III. Scope of Proceeding

The scope of this proceeding was described in Scoping Memo and Ruling of Assigned Commissioner and Administrative Law Judge, issued on June 24, 1999. The fundamental questions the Commission must resolve are: (1) whether the incremental revenues PG&E recorded in the balancing account during 1997 and 1998 were spent on the kinds of transmission and distribution system safety and reliability activities authorized in § 368(e), D.96-12-077, and D.98-12-094; and (2) whether they were reasonably incurred. If not, then § 368(e)(2) directs the Commission to credit those revenues against subsequent safety and reliability base revenue requirements.

There is little agreement on the standard for judging whether specific expenditures were of the kind authorized. PG&E continues to dispute whether it must demonstrate the reasonableness of its expenditures. It is undisputed, however, that the expenditures identified must be incremental to those funds authorized by the Commission in PG&E's 1996 GRC.

Also at issue is the question of how PG&E should properly credit any unspent funds to ratepayers.