Background
Consistent with the objectives of Pub. Util. Code § 454.5(d)(3),1 the ERRA was established to track the major energy utilities' fuel and purchase power revenues against actual recorded costs.2 The ERRA is considered in semi-annual applications - one to consider forecast issues and the other to consider reasonableness issues.
In this filing, which considers forecast issues, SDG&E presents its 2005 load forecast, the resources available to meet that load, fuel costs and costs for various energy resources. SDG&E requests that the Commission find the forecasts reasonable and adopt the resultant 2005 ERRA forecast revenue requirement of $301,106,000. SDG&E also requests approval of its proposed 5% threshold amount for 2004 of $30,013,000. As discussed below, based on SDG&E's application and prepared testimony, its requests are reasonable and will be adopted.
1 Pub. Util. Code § 454.5(d)(3) states that the Commission shall accomplish the following objective: "Ensure timely recovery of prospective procurement costs incurred pursuant to an approved procurement plan. The commission shall establish rates based on forecasts of procurement costs adopted by the commission, actual procurement costs incurred, or combination thereof, as determined by the commission. The commission shall establish power procurement balancing accounts to track the differences between recorded revenues and costs incurred pursuant to an approved procurement plan. The commission shall review the power procurement balancing accounts, not less than semiannually, and shall adjust rates or order refunds, as necessary, to promptly amortize a balancing account, according to a schedule determined by the commission. Until January 1, 2006, the commission shall ensure that any overcollection or undercollection in the power procurement balancing account does not exceed 5% of the electrical corporation's actual recorded generation revenues for the prior calendar year excluding revenues collected for the Department of Water Resources (DWR). The commission shall determine the schedule for amortizing the overcollection or undercollection in the balancing account to ensure that the 5% threshold is not exceeded. After January 1, 2006, this adjustment shall occur when deemed appropriate by the commission consistent with the objectives of this section." 2 The ERRA process was implemented by Decisions (D.) 02-10-062, D.02-12-074 and D.04-01-050.
