7. Public Utilities Code Section 311
Section 311(g)(1) requires the Commission's draft decision regarding PG&E's Petition to be (i) served on all parties, and (ii) subject to at least 30 days of public review and comment prior to a vote of the Commission. However, pursuant to § 311(g)(2) and Rule 77.6(f), the Commission may reduce or waive the 30-day period upon the stipulation of all the parties. PG&E, the only party to this proceeding, requests that the Commission waive the 30-day period.
1. PG&E's electric rates are currently frozen pursuant to §368(a) and D.96-12-077.
2. Much of the electricity that PG&E delivers to its retail customers is purchased by PG&E on the wholesale power market.
3. Since June 2000, there has been a huge and sustained increase in the price for wholesale power that PG&E says has far exceeded the rates that PG&E can charge its retail customers under the rate freeze established by §368(a) and D.96-12-077.
4. Under current ratemaking and accounting rules, the excess of PG&E's cost for wholesale power over its revenues is recorded as an undercollection in PG&E's TRA. The undercollection must be financed by PG&E.
5. D.00-10-065 authorized PG&E to issue $1.4 billion of additional short-term debt to finance its TRA undercollection. D.00-12-064 authorized PG&E to issue $2 billion of additional long-term debt to finance its TRA undercollection.
6. PG&E's TRA undercollection was approximately $4.5 billion as of November 30, 2000. The undercollection has continued to grow due to PG&E's inability under the rate freeze to fully recover the extraordinarily high cost for wholesale power.
7. PG&E represents that its TRA undercollection has fully consumed the $1.4 billion of short-term debt that PG&E was authorized to issue in D.00-10-065.
8. PG&E estimates that by March 2, 2001, its growing TRA undercollection will have consumed the $2 billion of long-term debt that PG&E was authorized to issue in D.00-12-064.
9. On December 29, 2001, PG&E filed a petition to modify D.00-12-064. In its Petition, PG&E requests authority under § 851 and/or § 816 et seq., to (i) issue $4 billion of additional debt to finance its TRA undercollection; (ii) finance its undercollection using any of the types of short-term and long-term debt authorized by D.00-10-065 and D.00-12-064, including debt secured by a lien on PG&E's property, plant, and equipment; (iii) finance its undercollection with debt secured by PG&E's accounts receivable; and (iv) exclude from its authorized capital structure any debt issued by PG&E to finance its TRA undercollection.
10. PG&E represents that it needs authority to issue $4 billion of additional debt in order to finance the large and growing undercollection in its TRA.
11. PG&E represents that it needs the ability to issue every type of short-term and long-term debt authorized by D.00-10-065 and D.00-12-064 in order to finance its large and growing TRA undercollection.
12. PG&E recently defaulted on debt payments.
13. PG&E states that for regulatory purposes, the maximum carrying cost for its TRA undercollection should be based on the 3-month commercial paper rate.
14. In D.00-12-064, the Commission adopted PG&E's stipulation to accrue interest on that portion of its TRA undercollection financed with long-term debt based on the lower of (i) the 3-month commercial paper rate, or (ii) the actual cost of long-term debt issued by PG&E to finance its TRA undercollection.
15. Given the large and growing size of PG&E's TRA undercollection, and the variety of debt instruments that PG&E is authorized to issue to finance the undercollection, it may be burdensome for both the Commission and PG&E to track the actual cost of debt issued by PG&E to finance its TRA undercollection.
16. PG&E asks the Commission to grant its Petition as soon as possible in order to avoid the possibility of PG&E not having access to sufficient capital to buy wholesale power. To accommodate this schedule, PG&E asks the Commission to: (i) waive the 30-day period in Rule 47(f) for parties to file responses to PG&E's Petition; and (ii) waive the 30-day period in § 311(g)(1) for public review and comment on the Commission's draft decision.
17. PG&E requests a waiver of the fee that it is required to pay under § 1904(b). Alternatively, PG&E requests that it be allowed to pay the fee, on a pro rata basis, within five days of any debt issuances.
18. PG&E will no longer have a need to finance its TRA undercollection once the undercollection is extinguished.
1. Pursuant to § 816 et seq., the Commission may authorize PG&E to issue debt to finance the large and growing undercollection in its TRA.
2. PG&E's request for authority to issue $4 billion of additional debt to finance its TRA undercollection is reasonable and should be granted. PG&E's authority to issue debt for this purpose should end six months after the TRA undercollection is paid off.
3.
4.
5. PG&E's request to finance its TRA undercollection with any combination of the following types of debt is reasonable and should be granted: (i) the types of short-term debt authorized by D.00-10-065, and (ii) the types of long-term debt authorized by D.00-12-064, including (a) long-term, fixed-rate debt, and (b) interest-rate swaps, caps, and collars.
6. PG&E's request to exclude from its authorized capital structure any debt used to finance its TRA undercollection is reasonable and should be granted.
7. It would be fair and easier if the carrying cost for PG&E's entire TRA undercollection were based on the 3-month commercial paper rate.
8. For ratemaking purposes, the carrying cost for PG&E's TRA undercollection should be based on the 3-month commercial paper rate.
9. PG&E should be authorized to elect to have the carrying cost on that portion of its TRA undercollection that is financed with long-term debt to be based on the lower of (i) the 3-month commercial paper rate, or (ii) the actual cost of long-term debt issued by PG&E to finance its TRA undercollection.
10. GO 24-B requires utilities to submit a monthly report to the Commission that contains the following information: (i) the amount of debt issued by the utility during the previous month; (ii) the total amount of debt outstanding at the end of the prior month; (iii) the purposes for which the utility expended the proceeds realized from the issuance of debt during the prior month; and (iv) a monthly statement of the separate bank account that the utility must maintain for all receipts and disbursements of money obtained from the issuance of debt.
11. Except as described in the subsequent Conclusion of Law, PG&E should be authorized to report on a quarterly basis the information required by GO 24-B with respect to debt issued by PG&E pursuant to this decision.
12. PG&E should report on a monthly basis the information required by GO 24-B with respect to debt issued by PG&E pursuant to this decision if directed to do so by Commission staff.
13. PG&E is required by § 1904(b) to pay a fee of $2,006,000 for authority to issue $4 billion of additional debt. PG&E should remit this fee to the Commission's Fiscal Office within a reasonable time, not to exceed six months from the effective date of this decision.
14. The Commission lacks authority to waive the fee required by § 1904(b).
15. PG&E's request to pay the § 1904(b) fee on a pro rata basis as it issues debt authorized by this decision should be denied in order to avoid the burden of the Commission having to track PG&E's payment of the fee.
16. Rule 48 allows PG&E to request an extension of time to pay the fee required by this decision and § 1904(b). If PG&E requests and receives such an extension, PG&E should pay interest on the fee retroactive to the effective date of this decision. The rate of interest should be based on the 3-month commercial paper rate published in Federal Reserve Statistical Release G.13.
17. Pursuant to § 311(g)(2) and Rule 77.6, the Commission may waive the 30-day period for public review and comment on draft decisions upon the stipulation of all the parties.
18. It is necessary to act expeditiously on PG&E's petition to modify D.00-12-064 in order to assure PG&E's ability to fund its ongoing operations.
19. This decision makes no findings regarding the reasonableness of the terms and conditions of any transaction that is directly or indirectly related to the authority granted to PG&E by this decision, including, but not limited to, transactions involving the issuance of debt and the purchase of wholesale power.
20. The following order should be effective immediately so that its provisions may be implemented expeditiously.
IT IS ORDERED that:
1. Pursuant to Pub. Util. Code § 816 et seq., Pacific Gas and Electric Company (PG&E) is authorized to issue $4 billion of additional debt to finance the undercollection in its Transition Revenue Account (TRA).
2.
3. All terms and conditions adopted by the Commission with respect to short-term debt that PG&E was authorized to issue in D.00-10-065 shall apply with equal force and effect to any short-term debt that PG&E issues pursuant to this decision. All terms and conditions adopted by the Commission with respect to long-term debt that PG&E was authorized to issue in D.00-12-064, including associated interest-rate swaps, caps, and collars, shall apply with equal force and effect to any long-term debt that PG&E issues pursuant to this decision.
4. Any debt issued by PG&E pursuant to this decision shall only be used for the purpose authorized by Ordering Paragraph 1.
5. PG&E's request to exclude from its authorized capital structure any debt issued to finance its TRA undercollection is granted.
6. For ratemaking purposes, the carrying cost for PG&E's TRA undercollection shall be based on the 3-month commercial paper rate published in Federal Reserve Statistical Release G.13. However, PG&E may elect to have the carrying cost for that portion of its TRA undercollection financed with long-term debt be based on the lower of (i) the 3-month commercial paper, or (ii) the actual cost of long-term debt issued by PG&E to finance its TRA undercollection.
7. PG&E's authority to issue debt to finance its TRA undercollection shall expire six months after the undercollection is extinguished. PG&E shall have six months from the date that the undercollection is paid off to permanently reduce its outstanding debt by an amount equal to the outstanding debt issued by PG&E pursuant to this decision, D.00-10-065, D.00-12-064, and the companion decision issued today regarding PG&E's petition to modify D.00-10-065.
8. PG&E shall report to the Commission the information required by General Order 24-B with respect to debt issued by PG&E pursuant to this decision. PG&E may report this information on a quarterly basis, except that PG&E shall report on a monthly basis if requested to do so by Commission staff.
9. Pursuant to Pub. Util. Code § 1904(b), PG&E shall remit the statutorily mandated fee of $2,006,000 to the Commission's Fiscal Office within a reasonable time, not to exceed six month from the effective date of this decision. Failure by PG&E to remit the fee shall render void all authority granted herein.
10. If PG&E requests and receives an extension of time beyond six months to pay the fee required by Pub. Util. Code § 1904(b) and the prior Ordering Paragraph, PG&E shall pay interest on the fee retroactive to the effective date of this decision. The rate of interest shall be based on the 3-month commercial paper rate published in Federal Reserve Statistical Release G.13.
11. The 30-day period for public review and comment on this decision that is provided by Pub. Util. Code § 311(g)(1) is waived pursuant to § 311(g)(2).
12. PG&E's petition to modify D.00-12-064 is granted to the extent set forth in the prior Ordering Paragraphs.
13. D.00-12-064 remains in full force and effect.
This order is effective today.
Dated ____________________, at San Francisco, California.
CERTIFICATE OF SERVICE
I certify that I have by mail this day served a true copy of the original attached Alternate Draft Decision on all parties of record in this proceeding or their attorneys of record.
Dated February 7, 2001, at San Francisco, California.
Arlene C. Gaspar |
NOTICE
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