VIII. Comments on Proposed Decision
The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(d) and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed on ____________________, and reply comments were filed on ________________.
1. In A.99-09-006, PG&E requested Commission approval of its entries to the TCBA during July 1, 1998 through June 30, 1999, and for a Commission determination of the reasonableness of PG&E's activities during July 1, 1998 through June 30, 1999, associated with: (1) employee-related transition cost programs; (2) QF and other PPAs; (3) pumped storage operations, geothermal operations and water purchases for power production; (4) ISO and PX costs and revenues; and (5) management of transaction costs for Wave 1 and Wave 2 plant sales and Hunters Point Power Plant market valuation.
2. On February 4, 2000, pursuant to an ALJ ruling, PG&E's request for approval of the Hunters Point decommissioning cost estimate was bifurcated into a separate phase and will be addressed in a separate decision.
3. On April 27, 2000, the assigned ALJ issued a ruling granting the joint motion of PG&E, Edison and SDG&E to strike Chapter 8 of ORA's Report, entitled Regulatory Assets.
4. The only active participants in this phase of PG&E's ATCP have been ORA, and CUE. ORA filed testimony, while CUE participated through cross-examination.
5. On June 16, 2000, PG&E and ORA submitted a Stipulation Agreement Between Pacific Gas And Electric Company And The Office Of Ratepayer Advocates Resolving Issues In The 1999 Annual Transition Cost Proceeding (Stipulation) that resolves all of the contested issues in this phase of the proceeding except for the $500,000 employee transition cost issue and the WRRM issue.
6. No other party has filed testimony or participated in hearings on any of the issues addressed by the Stipulation. No party has proposed that the Stipulation or any part of it contravenes statutory provisions or prior Commission decisions, and none do.
7. We review PG&E and ORA's Stipulation under the rules provided in Rule 51.1 and the Commission's criteria for all-party settlements.
8. The PG&E and ORA Stipulation is a reasonable compromise that fairly serves the interests of PG&E, its shareholders, customers, and employees.
9. The PG&E and ORA Stipulation is reasonable in light of the whole record, consistent with law, and in the public interest.
10. The Stipulation provided that $13,800 of disputed retraining assistance costs are consistent with the programs approved in D.00-02-048 and should be recovered through the TCBA.
11. The Stipulation provided that $25,452 of disputed Hunters Point Management Enhanced PIP costs were incurred while Hunters Point was part of PG&E's divestiture proposals and, therefore, are consistent with the programs approved in D.00-02-048 and should be recovered through the TCBA.
12. The Stipulation confirms that none of PG&E's QF administrative costs were authorized for recovery in PG&E's 1999 GRC. The ATCP is the appropriate mechanism for recovery of these costs.
13. The Stipulation confirms that the costs and incentive amounts associated with the Mt. Poso Cogen termination and bridging agreements, the San Joaquin Cogen termination agreement, and the Ultrapower Blue Lake termination agreement, are appropriately recorded in the TCBA, but are subject to revisions necessary to reflect final Commission decisions from the proceedings considering those PPA modifications.
14. The Stipulation adopts a reduction of $6,100 to PG&E's requested Big Creek incentive amount as a compromise of the party's positions.
15. The Stipulation concurs with ORA's observation that further entries in the TCBA may be required based on the Commission's decision in I.98-12-013 (relating to the December 8, 1998, San Francisco outage).
16. The Stipulation agrees with ORA that the December 1998 monthly PBOP entry was in error, requiring PG&E to credit the TCBA by $3,082,556 plus interest.
17. The Stipulation agrees with ORA that a June 1999 TCBA credit of $2,468,356 should have included interest of $352,211, requiring PG&E to make an adjustment to address this.
18. The Stipulation agrees with ORA that an erroneous record period debit entry relating to revenues from departing load customers should have been a credit, requiring PG&E to credit the TCBA by $174,878, plus interest.
19. D.00-02-048 in the 1998 ATCP adopted a settlement between PG&E, ORA and CUE which approved, among other things, the reasonableness of the employee transition programs at divested fossil and geothermal plants.
20. PG&E's Bargaining Unit Severance and Displacement Program (called the Bargaining Unit Displacement Program in the settlement) is one of the employee transition cost programs approved by D.00-02-048.
21. Under the 1998 ATCP settlement, and therefore the 1998 ATCP decision, PG&E may recover the costs incurred under the Bargaining Unit Severance and Displacement Program up to a cap of $42.575 million, so long as the employees receiving the payments are eligible to do so, and PG&E has properly identified and recorded the costs.
22. ORA and PG&E have a dispute in this proceeding as to whether 11 employees, who received $500,000 in displacement payments during the record period, were eligible to receive benefits under the specific terms of the Bargaining Unit Severance and Displacement Program.
23. ORA asserts that because the 11 employees were displaced soon after PG&E divested the plants at which they worked, they were not eligible to receive $50,000 payments under the specific terms of the WMP.
24. The Bargaining Unit Severance and Displacement Program provides payments at various times after the Commission approval of PG&E's Pub. Util. Code § 851 application for plant divestiture, which is referred to as the "trigger date."
25. The $50,000 payment is made in conjunction with an employee's displacement or layoff, and therefore may be paid prior to year four in conjunction with the application of the demotion and layoff provisions of the appropriate collective bargaining agreement.
26. Employees are eligible for the $50,000 payment when they are displaced, regardless of whether that occurs prior to year four after the trigger date, so long as it occurs at a plant for which § 851 approval has been granted.
27. These 11 employees were displaced after § 851 approval had been granted for the plants where they were employed.
28. These 11 employees were eligible for and entitled to receive these payments under the Bargaining Unit Severance and Displacement Program, and PG&E is authorized to recover the costs of the payments in the TCBA.
29. ORA and PG&E have a dispute in this proceeding as to the calculation of the net benefit of the Workforce Reduction Program to be returned to ratepayers.
30. In 1993, after the Commission issued its decision in PG&E's 1993 GRC, PG&E announced its WMP. The 1993 GRC decision did not reflect the anticipated effects of the Program on PG&E's workforce.
31. PG&E filed an application shortly after announcing the Program, proposing to return to ratepayers the difference between (1) the amount that was included in the based revenue requirement for 1993, 1994, and 1995, but would not have been included had the 1993 GRC decision reflected the effect of the Program, and (2) the incremental cost of the Program.
32. In D.93-03-025, the Commission established the WRRM account as a memorandum account, to track (1) the reduction in salaries and related overheads due to the Program, and (2) the costs of the Program. The Commission did not determine what ratemaking treatment should result from the information recorded in the WRRM account.
33. The amount that was included in the electric base revenue requirement for 1993, 1994, and 1995, but would not have been included had the 1993 decision reflected the effect of the WMP on PG&E's workforce, is $293 million.
34. The electric portion of the costs of the WMP were $180 million.
35. ORA and PG&E agree that PG&E has returned a total of $107 million to electric ratepayers through reductions in the electric base revenue requirement for 1994 and 1995.
36. ORA and PG&E agree that interest should accrue on the balance of the WRRM.
37. Interest of $8 million has accrued on the WRRM based on the amounts described above.
38. There is no basis for ORA's assertion that a portion of the $180 million of Program costs should not be recovered.
39. To close out the WRRM, PG&E should recover the approximately $2 million through the TCBA.
40. Except as described above, PG&E's entries into the TCBA during the record period were appropriate.
41. During the record period, PG&E operated its geothermal, hydroelectric and pumped storage generation facilities reasonably.
42. PG&E reasonably administered and managed its QF contracts in accordance with Commission decisions. The QF contract modifications, restructurings, amendments and dispute settlements for which PG&E is seeking approval in this proceeding are reasonable.
43. Except for the Big Creek incentive amount to be adjusted as described above, the associated incentive amounts for which PG&E is seeking approval in this proceeding are reasonable and properly recorded in the TCBA.
44. PG&E properly recorded in the TCBA during the record period the amounts for other PPA payments and associated administrative costs, including amounts recorded associated with the WAPA integration agreement.
45. PG&E reasonably administered and managed its other PPA agreements, including the WAPA integration agreement.
46. PG&E's activities in scheduling "must take" resources were reasonable.
47. In addition to the amounts discussed above, PG&E's employee transition costs incurred during the record period were consistent with the terms of the programs approved in last year's ATCP decision, and they are appropriately recorded in the TCBA during the record period.
48. PG&E's transaction costs associated with the divestiture of PG&E's Wave 1 and Wave 2 power plants were reasonable, and they are appropriately recorded in the TCBA.
1. The Settlement before us is reasonable in light of the whole record, consistent with the law and in the public interest, and should be approved.
2. Employees receiving benefits from the employee transition programs during the record period were eligible for the benefits received.
3. Pub. Util. Code § 367 authorizes transition cost recovery of the above market costs associated with QF contracts and other PPAs and the costs to buy-out, buy-down and/or restructure those QF contracts and other PPAs, including administrative and legal costs and shareholder incentive amounts.
4. Further entries in the TCBA may be required based on the Commission's decision in I.98-12-013 (relating the December 8, 1998, San Francisco outage).
5. Further entries in the TCBA may be required based on the Commission's decisions in the proceedings considering the Mt. Poso Cogen termination and bridging .
IT IS ORDERED that:
1. The Stipulation Agreement Between Pacific Gas And Electric Company And The Office Of Ratepayer Advocates Resolving Issues In The 1999 Annual Transition Cost Proceeding (Exhibit 5), attached as Appendix B, shall be adopted.
2. Pacific Gas and Electric Company (PG&E) shall recover through the Transition Cost Balancing Account (TCBA) the $500,000 for payments made to 11 employees under the Bargaining Unit Severance and Displacement Program.
3. PG&E shall close out the Workforce Reduction Rate Mechanism (WRRM) account and recover the undercollection of approximately $2 million through the TCBA.
4. The WRRM docket (A.93-02-047) shall be closed.
5. Within 21 days of the effective date of this decision, PG&E shall file and serve a compliance advice letter to confirm the adjusted entries in its TCBA and related memorandum accounts. The advice letter will become effective after appropriate review by the Energy Division.
6. This proceeding shall remain open to address Hunters Point Power Plant decommissioning issues.
This order is effective today.
Dated , at San Francisco, California.
List of Appearances
Applicant:. Mark R. Huffman, Attorney at Law, for Pacific Gas & Electric Company.
Interested Parties: Steven C. Nelson, Attorney at Law, and Tom Whelan, Sempra Energy, for San Diego Gas & Electric Company; and James P. Scott Shotwell, and Janet K. Lohmann, Attorneys at Law, for Southern California Edison Company; Ellison & Schneider, by Andrew Brown, Attorney at Law, for California Dept. of General Services; Bruno Gaillard, for Enron Corporation; Grueneich Resource Advocates, by Dian Grueneich; Attorney at Law, for City and County of San Francisco; Ellison & Schneider, by Douglas Kerner, Attorney at Law, for Independent Energy Producers; Ronald Liebert, Attorney at Law, for California Farm Bureau Federation; Sutherland, Asbill & Brennan, by Keith McCrea, Attorney at Law, for California Manufacturers Association; Adams, Broadwell, Joseph & Cardozo, by Katherine S. Poole, Attorney at Law, for Coalition of California Utilities; James Weil, for Aglet Consumer Alliance; Norman J. Furuta, Attorney at Law, for Federal Executive Agencies; and Goodin, MacBride, Squeri, Ritchie & Day, by James W. McTarnaghen, Attorney at Law, for himself.
Legal Division: Darwin Farrar, Attorney at Law.
Office of Ratepayer Advocates: Donna-Fay Bower.
Energy Division: Kayode Kajopaiye.
Public Advisor's Office: Rosalina White.
(END OF APPENDIX A)
APPENDIX B
Page 1
STIPULATION AGREEMENT BETWEEN
PACIFIC GAS AND ELECTRIC COMPANY AND THE
OFFICE OF RATEPAYER ADVOCATES RESOLVING ISSUES IN THE 1999 ANNUAL TRANSITION COST PROCEEDING
(APPLICATION NO. 99-09-006)
In accordance with Article 13.5 of the California Public Utilities Commission's (Commission) Rules of Practice and Procedure, the Office of Ratepayer Advocates (ORA) and Pacific Gas and Electric Company (PG&E), by and through their undersigned representatives, enter into this Stipulation Agreement resolving several issues in the 1999 Annual Transition Cost Proceeding, A.99-09-006. As a compromise between their respective litigation positions in A. 99-09-006, PG&E and ORA agree to and support all of the terms of this Stipulation Agreement.
Except for the two unresolved issues identified in Section II., and issues relating to Hunters Point power plant decommissioning costs, this Stipulation Agreement resolves all of the issues between ORA and PG&E in this proceeding.
