3. CEMA and Authority Sought Under Application
A utility may incur charges in a CEMA account in accordance with Public Utilities Code Section 454.93 and Resolution E-3238.4 Under the statute and resolution, a regulated utility has the opportunity to recover reasonable costs to address a catastrophic event provided that the costs are incremental to existing allowances in rates. More specifically, Resolution E-3238 ordered that the CEMA could record costs for "(a) restoring utility services to customers; (b) repairing, replacing, or restoring damaged utilities, and (c) complying with governmental orders in connection with events declared disasters by competent state or federal authority."5
3.1. Bark Beetle CEMA Costs
On March 7, 2003, Governor Davis issued a State of Emergency Proclamation for the Counties of Riverside, San Bernardino, and San Diego because of widespread bark beetle infestation. In response to the Emergency Proclamation, the Commission issued Resolution E-3824 on April 3, 2001, which ordered Bear Valley Electric and other electric utilities to work with the California Department of Forestry and Fire Protection to "take all reasonable and necessary actions to implement the provision of the Governor's State of Emergency Proclamation to mitigate the increased fire hazard by removing dead, dying, or diseased trees that may fall or contact distribution and transmission lines within their rights of way . . . " The Commission authorized utilities to book bark-beetled related costs into the CEMA to track each utility's actions to comply with the Commission's order to fight the bark beetle infestation.
In Resolution E-3976, dated April 13, 2006, the Commission approved GSWC's request for recovery of $340,117 in costs (plus accrued interest) for bark-beetle infested tree removal and related costs that were incurred during the period April 3, 2003 through June 30, 2005. The Commission authorized collection of these amounts through a per kWh surcharge over a 12-month period. GSWC implemented a surcharge pursuant to Advice Letter 210-E, but the surcharge did not collect $66,426 of the costs approved to be recovered within the 12-month period authorized by Resolution E-3976.
In this application, GSWC seeks approval of Bear Valley Electric's bark beetle mitigation costs from July 1, 2005 through April 30, 2007, totaling $414,442. In addition, GSWC seeks approval of bark beetle mitigation carrying costs booked in the Bear Valley Electric CEMA through December 31, 2010 totaling $138,448 ($66,426 attributable to the under-collection noted above, $18,006 in interest on the under-collected amount, and $54,016 in interest on bark beetle costs booked in the CEMA since July 2005).
3.2. January 2010 CEMA Costs
In January 2010, a severe storm struck in Bear Valley Electric's service territory resulting in downed transmission and distribution poles and damaged transformers and causing widespread loss of electrical service. The storm was declared a local emergency by San Bernardino County and a state of emergency by Governor Schwarzenegger.
Bear Valley Electric's employees took all necessary actions to respond to customer calls and restore power as a result of the storm, but the volume and extent of service outages required overtime hours for existing employees and the need to contract with outside crews to restore service. GSWC seeks approval of $307,159 in direct costs associated with the January 2010 storm and $610 in CEMA-booked 2010 storm-related interest costs through December 31, 2010.
3 All section references are to the California Public Utilities Code.
4 The CEMA was authorized in Resolution E-3238, effective September 6, 1991.
5 Resolution E-3238 at 5.
