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 __________. Reply comments were received on September 20 from ________________.
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 the costs-follows-contracts methodology is not equitable.
4. The Proposed Settlement relies upon a flawed forecast of future above-market costs.
5. 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.
6. No party's litigation position proposed an equitable allocation methodology.
7. The pro rata allocation methodology adopted in D.02-12-045 was generally equitable, but the residual calculation approach used in that decision was flawed.
8. Several parties proposed fairness metrics for evaluating allocation methodologies. Avoidable DWR contract costs were previously allocated in D.02-09-053.
9. Avoidable DWR contract costs were previously allocated in D.02-09-053.
10. 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. The parties' fairness metrics provide an equitable basis for determining a permanent allocation.
5. The pro rata allocation methodology adopted in D.02-12-045 provides a reasonable starting point for a permanent allocation.
6. The residual calculation approach used in D.02-12-045 should be replaced with a separate calculation of fixed costs.
7. DWR should establish utility specific balancing accounts.
8. 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.
2. The Proposed Settlement is not adopted.
3. The allocation of variable costs previously adopted in Decision (D.) 02-09-053 remains unchanged.
4. The allocation of fixed costs of DWR's revenue requirement is: Pacific Gas and Electric Company - 43.75%, Southern California Edison Company - 43.75%, and San Diego Gas & Electric Company - 12.5%.
5. Pursuant to D.04-01-028, the allocation methodology is applied retroactively to January 1, 2004.
6. The utilities are directed to work with DWR to implement utility specific balancing accounts, as described above.
7. The details of the allocation methodology we adopt are set forth in Appendix A.
8. 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.
9. This order is effective immediately.
This order is effective today.
Dated , at San Francisco, California.
APPENDIX A
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) |
75,037,233 |
76,032,000 |
17,916,427 |
168,985,660 |
11 |
Percentages |
44.4% |
45.0% |
10.6% |
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 |
($614,604,886) |
($886,338,351) |
($341,897,836) |
($1,842,841,072) |
15 |
Result: CFC Net of IOU-specific AMC |
$1,128,959,740 |
$1,384,777,010 |
$501,812,637 |
$3,015,549,388 |
16 |
Add back: pooled and re-allocated AMC |
$818,304,316 |
$829,152,559 |
$195,384,197 |
$1,842,841,072 |
17 |
Final Allocation of DWR contract Costs |
$1,947,264,056 |
$2,213,929,569 |
$697,196,834 |
$4,858,390,460 |
18 |
|||||
19 |
Adopted Allocator of Non-Contract Costs and Revenues |
40.7% |
45.4% |
13.9% |
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 |
($18,078,332) |
($215,013,323) |
($39,486,934) |
($272,578,590) |
23 |
Subtotal: Allocated DWR Costs |
$1,800,979,757 |
$1,855,870,021 |
$613,882,301 |
$4,270,732,079 |
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 |
$1,700,389,070 |
$1,897,178,279 |
$673,164,730 |
$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 |
$1,596,076,320 |
$1,792,514,379 |
$641,045,400 |
$4,029,636,099 |
28 |
|||||
29 |
Calculate of 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 |
$0.07548 |
$0.08181 |
$0.08014 |
$0.07893 |
32 |
Adjustment to Match DWR Operating Account Balance |
($0.00091) |
($0.00091) |
($0.00091) |
($0.00091) |
33 |
Adopted IOU Power Charges |
$0.07457 |
$0.08090 |
$0.07923 |
$0.07802 |
(END OF APPENDIX A)
