XI. Comments on Alternate Decision
The alternate decision of Commissioner Brown was mailed to the parties in accordance with Rule 77.6 of the Commission's Rules of Practice and Procedure. Comments were received on September 16, 2004 from The Settling Parties, SDG&E, ORA, California Large Energy Consumers Association, and DWR. Reply comments were received on September 20 from the Settling Parties and SDG&E. Changes have been made in the text of this decision in response to these comments from parties.
On September 30, in response to the revised alternate decision issued by Commissioner Brown, SDG&E sent a letter to all Commissioners requesting an opportunity to submit direct testimony and evidence regarding the alternate decision's methodology for allocating the above-market cost component of the DWR contracts. SDG&E has made numerous requests to submit such testimony. (See, e.g., Motion for Reconsideration, filed June 4, 2004.) These requests have been denied by the ALJ. On July 1, 2004, SDG&E filed a "Motion of San Diego Gas & Electric Company for Commission Decision Allowing SDG&E to Present Direct Testimony and Evidence on the Contested Issues Raised by the Proposed Settlement in Accordance with Rule 51.6."10
We find no basis for granting SDG&E's Motion. First, the ALJ had set evidentiary hearings regarding the proposed settlement agreement, including the above-cost allocation methodology. Thus, SDG&E has been provided an opportunity to cross-examine witnesses and submit detailed comments regarding the methodology. Second, SDG&E seeks to submit direct testimony and evidence to demonstrate the alleged adverse impacts of this allocation methodology on its ratepayers. However, the rate impacts about which SDG&E wants to submit testimony are in fact in the record in some detail.11 (See, May 24, 2004 Opening Comments of SDG&E, pp. 1-2, 5-9.) Moreover, SDG&E fails to explain what additional evidence it seeks to introduce through direct testimony that it cannot present through the filing of comments. Accordingly, SDG&E's Motion is denied.
1. Annual re-litigation of an allocation methodology to be applied to DWR's revenue requirement is neither efficient nor necessary.
2. DWR's supplemental revenue requirement determination was based on Prosym Run 45.
3. The Proposed Settlement's use of historical forecasts of the net short positions of the three utilities as a basis for future cost allocation is too uncertain to be found equitable.
4. The underlying logic of the Proposed Settlement--attempting to fairly allocate the above-market costs of the DWR contracts--is sound.
5. Edison's "alternative" litigation position can serve as the basis for an equitable allocation methodology.
6. (AB)1X (Chapter 4 of the Statutes of 2001-02 First Extraordinary Session) exempted residential usage up to 130% from paying DWR power costs.
7. The above-market burden of DWR's contract costs should be spread equally among the non-exempt ratepayers in PG&E, SCE and SDG&E territories.
8. SCE's explanation of its projection of above-market DWR contract costs is credible.
9. DWR contract renegotiations may lend to lower above-market costs.
10. DWR's non-contract costs should be allocated each year using the same allocation percentages adopted for this purpose in D.04-08-050.
11. The utilities proposed, and DWR agreed to, the implementation of utility specific balancing accounts.
1. A permanent allocation methodology for DWR's revenue requirement should be adopted.
2. The Proposed Settlement is inconsistent with D.02-12-045.
3. The Proposed Settlement is not equitable, and should not be approved.
4. Southern California Edison's proposal to allocate the above-market portion of DWR contract costs provides a reasonable starting point for a permanent allocation.
5. SCE's projection of above-market DWR contract costs is credible, and should serve as the basis for a permanent allocation of these costs.
6. (AB)1X (Chapter 4 of the Statutes of 2001-02 First Extraordinary Session) exempted residential usage up to 130% from paying DWR power costs.
7. It is equitable to allocate the above-market costs of DWR's contracts equally to non-exempt PG&E, SCE and SDG&E ratepayers.
8. The allocation percentages that were adopted in D.04-08-050 for DWR's non-contract costs should be made permanent, except that changes related to DWR contract renegotiations should be allocated as discussed herein so that all ratepayers benefit from reduced above-market costs.
9. DWR should establish utility specific balancing accounts.
10. This decision construes, applies, implements, and interprets the provisions of Assembly Bill (AB) 1X (Chapter 4 of the Statutes of 2001-02 First Extraordinary Session).
ORDER
IT IS ORDERED that:
1. The allocation methodology adopted today for Department of Water Resources' (DWR) revenue requirement is permanent, except that changes related to DWR contract renegotiations shall be allocated as discussed herein.
2. The Proposed Settlement is not adopted.
3. The annual above-market costs of DWR's contracts shall be pooled and re-allocated to the ratepayers in PG&E, SCE and SDG&E territories. The adopted annual adjustments are shown in Appendix A.
4. The allocation percentages adopted in D.04-08-050 for DWR's non-contract costs are permanently fixed as follows: PG&E 40.69%, SCE 45.40%, and SDG&E 13.91%.
5. Pursuant to D.04-01-028, the allocation methodology is applied retroactively to January 1, 2004.The details of the allocation methodology we adopt are set forth in Appendices A, B, and C..
6. The utilities shall provide updated estimates of direct access customer responsibility surcharge revenues in their implementation advice letters.
7. The 2004 power charges shown in Appendix C, after final adjustments by the utilities as described above for DA CRS, shall go into effect immediately, and will remain in effect until further order of the Commission.
8. Within 14 days of the issuance of today's decision, Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company shall file advice letters with revised tariffs that reflect the power charges, as adjusted for DA CRS. These new tariffs shall be effective as of the date of today's decision, subject to review by the Commission's Energy Division.
9. The utilities are directed to work with DWR to implement utility specific balancing accounts, as described above.
10. Pub. Util. Code § 1731(c) (applications for rehearing are due within 10 days after the date of issuance of the order or decision) and Pub. Util. Code § 1768 (procedures applicable to judicial review) are applicable to this decision.
11. This order is effective immediately.
This order is effective today.
Dated , at San Francisco, California.
APPENDIX A
Permanent Annual Adjustments To IOU Allocations to Achieve Equal Sharing of Above-Market DWR Contract Costs | ||||||||||||||
SCE Estimate of Above-Market Costs of DWR Contracts Assigned to Each IOU (source: SCE Exhibit 04-28) |
Re-allocation of Annual Total Above-Market Costs Based on Equal-Cents-per-kWh Allocator |
Resulting Annual Adjustments to IOU Allocations | ||||||||||||
Year |
PG&E |
SCE |
SDG&E |
Total |
PG&E |
SCE |
SDG&E |
Total |
PG&E |
SCE |
SDG&E |
Total | ||
44.8% |
45.3% |
9.9% |
100% |
|||||||||||
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
(k) |
(l) | |||
= .448 x (d) |
= .453 x (d) |
= .099 x (d) |
=(e) - (a) |
=(f) - (b) |
=(g) - (c) |
|||||||||
2004 |
$616,740 |
$899,740 |
$341,898 |
$1,858,378 |
$832,876 |
$841,543 |
$183,959 |
$1,858,378 |
$216,136 |
($58,197) |
($157,939) |
$0 | ||
2005 |
$576,780 |
$418,800 |
$300,096 |
$1,295,676 |
$580,688 |
$586,730 |
$128,258 |
$1,295,676 |
$3,908 |
$167,930 |
($171,838) |
$0 | ||
2006 |
$448,740 |
$378,240 |
$258,162 |
$1,085,142 |
$486,332 |
$491,393 |
$107,417 |
$1,085,142 |
$37,592 |
$113,153 |
($150,745) |
$0 | ||
2007 |
$374,030 |
$367,690 |
$242,054 |
$983,774 |
$440,902 |
$445,490 |
$97,383 |
$983,774 |
$66,872 |
$77,800 |
($144,671) |
$0 | ||
2008 |
$345,700 |
$363,270 |
$164,706 |
$873,676 |
$391,559 |
$395,633 |
$86,484 |
$873,676 |
$45,859 |
$32,363 |
($78,222) |
$0 | ||
2009 |
$276,760 |
$234,390 |
$75,822 |
$586,972 |
$263,066 |
$265,803 |
$58,104 |
$586,972 |
($13,694) |
$31,413 |
($17,718) |
($0) | ||
2010 |
$127,290 |
$207,080 |
$60,066 |
$394,436 |
$176,776 |
$178,615 |
$39,045 |
$394,436 |
$49,486 |
($28,465) |
($21,021) |
$0 | ||
2011 |
$104,290 |
$159,340 |
$24,458 |
$288,088 |
$129,114 |
$130,457 |
$28,518 |
$288,088 |
$24,824 |
($28,883) |
$4,059 |
$0 | ||
2012 |
$20,260 |
$0 |
($2,693) |
$17,567 |
$7,873 |
$7,955 |
$1,739 |
$17,567 |
($12,387) |
$7,955 |
$4,432 |
$0 | ||
2013 |
$0 |
$0 |
($334) |
($334) |
($150) |
($151) |
($33) |
($334) |
($150) |
($151) |
$301 |
$0 | ||
Total |
$2,890,590 |
$3,028,550 |
$1,464,236 |
$7,383,376 |
$3,309,034 |
$3,343,467 |
$730,874 |
$7,383,376 |
$418,444 |
$314,917 |
($733,362) |
($0) | ||
(END OF APPENDIX A)
APPENDIX B
Illustrative Calculation of Expected DWR Contract Allocations Reflecting Equal Sharing of Above-Market Costs | ||||||||||||||
Forecast Costs of DWR Contracts Assigned to Each IOU by D.02-09-053 ($000) |
Annual Adjustment to Equalize Above Market Costs of DWR Contracts (see Appendix A) ($000) |
Adjusted Allocation of DWR contracts ($000) | ||||||||||||
Year |
PG&E |
SCE |
SDG&E |
Total |
PG&E |
SCE |
SDG&E |
Total |
PG&E |
SCE |
SDG&E |
Total | ||
2004 |
$1,534,288 |
$2,002,488 |
$541,967 |
$4,078,743 |
$216,136 |
($58,197) |
($157,939) |
$0 |
$1,750,424 |
$1,944,291 |
$384,029 |
$4,078,743 | ||
2005 |
$1,666,016 |
$1,473,246 |
$574,602 |
$3,713,864 |
$3,908 |
$167,930 |
($171,838) |
$0 |
$1,669,924 |
$1,641,176 |
$402,764 |
$3,713,864 | ||
2006 |
$1,643,867 |
$1,492,965 |
$556,558 |
$3,693,389 |
$37,592 |
$113,153 |
($150,745) |
$0 |
$1,681,459 |
$1,606,117 |
$405,813 |
$3,693,389 | ||
2007 |
$1,570,042 |
$1,455,451 |
$524,566 |
$3,550,060 |
$66,872 |
$77,800 |
($144,671) |
$0 |
$1,636,914 |
$1,533,251 |
$379,895 |
$3,550,060 | ||
2008 |
$1,557,697 |
$1,434,590 |
$337,537 |
$3,329,824 |
$45,859 |
$32,363 |
($78,222) |
($0) |
$1,603,556 |
$1,466,953 |
$259,315 |
$3,329,824 | ||
2009 |
$1,556,910 |
$1,427,688 |
$308,214 |
$3,292,812 |
($13,694) |
$31,413 |
($17,718) |
($0) |
$1,543,216 |
$1,459,101 |
$290,496 |
$3,292,812 | ||
2010 |
$499,289 |
$1,362,356 |
$291,206 |
$2,152,852 |
$49,486 |
($28,465) |
($21,021) |
($0) |
$548,775 |
$1,333,892 |
$270,185 |
$2,152,852 | ||
2011 |
$372,488 |
$1,185,811 |
$96,567 |
$1,654,866 |
$24,824 |
($28,883) |
$4,059 |
($0) |
$397,312 |
$1,156,928 |
$100,627 |
$1,654,866 | ||
2012 |
$57,369 |
($53,448) |
$39,136 |
$43,057 |
($12,387) |
$7,955 |
$4,432 |
$0 |
$44,983 |
($45,493) |
$43,568 |
$43,057 | ||
2013 |
$5,746 |
($21,698) |
$7,705 |
($8,247) |
($150) |
($151) |
$301 |
$0 |
$5,596 |
($21,850) |
$8,006 |
($8,247) | ||
Total |
$10,463,713 |
$11,759,448 |
$3,278,059 |
$25,501,220 |
$418,444 |
$314,917 |
($733,362) |
($0) |
$10,882,158 |
$12,074,365 |
$2,544,697 |
$25,501,220 | ||
(END OF APPENDIX B)
APPENDIX C
2004 IOU Cost Allocation Summary
1 |
Total DWR Contract Costs |
$4,859,626,196 | |||
2 |
Administrative & General Expenses |
$59,000,000 | |||
3 |
Extraordinary Costs |
$37,054,868 | |||
4 |
Net Operating Revenues |
($320,372,326) | |||
5 |
Interest Earnings on Fund Balance |
($32,212,129) | |||
6 |
Other Revenues (Contract Settlements, Extraordinary Receipts) |
($51,896,968) | |||
7 |
Net Total of Variable Contract Costs, other Fixed Costs, and Net Revenues |
$4,551,199,641 | |||
8 |
|||||
9 |
Allocation of Contract Costs |
PG&E |
SCE |
SDG&E |
Total |
10 |
Sales Allocator (MWh) |
49,407,356 |
49,921,476 |
10,912,716 |
110,241,549 |
11 |
Percentages |
44.8% |
45.3% |
9.9% |
100.0% |
12 |
|||||
13 |
Start with: Cost-Follows-Contracts Allocation |
$1,743,564,626 |
$2,271,115,361 |
$843,710,473 |
$4,858,390,460 |
14 |
Subtract: SCE Estimate of IOU-specific Above-Market Costs |
($616,740,000) |
($899,740,000) |
($341,897,836) |
($1,858,377,836) |
15 |
Result: CFC Net of IOU-specific AMC |
$1,126,824,626 |
$1,371,375,361 |
$501,812,637 |
$3,000,012,624 |
16 |
Add back: pooled and re-allocated AMC |
$832,875,961 |
$841,542,646 |
$183,959,229 |
$1,858,377,836 |
17 |
Final Allocation of DWR contract Costs |
$1,959,700,587 |
$2,212,918,007 |
$685,771,866 |
$4,858,390,460 |
18 |
|||||
19 |
Adopted Allocator of Non-Contract Costs and Revenues |
40.69% |
45.40% |
13.91% |
100.0% |
20 |
Allocated Non-Contract Costs and Revenues |
($125,498,765) |
($140,025,656) |
($42,902,134) |
($308,426,555) |
21 |
DWR Reconciliation to SCO |
($2,707,202) |
($3,020,570) |
($925,465) |
($6,653,237) |
22 |
Less: Off-system Sales |
||||
23 |
Subtotal: Allocated DWR Costs |
($18,078,332) |
($215,013,323) |
($39,486,934) |
($272,578,590) |
24 |
2001/2002 True-up (D.04-01-028) |
($100,590,687) |
$41,308,258 |
$59,282,429 |
$0 |
25 |
Sub-Total--Revenue Requirement before Direct Access Revenues |
$1,712,825,601 |
$1,896,166,716 |
$661,739,762 |
$4,270,732,079 |
26 |
Less: Direct Access CRS Revenues |
($104,312,750) |
($104,663,900) |
($32,119,330) |
($241,095,980) |
27 |
Total Revenue Requirement |
$1,608,512,851 |
$1,791,502,816 |
$629,620,432 |
$4,029,636,099 |
28 |
|||||
29 |
Calculate IOU Power Charges |
PG&E |
SCE |
SDG&E |
Total |
30 |
2004 DWR Delivered Energy (MWh) |
21,145,876 |
21,910,180 |
7,998,786 |
51,054,842 |
31 |
Partial IOU Power Charge |
$0.07607 |
$0.08177 |
$0.07871 |
$0.07893 |
32 |
Adjustment to Match DWR Operating Account Balance |
($0.00090) |
($0.00090) |
($0.00090) |
($0.00090) |
33 |
Adopted IOU Power Charges |
$0.07517 |
$0.08087 |
$0.07782 |
$0.07803 |
(END OF APPENDIX C)
10 In its November 24, 2004 Comments in response to a November 18, 2004 Assigned Commissioners' Ruling, SDG&E again requests hearings on the above-market cost allocation methodology.
11 In fact, there is even more rate and bill impact information now in the record as a result of the comparison exhibit (Exhibit 04-COMP BILL) and SDG&E's November 24 Comments.
