8. Final Categorization and Review and Comment Period

Based on our review of this application, we conclude that there is no need to alter the preliminary determination as to the ratesetting categorization made in Resolution ALJ 176-3080 (January 23, 2002). We modify our preliminary determination that a hearing is necessary, because no hearing was necessary in this proceeding.⁵⁷

The draft decision of ALJ Prestidge was mailed to the parties in accordance with Section 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure on February 11, 2003. Comments were received from PG&E, TID, and ORA on March 3, 2003. Late-filed reply comments were received from PG&E and ORA on March 10, 2003.⁵⁸

PG&E and TID comment that the Commission should not defer its determination of the allocation of PG&E's gain on sale from this transaction between shareholders and ratepayers to a subsequent rulemaking regarding gain on sale issues. ORA's comments also express disappointment that the Commission deferred its determination regarding allocation of the gain on sale, but recognized that this issue is a policy matter for the Commission.

ORA comments that the proposed decision errs by improperly shifting the burden of proof to ORA regarding whether TID is likely to default on its obligations to pay NBCs on behalf of departing customers and the amounts that would otherwise be owed by departing customers under PG&E energy efficiency contracts. ORA further comments that the Commission lacks jurisdiction to order TID to reimburse PG&E for NBCs otherwise owed by departing customers. We have modified Section 5, regarding ratemaking issues, to clarify that this decision does not order TID to pay NBCs in effect before the closing date on behalf of departing customers, but approves the asset sale agreement, in which TID assumed this obligation, and directs PG&E to enforce this obligation if TID should default. We have also added language to clarify that while we cannot require TID to pay NBCs imposed after the closing date which it has not agreed to pay, we may impose this obligation on departing customers as consistent with state law and Commission decisions. We need not respond to ORA's other comments because they are only rearguments of positions stated in ORA's briefs.

PG&E also comments that the proposed decision does not include a finding requested by PG&E that TID's agreement to pay NBCs in effect established before the closing date on behalf of departing customers, according to the methodology and calculations contained in PG&E's testimony, fully satisfies any obligation of PG&E and its customers for NBCs. We have added language to Section 5 regarding ratemaking issues to deny PG&E's request and to state that TID's agreement to pay NBCs in effect before the closing date cannot satisfy the obligation of departing customers to pay their fair share of any applicable new NBCs or CRCs imposed after the closing date. As requested in ORA's reply comments, we have retained language in the proposed decision that requires PG&E to enforce TID's obligations to pay NBCs and amounts owed under energy efficiency contracts on behalf of departing customers using the dispute resolution process set forth in the closing agreement.

PG&E's comments also ask the Commission to approve the specific methodology and calculations of NBCs to be paid by TID on behalf of departing customers contained in PG&E's testimony. We have added language to Section 5 to state that while PG&E's overall methodology appears sound, we cannot approve the specific calculations of NBCs owed because some of the calculations are based on illustrative examples, rather than actual figures.

PG&E and TID further comment that the Commission should permit PG&E to waive the amounts that would otherwise be owed by departing customers under PG&E energy efficiency program contract. PG&E and TID state that since the departing customers are being transferred into TID's service area involuntarily, it is not fair to require them to pay these amounts. We need not respond to these comments, which are mere rearguments of positions argued by the partiers in their briefs. PG&E further comments that waiver of the amounts owed by departing customers under energy efficiency contracts will not place an unfair financial burden on remaining ratepayers, because PG&E's remaining ratepayers will still benefit from the reduced energy load and associated savings that result from the installation of energy efficiency measures. We have added language to Section 5 regarding ratemaking issues to state that although the installation of energy efficiency measures should result in overall energy savings, the record contains no evidence that this savings or any overall reduction in energy load would be equivalent to the amount owed by departing customers under the energy efficiency contracts.

In addition, PG&E's comments request modification of the proposed decision to provide that if TID's agreed-upon payments up to $500,000 on behalf of departing customers for amounts due under energy efficiency contracts do not cover all amounts owed, PG&E may use TID's payments to cover amounts less than $10,000 owed under small energy efficiency contracts and may collect any additional amounts from departing customers who received large rebates under energy efficiency contracts, such as $50,000 or more. PG&E states that this approach would permit more efficient collection of the amounts owed than requiring PG&E to collect from departing customers on a pro rata basis. We note that PG&E and ORA have previously stipulated that the amounts owed under energy efficiency contracts is most likely less than $500,000 and therefore modify the proposed decision to make this change.

Comments from the parties also requested several minor technical corrections to the proposed decision. We have modified the proposed decision as appropriate.