VI. The Audit of the DA Credit Process

AReM/WPTF request an ongoing audit process for the DA credit. AReM/WPTF claim that this audit is necessitated by the wide disparity in methods proposed by the two utilities and the variation in credits. AReM/WPTF say that PG&E's DA credit method causes DA customers to pay a portion of PG&E's generation charges, even though they do not procure power from PG&E. There is a need to audit the DA credits provided by PG&E prior to the implementation of bottoms-up billing to verify that PG&E has only charged DA customers for non-generation utility charges and that PG&E has not been collecting excessive charges from DA customers. SCE and PG&E strongly disagree and submit that an ongoing audit of their DA credit process would be a blatant waste of time and resources.

Since June 3, 2001, SCE has provided a DA credit equal to the generation component of the customer's OAT. SCE proposes to continue this practice until a move to bottoms-up rates, after which, there will be no DA credit. SCE contends that the generation component of the OAT is transparent and easily verifiable. In other words, there is nothing to audit under SCE's preferred approach. There are no assumptions built into SCE's approach. The credit is equal to the published generation component of the OAT.

PG&E argues that an audit would be not only pointless, but also expensive. A previous DA credit audit authorized by D.99-06-058 cost more than $1.5 million and discovered only a few minor variances in the monthly reports. PG&E maintains that the cost of that audit far exceeded any benefits. PG&E asserts it is not reasonable for all utility ratepayers to have to pay to provide comfort to a small subset of DA customers in the form of an unnecessary audit.

We agree with PG&E and SCE. There is no persuasive evidence in this proceeding to show that an audit is necessary. There is no Commission staff report which raises any questions regarding the accuracy of utility DA credit accounting. Nor have any DA customers revealed a problem with utility DA credit accounting. Further, we have no intention of ordering an audit for the benefit of a small class of customers to be paid for by all utility customers. Should a DA customer find a discrepancy in its utility bill, the Commission's complaint procedure will afford redress.

TURN recommends that PG&E be ordered to prepare an analysis of the relative contributions of bundled and DA customers to the bankruptcy recovery refund, in order for those relative contributions to be allocated fairly.

TURN's witness had testified that:

At the absolute minimum, PG&E must be ordered to track the contributions toward the bailout fund that are coming from bundled and DA customers respectively. For bundled customers, this would mean tracking the difference, for each month beginning no later than June of 2001, between total bundled service generation revenues (including surcharges) collected by PG&E and the actual (or authorized) costs of URG and DWR power for that month. This account would then show the contribution of bundled customers toward the PG&E overcollection that appears likely to be used as part of the bankruptcy resolution.

For DA customers, the account should track the revenues from the one-cent surcharge, as well as any other net "headroom" or "CTC" that has been collected from DA customers through generation rates that exceeded the actual DA credit. This would show the contribution of DA customers toward the PG&E bailout fund. Once the basic data was accumulated, the Commission would at least be in a position to assess who has paid what. (Ex. 11, p. 8.)

We believe TURN is correct in pointing out the need for a report regarding PG&E's revenue collection sources and the allocation of that revenue in regard to bundled and DA customer costs. We will order PG&E to submit such a report.