ALJ/DUG/jva DRAFT Agenda ID #3366

Ratesetting

4/22/04 Item 42

Decision PROPOSED DECISION OF ALJ LONG (Mailed 3/22/2004)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company to Consolidate the Review of Pacific Gas and Electric Company's Expenditures in 1997 And 1998 to Enhance Transmission and Distribution System Safety and Reliability Pursuant to Section 368(e) of the California Public Utilities Code. (U 39 E)

Application 99-03-039 (Filed March 19, 1999)

DECISION RESOLVING PACIFIC GAS & ELECTRIC COMPANY'S
SYSTEM SAFETY AND RELIABILITY ENHANCEMENT
FUNDS BALANCING ACCOUNT

(See Appendix A for List of Appearances.)

TABLE OF CONTENTS

Title Page

DECISION RESOLVING PACIFIC GAS & ELECTRIC COMPANY'S SYSTEM SAFETY AND RELIABILITY ENHANCEMENT FUNDS BALANCING ACCOUNT 2

I. Summary 2

II. Background 3

III. Scope of Proceeding 5

IV. Standard 7

V. Specific Expenditures 15

1. Administrative and General ($27 Million) 15

2. Advertising Expenses ($450,000) 20

3. Automatic Meter Reading Costs ($499,295) 20

4. Common Plant "Unbundling" ($19.5 Million) 21

5. Distribution and Customer Service Support Costs ($13.31 Million) 23

6. Electric Industry Restructuring Costs ($2.06 Million) 24

7. Pole Test & Treat Costs ($2 Million) 31

8. Vehicles Used for Metering ($929,000) 33

9. Year 2000 Compliance Expenses ($940,000) 35

10. "Time Saving Proxy" Calculation 36

VI. Catastrophic Event Memorandum Account Costs 36

VII. Prior Period Transactions 42

VIII. Crediting Unspent Funds 46

IX. Comments on Proposed Decision 48

X. Assignment of Proceeding 48

Findings of Fact 49

Conclusions of Law 51

ORDER 55

APPENDIX A - List of Appearances

DECISION RESOLVING PACIFIC GAS & ELECTRIC COMPANY'S
SYSTEM SAFETY AND RELIABILITY ENHANCEMENT
FUNDS BALANCING ACCOUNT

I. Summary

Pacific Gas and Electric Company (PG&E) requests Commission review and approval of its expenditures in 1997 and 1998 to enhance transmission and distribution system safety and reliability. In Decision (D.) 96-12-077, the Commission authorized incremental base revenue for PG&E of $164.231 million for 1997, and $241.614 million for 1998, for system safety and reliability enhancements above those already authorized in base revenues, pursuant to Pub. Util. Code § 368(e).¹ PG&E states that in 1997 it overspent the authorized amount by $19.012 million, and that in 1998 it underspent the authorized amount by $2.875 million.

In this decision, we find that certain costs incurred by PG&E pursuant to

§ 368(e) are just and reasonable, but we disallow certain costs shown by intervenors to be unreasonable. Costs related to catastrophic events have been removed from PG&E's § 368(e) request and PG&E is authorized to file a Catastrophic Event Memorandum Account (CEMA) application to seek recovery of such costs. Sufficient evidence was presented to assess the reasonableness of the costs booked in the System Safety and Reliability Account (SSRA); thus no further proceedings are required. This proceeding is closed.