PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
E-1
ENERGY DIVISION RESOLUTION G-3312
DATE: May 24, 2001
Resolution G-3312. Southern California Gas Company (SoCalGas) requests approval of its Performance-Based Ratemaking (PBR) Mechanism Sharable Earnings Filing for 1999, which details revenue sharing calculations and performance rewards and penalties for 1999. SoCalGas Advice Letter 2938-A is approved effective today.
By Advice Letter 2938 filed on July 10, 2000 and replaced in its entirety by Advice Letter 2938-A filed on September 15, 2000.
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SUMMARY
This Resolution approves the SoCalGas PBR Sharable Earnings Advice Letter (AL) 2938-A filed September 15, 2000 which replaced in its entirety A.L. 2938 filed July 10, 2000. The ALs provide SoCalGas': 1) calculations of earnings to be shared with ratepayers under the existing PBR mechanism, 2) adjustment for actual 1999 customer count, 3) report of its performance under its service quality, customer satisfaction and safety incentives, and 4) results of its core pricing flexibility program activity.
SoCalGas calculates a 1999 rate of return (ROR) subject to sharing of 10.13%. This ROR is 64 basis points above the authorized ROR. Under SoCalGas PBR, shareholders will retain 100 per cent of the earnings up to 25 basis points (0.25%) above the benchmark ROR. Between 25 basis points and 50 basis points (0.50%), shareholders will retain 25 per cent and ratepayers 75 per cent of the earnings. Between 50 basis points (0.50%) and 75 basis points (0.75%) shareholders will retain 35 per cent and ratepayers 65 per cent of the earnings. For 1999, since SoCalGas exceeded its authorized ROR by 64 basis points, ratepayers will retain $8.2 million.
The Company's actual customer count is slightly higher than its estimate made in October 1998. A true-up of base margin using the average recorded number of customers for the year in which the rates were in effect is included as part of the SoCalGas PBR. SoCalGas' authorized revenue requirement will be adjusted to reflect the actual 1999 number of customers on January 1, 2001. SoCalGas' base margin will also be increased by $60,871 to reflect new individual meters resulting from mobilehome master meter conversions in 1999.
SoCalGas reports that its 1999 performance under its customer satisfaction and service quality exceeded targets established in its PBR. SoCalGas PBR provides for a penalty for failure to meet identified targets or lower deadband levels and a reward is provided for exceeding the employee safety target. Since SoCalGas exceeded the targets or lower deadband levels for customer satisfaction and service quality, the Company is not subject to a penalty in 1999 in these performance areas. SoCalGas calculates a reward of $280,000 for exceeding the target for employee safety.
D.97-07-054 and D.98-10-040 authorized a core pricing flexibility program for SoCalGas. Under this arrangement, SoCalGas shareholders are responsible for any reduction in core revenues that may occur due to discounting, while revenue gains will be shared between ratepayers and shareholders. In 1999, SoCalGas achieved a net revenue gain of $305,690 under its core pricing flexibility program.'
