, the report for work done in 2010 will be due by March 1, 2011.
With respect to PG&E's proposal for potentially increasing authorized costs, as indicated previously, rate recovery through this proceeding is capped by the adopted forecasted amounts. For the 2014 GRC, PG&E can include Cornerstone expenditures through 2013 on a recorded basis, to the extent possible. For the remainder of the projects not yet completed, forecasted costs can be used to determine the appropriate amount to carry forward as part of the 2014 authorization. From then on, recorded costs should be reflected in plant in service and rates in a similar manner as for other projects forecasted in GRCs.24
22 This should include the costs as forecasted in this application, the final budgeted costs after detailed analysis, and the final recorded costs.
23 This should include analyses related to the use of outside contractors versus the use of PG&E personnel, if applicable.
24 While projects may initially be reflected in rates on a forecasted basis, at some point they become embedded in recorded plant in service and are then reflected in rates on a recorded basis.
