8. Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner. Burton W. Mattson is the assigned ALJ in this proceeding.
1. On February 17, 2005, applicant served notice on all parties of a settlement conference, and on March 9, 2005 applicant hosted the initial settlement conference, with additional discussions held over the course of several weeks.
2. California's strong public policy is to favor settlements, thereby supporting many worthwhile goals (such as reducing litigation expense, conserving scarce resources, and reducing parties' risk that litigation will produce unacceptable results).
3. The Commission considers individual settlement provisions but, in light of California's strong public policy in favor of settlements, does not base its conclusion on whether any single provision is the optimal result but rather on whether the settlement as a whole produces a just and reasonable outcome.
4. Settling Parties to the May 13, 2005 Settlement are all the active parties; include residential, small commercial, large commercial, agricultural and industrial customers, and are thereby fairly reflective of the affected interests; and the May 13, 2005 Settlement along with the record contain sufficient information for the Commission to discharge its future regulatory duties.
5. The record consists of over 80 exhibits, plus testimony at evidentiary hearing over two days from panels of expert witnesses in support of individual settlements.
6. Settling Parties do not agree on specific marginal costs, but generally agree that the residential class is bearing less than its full cost of service while most non-residential classes are bearing more than their full cost of service and, based on this general concurrence regarding costs, agree to a revenue allocation that brings electric rates into better alignment with costs while at the same time tempering the magnitude and abruptness of changes to any one customer class.
7. There is no dispute that the record shows charging full cost by any party's measure of marginal costs means increases to the residential class with decreases to other classes for the revenue neutral allocation in this proceeding.
8. The approximate 4.5% increase for the residential class resulting from the May 13, 2005 Settlement is below even the smallest "full cost" increase estimated by any party, and is in the mid-range of the outcomes recommended in the parties' litigation positions.
9. The recommended revenue allocation is reasonable in light of the whole record.
10. Rate design outcomes reflect one or another party's position, or a compromise between parties, and are reasonable in light of the whole record.
11. No party objects to any settlement.
12. The May 13, 2005 Settlement and five Supplemental Settlements are in the public interest (e.g., by being a reasonable compromise of litigation positions, avoiding the cost of further litigation, conserving scarce resources, moderating potentially harsh bill impacts while better aligning rates with costs, avoiding a residential class rate decrease inconsistent with cost as would result from application of RDSA principles, retaining residential class total revenue at less than energy crisis levels, avoiding an increase in CARE rates).
13. CCDC seeks continuation of the eligibility period for standby charge exemptions authorized by statute (§ 353 et seq.) and extended by the Commission (D.03-04-060) until the Commission issues a decision regarding establishment of DG rates in R.04-03-017 (or any other proceeding where DG tariffs are considered), and such rates become effective, notwithstanding any approved standby rates in this proceeding (A.04-06-024).
14. PG&E has been ordered to file an application regarding line extension issues. (Resolution E-3921.)
1. The Commission will not approve a settlement unless it is reasonable in light of the whole record, consistent with law, and in the public interest.
2. The Commission will not approve an all-party settlement unless the settlement commands the unanimous sponsorship of all active parties, sponsoring parties are fairly reflective of the affected interests, no settlement term contravenes statutory provisions or prior Commission decisions, and the settlement conveys sufficient information to permit the Commission to discharge future regulatory obligations with respect to parties and their interests.
3. The May 13, 2005 Settlement meets the four all-party settlement tests and should be adopted.
4. The Commission's currently adopted revenue allocation policies apply only prior to adoption of rates in this proceeding.
5. The settlements are consistent with law and Commission decisions (e.g., Water Code § 80110; Pub. Util. Code §§ 451, 453, 739, 739.1, 739.2, 739.5, 739.7; D.03-07-028, D.04-02-062, and D.05-06-029).
6. The May 13, 2005 Settlement and five Supplemental Settlements are reasonable in light of the whole record, consistent with law, and in the public interest, and should be adopted.
7. The relief requested by CCDC should be granted.
8. This order should be effective immediately so that applicant may prepare the necessary advice letter, parties may review and comment on that advice letter, and rates may be timely adjusted consistent with the adopted Settlements.
IT IS ORDERED that:
1. The motions dated May 13, June 3, and July 8, 2005 for adoption of the May 13, 2005 Settlement plus five Supplemental Settlements are granted. The Settlements in Appendices B, C, D, E, F and G are adopted.
2. Within 45 days of the date this order is mailed, Pacific Gas and Electric Company (PG&E or applicant) shall file an advice letter(s) in compliance with General Order 96-A and Decision (D.) 05-01-032 ("Third Interim Opinion Adopting Certain Requirements Regarding Advice Letter Filing, Service, Suspension, and Disposition"). The advice letter(s) shall also comply with resolutions, if any, adopted pursuant to applicant's annual electric true-up filing (Advice 2706-E filed September 1, 2005). The advice letter(s) shall include revised tariff sheets to implement the revenue allocations and rate designs adopted in this order. The tariff sheets shall become effective on or after January 1, 2006, subject to Energy Division determining that they are in compliance with this order.
3. Notwithstanding any Commission approval of standby rates in this proceeding, the eligibility period for standby charge exemptions authorized by statute and extended by the Commission in D.03-04-060 shall remain in effect until (a) distributed generation rates established by Commission decision become effective, consistent with the policies adopted in D.01-07-027 and with any cost-benefit analysis methodology developed in Rulemaking 04-03-017, or (b) until further order of the Commission.
4. Applicant shall provide notice to customers on Schedule E-25 consistent with the discussion in this order.
5. This proceeding remains open to address the agricultural class definition issue.
This order is effective today.
Dated , at San Francisco, California.
