7. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner and David K. Fukutome is the assigned ALJ in this proceeding.

1. The Settlement Agreement is unopposed.

2. The Settlement Agreement was signed by 17 of the 20 active parties in this proceeding. The Settling Parties represent a variety of interests other than that of PG&E.

3. The record in this proceeding supports reductions to PG&E's request but not to the full extent advocated during this proceeding by the various other parties.

4. The fact that a large number of parties with diverse interests and recommendations were able to reach a compromise that is acceptable from their various viewpoints provides assurance that the overall result of the Settlement Agreement is reasonable.

5. Aside from the effects of the one issue that was not resolved, the test year 2011 revenue requirements for electric distribution, gas distribution, and electric generation, as depicted in the Settlement Agreement, are consistent with the record and reasonable.

6. The 2012 and 2013 attrition increases for electric distribution, gas distribution, and electric generation, as depicted in the Settlement Agreement, are consistent with the record and reasonable.

7. The Settlement Agreement also includes a number of guidelines and directions that are consistent with the record and reasonable, and address:

· Retention of the Vegetation Management Balancing Account.

· Allocation of work credits for Rule 20A projects.

· Allocation of electric RD&D project costs between generation and distribution, and, with certain limitations, placement of project results in the public domain.

· Establishment of the Distribution Integrity Management Program and an associated one-way balancing account.

· Treatment of the postretirement benefits other than pensions and long term disability balancing account and associated costs.

· Treatment of certain Diablo Canyon Power Plant labor costs as operating expense rather than capital expenditures.

· Cost recovery treatment and guidelines related to the Diablo Canyon Steam Generator Replacement Project, Gateway Settlement Balancing Account, Colusa Generating Station, Humboldt Bay generating station, Hunters Point Power Plant site, and nuclear fuel payments.

· Below-the-line treatment of customer retention costs incurred by the Customer Care organization.

· Requiring an independent audit of PG&E's SmartMeter-related costs.

· Continuation of the SmartMeter Benefits Realization Mechanism.

· Treatment of the Commission's consultant costs for the SmartMeter evaluation as an eligible cost in the SmartMeter balancing accounts.

· Commitment of PG&E to file an application by January 1, 2012 to comprehensively reassess all of its DA and CCA fees.

· Rejection of reconnection fee adjustments.

· Approval of 8:30 a.m. to 5:00 p.m. as local office hours.

· Reduction of Non-sufficient Funds Fee to $9 from the current level of $11.50.

· Modification of PG&E's Below-the-Line Guidelines.

· Treatment of employee transfers from affiliates.

· Guidelines for meal expense records.

· Recovery of nuclear fuel and fuel oil carrying costs at short-term commercial paper rates.

· Removal of all Market Redesign and Technology Upgrade related revenue requirements from this proceeding.

· Denial of PG&E's requests for new balancing accounts for health care costs, New Business/WRO/Rule 20 renewable energy projects, uncollectibles, emergencies and catastrophic events, and RD&D expenses.

· Use of the adopted 2011 rate base amounts in developing revenue requirements from future cost of capital proceedings.

· Use of adopted 2011 administrative and general expenses for use in determining administrative and general expenses in related proceedings, if needed.

· Approval of the Memorandum of Understanding between DisabRA and PG&E.

· Elimination of the requirement for PG&E to prepare total factor productivity studies.

· Elimination of the requirement for PG&E to include information about long-term incentives that are not funded by ratepayers, in future total compensation studies.

· Review of the Results of Operations model for use in PG&E's next GRC.

· Justification of new types of costs in the next GRC.

· Suspension of Allowance for Funds Used During Construction accruals for the ten Transform Operations projects identified by TURN.

· Employee training and hiring testimony requirements for PG&E in its next GRC.

8. An annual information-only report with the information described herein that is submitted by PG&E to the Energy Division and interested parties will allow the Commission and parties to monitor PG&E's expansion of NTP&S into areas already being offered by the other major energy utilities.

9. PG&E's experience for the current advice letter approval process for new NTP&S is eight months to one year for approval.

10. A reprioritization process is expected and is necessary for the utility to manage its operations in a safe and reliable manner.

11. Despite any financial implications of exceeding authorized cost levels, the utility has the responsibility to spend what is necessary to ensure safe and reliable service.

12. Reprioritization and cost deferrals undermine the basis for the Commission's determination of the reasonableness of the utility's GRC request and the extent of the authorized revenue requirement.

13. Reprioritized needs and associated costs may not result in the most efficient use of funds.

14. Due to the Commission's responsibilities and concerns regarding gas pipeline safety there is a need for additional reporting requirements related to gas distribution pipelines.

15. PG&E is financially healthy and has very strong access to capital because of its strong balance sheet and its ability to raise capital from both equity and debt financing.

16. For the period covered by this GRC, the Settlement Agreement will provide PG&E with sufficient revenues to maintain its financial health, provide adequate service, and make necessary capital investments.

17. The Settlement Agreement advances the public interest because it sets forth a compromise that significantly reduces the revenue sought by PG&E while providing PG&E a test year revenue requirement increase and predictable attrition allowance.

18. The Settlement Agreement furthers the public interest (such as safe and reliable service, ratepayer safeguards, and levelized competitive playing fields) by:

· Retaining the current one-way Vegetation Management Balancing Account, whereby any unspent amount will be returned to ratepayers.

· Allowing communities with Rule 20 undergrounding projects already in progress to continue with their projects even if they exceed the 5-year allowable borrowing period.

· Establishing a one-way balancing account mechanism for the gas related Distribution Integrity Management Program that covers developments and improvements in such areas as preventative maintenance, leak surveys, operator qualifications and training. Any net unspent funds from this program will be returned to customers in the next GRC.

· Allowing PG&E to file a subsequent application to recover additional site-specific environmental remediation costs to the extent necessary to accommodate the development plan ultimately adopted for the Hunters Point site.

· Requiring PG&E to record customer retention costs incurred by its Customer Care organization below-the-line.

· Committing PG&E to file an application by January 1, 2012 to comprehensively reassess all of its DA and CCA service fees.

· Modifying PG&E's below-the-line guidelines to provide for an annual compliance review, as well as identification of additional below-the-line activities and more thorough accounting and employee training.

· Advocating Commission approval of the MOU between PG&E and DisabRA regarding accessibility and safety issues for the disabled.

· Providing for an independent audit, at PG&E's expense, to ensure proper booking and allocation of costs and benefits related to PG&E's SmartMeter program and evaluate whether PG&E's internal cost management guidelines are adequate to ensure that all labor and non-labor costs are properly booked to the SmartMeter balancing account.

19. The Commission encouraged the electric utilities, including PG&E, to consider and implement AMI. PG&E responded with an initial AMI proposal in June 2005 (A.05-06-028) and a revised proposal in December 2007 (A.07-12-009).

20. In both A.05-06-028 and A.07-12-009, PG&E proposed to reduce both the electric plant in service balance and the depreciation reserve balance by the original cost of the electromechanical electric meters that are replaced by SmartMeters. This produces a result that is the same as leaving the retired meters in plant, continuing depreciation over the estimated life of that asset and receiving a rate of return on the undepreciated balance.

21. No party addressed PG&E's retired meter proposal in either A.05-06-028 or A.07-12-009.

22. Neither D.06-07-028 nor D.09-03-026 contains specific discussion of PG&E's ratemaking proposal for retired meters or includes findings, conclusions or ordering paragraphs in which this issue is specifically identified.

23. Neither the magnitude of the net plant balance for prematurely retired meters, nor the associated rate of return costs were identified in PG&E's prior AMI testimony.

24. With respect to the retired meter issue, parties have made a number of arguments and cited precedential Commission actions that are relevant and significant, but which were never brought up and considered in the prior AMI proceedings.

25. In D.09-03-026, the Commission found PG&E's SmartMeter Upgrade proposal to be cost-effective, in that estimated incremental benefits are expected to exceed incremental estimated costs.

26. Electromechanical electric meters replaced by SmartMeters are no longer used and useful.

27. While the Commission has determined that plant which is not used and useful should be excluded from rate base (and therefore excluded from earning a rate of return), the Commission has also made exceptions to this general policy.

28. There are Commission precedents for denying or reducing the rate of return associated with plant that is not, or is no longer, used and useful.

29. There are Commission precedents for the accelerated cost recovery of plant that is not, or is no longer, used and useful.

30. While the Commission decided to amortize the net plant associated with retired meters over six years, in the ALJ proposed decision and the assigned Commissioner alternate proposed decision, the associated revenue requirements were not calculated using a completely revised results of operations model.

31. The circumstances related to the issues resolved in D.83-08-031 are not the same as those related to the retired meter issue in this proceeding.

32. Any additional implicit SmartMeter benefits due to the Commission's resolution of the retired meter issue in this proceeding further substantiates the Commission's decision to approve PG&E's SmartMeter program that was determined to be marginally cost-effective at that time. That there may be additional benefits does not disadvantage PG&E.

33. That PG&E demonstrated that its proposed treatment of the meters is consistent with the Commission's decisions in its AMI proceedings is sufficient for meeting its initial burden of proof with respect to the retired meter issue.

34. There is no certainty as to when, or even if, legislation necessary to implement TURN's alternative securitization proposal would be undertaken and finalized.

35. There is no record as to what an appropriate level would be for a market based rate or a short-term interest rate and why it would be appropriate to use either rate in addressing the particular circumstances of the retired meter issue.

36. Greenlining's request for final oral argument is inconsistent with the requirements for presenting such argument, as detailed in the March 5, 2010 Scoping Memo. Also, the retired meter issue, the only issue not settled, was thoroughly briefed by a number of parties. A final oral argument is not necessary.

1. The Settlement Agreement, as modified by this decision, is consistent with law, reasonable in light of the record and in the public interest.

2. The Settlement Agreement, as modified by this decision, should be adopted.

3. PG&E should be allowed to offer NTP&S that are already being offered by the other major energy utilities in a more expeditious manner than is currently available.

4. PG&E should be allowed to provide NTP&S categories already approved for other California energy utilities subject to an annual information-only report to the Energy Division and other interested parties that describes PG&E's specific plans for expansion into these other areas.

5. In order for the Commission to better understand the ongoing effects of reprioritizations and deferrals, PG&E should provide expense and capital expenditure information for electric distribution, electric generation, and gas distribution, as detailed in the body of this decision.

6. PG&E should submit gas distribution pipeline safety reports to the Directors of the Commission's Consumer Protection and Safety Division and Energy Division, as detailed in Attachment 5 to this decision.

7. There is good reason to believe that PG&E's ratemaking proposal for retired meters was not fully understood and considered by the Commission in PG&E's two prior AMI proceedings.

8. The Commission should fully examine the retired meter issue in this proceeding and determine whether the outcome in D.09-03-026 is just or needs to be changed.

9. Since the cause of the wholesale electromechanical meter retirements was the Commission's encouragement for utilities to implement AMI and the SmartMeters that replaced them were determined to be cost-effective, it is reasonable to grant a rate of return on the unamortized net plant balance associated with those retired meters.

10. Consistent with prior Commission decisions, it is reasonable to accelerate the amortization of the net plant balance associated with electromechanical electric meters replaced by SmartMeters to six years.

11. In order to reflect reduced regulatory risk, it is reasonable to reduce the rate of return on equity to 6.55% in calculating the applicable rate of return for the unamortized net plant balance associated with electromechanical electric meters replaced by SmartMeters.

12. With respect to the amortization of retired meters replaced by SmartMeters, PG&E should be allowed to file a compliance advice letter that sets forth the annual amortization schedule base on the reduced rate of return. This amortization schedule should then be used to determine any incremental recovery amounts related to state and federal income taxes, to the extent the information is a part of the results of operations data base for this proceeding and is consistent with the manner in which the results of operations model calculates revenue requirements.

13. In calculating the associated revenue requirements for the compliance advice letter filing, PG&E should, to the extent possible, reflect any remaining state tax depreciation and federal tax and book depreciation as deductions over the six year amortization period; to the extent applicable, reflect any increased state taxes as increased deductions for calculating federal income taxes; and reflect any other standard ratemaking adjustments that would lower the revenue requirements.

14. Greenlining's request for final oral argument in this proceeding should be denied.

ORDER

IT IS ORDERED that:

1. The general rate case settlement, dated October 15, 2010, which resolves all but one issue in this consolidated proceeding, is adopted with modifications and clarifications. Modifications impose additional requirements for certain new non-tariffed products and services, reprioritization and cost deferrals, and gas distribution pipeline safety reporting. With respect to clarification, Commission staff, to be designated by Commission management, shall oversee the independent audit of the booking and allocation of SmartMeter costs and benefits and the adequacy of related Pacific Gas and Electric Company guidelines. Also, to the extent that this decision adopts a different ratemaking treatment than proposed by either Pacific Gas and Electric Company or The Utility Reform Network regarding the appropriate rate of return on meter devices, the general rate case settlement is modified in that respect.

2. Pacific Gas and Electric Company is authorized to recover, through rates and through authorized ratemaking accounting mechanisms, over the remainder of 2011 the (i) revenue requirement set forth in Appendix A (Modified) of Attachment 3 to this decision, less (ii) the amount collected by Pacific Gas and Electric Company in base rates since January 1, 2011, and prior to the implementation of the revenue requirement authorized by this decision, plus
(iii) interest on the difference between (i) and (ii), with said interest based on the rate for prime, 3-month commercial paper reported in Federal Reserve Statistical Release H-15.

3. Within 30 days from the effective date of this decision, Pacific Gas and Electric Company shall file a Tier 1 advice letter with revised tariff sheets to implement (i) the revenue requirement authorized by this decision, and (ii) all accounting procedures, fees, and charges authorized by this decision that are not addressed in the other advice letters required by this decision. The revised tariff sheets shall (a) become effective on filing, subject to a finding of compliance by the Commission's Energy Division, (b) comply with General Order 96-B, and
(c) apply to service rendered on or after their effective date.

4. Pacific Gas and Electric Company is authorized to implement the attrition revenue requirement increases for the years 2012 and 2013 as detailed in Appendix C of Attachment 1 to this decision. The attrition increases may be implemented by advice letter.

5. Pacific Gas and Electric Company shall retain its current one-way Vegetation Management Balancing Account and the separate tracking account described in the "Incremental Inspection and Removal Cost Tracking Account Accounting Procedure" in Pacific Gas and Electric Company's Electric Preliminary Statement Part BU, and the annual cap for both accounts shall be set at $161 million (Fully Burdened dollars).

6. Pacific Gas and Electric Company shall allocate work credits at the same level and in the same amount as Pacific Gas and Electric Company's Rule 20A annual budgeted project amount for 2010, in order to stop the escalation of work credit allocations. Communities with projects already in progress shall be allowed to continue with their projects, even if they exceed the 5-year allowable borrowing period under the modified Rule 20A allocation method adopted herein.

7. Electric Research Development and Demonstration project costs shall be reasonably allocated between generation and distribution as Pacific Gas and Electric Company preliminarily outlined in Table 31-2, Exhibit PG&E-18 v3c, at 31-11 (except for energy storage, for which Pacific Gas and Electric Company has revised its forecast allocation to 50/50 generation/distribution) and, for the test year 2011 general rate case cycle, the results of Pacific Gas and Electric Company's prospective electric Electric Research Development and Demonstration projects described in Exhibit PG&E-18 v3c, Chapter 31 shall be placed in the public domain to the extent allowed by grid security considerations.

8. Pacific Gas and Electric Company shall create a new major work category for its Distribution Integrity Management Program. There shall be a one-way balancing account mechanism with a cap of $60 million for Distribution Integrity Management Program costs for the term of the general rate case cycle
(2011-2013). Any unspent Distribution Integrity Management Program funds at the end of this general rate case cycle shall be returned to customers in the next general rate case.

9. Pacific Gas and Electric Company's current postretirement benefits other than pensions/long term disability balancing account shall remain a one-way account. The estimate of total contributions for 2011 to the postretirement benefits other than pensions medical and life, and long term disability trusts will be $163.3 million (total company before allocation to capital and other
non-general rate case Unbundled Cost Categories). This total amount shall also apply to the attrition years. In compliance with Decision (D.) 92-12-015 and
D.95-12-055, Pacific Gas and Electric Company will file a consolidated true-up of the revenue requirements associated with the postretirement benefits other than pensions medical, life, and long term disability contributions at the end of the 2011 general rate case cycle.

10. Pacific Gas and Electric Company shall treat Diablo Canyon Power Plant labor costs associated with spent nuclear fuel removal, drying, loading, and encapsulation as operating expense, not capital expenditures.

11. The cost of the Diablo Canyon Steam Generator Replacement Project shall be recovered in generation rates without the need for further reasonableness review.

12. Pacific Gas and Electric Company shall transfer the balance in the Gateway Settlement Balancing Account to the Utility Generation Balancing Account when the total costs of the project are known, and Pacific Gas and Electric Company shall close out the Gateway balancing account at that time.

13. With respect to the true-up of the initial cost of the Colusa Generating Station, Pacific Gas and Electric Company is authorized to file an advice letter to true-up the project's initial capital cost, subject to the requirements of
Decision 06-11-048, when the final project costs are known.

14. With respect to the true-up of the initial cost of Humboldt Bay Generating Station, Pacific Gas and Electric Company is authorized to file an advice letter to true-up the project's initial capital cost, subject to the requirements of
Decision 06-11-048, when the final project costs are known.

15. With respect to the recovery of costs in excess of the authorized initial cost of Humboldt Bay Generating Station, Pacific Gas and Electric Company is authorized to increase the initial capital cost target approved for the project by up to $25 million by advice letter to the extent the project's actual costs exceed the initial cost target. If the actual project costs exceed the cap by more than
$25 million, Pacific Gas and Electric Company shall file an application with the Commission demonstrating the reasonableness of any excess amounts.

16. Pacific Gas and Electric Company may file a subsequent application to recover additional site-specific environmental remediation costs to the extent necessary to accommodate the development plan ultimately approved for the Hunters Point Power Plant site.

17. Pacific Gas and Electric Company shall provide in its next general rate case a status report on spent nuclear fuel payments made to the U.S. Department of Energy, associated lawsuits, and responsibility for the costs of on-site spent fuel storage at Pacific Gas and Electric Company facilities.

18. During the test year 2011 general rate case cycle, Pacific Gas and Electric Company shall record the customer retention costs incurred by its Customer Care organization below-the-line.

19. At Pacific Gas and Electric Company's expense, Commission staff shall oversee an independent audit of Pacific Gas and Electric Company's
SmartMeter-related costs to determine whether costs that should have been recorded in the SmartMeter balancing accounts were instead recorded in other accounts. The cost to Pacific Gas and Electric Company of the audit shall not exceed $200,000 and shall be recoverable through the SmartMeter balancing accounts.

20. The SmartMeter Benefits Realization Mechanism adopted by the Commission in Decision (D.) 06-07-027 and D.09-03-026 shall be continued through the 2011 general rate case cycle, with adjustments as specified in the general rate case settlement, dated October 15, 2010.

21. The Commission's consultant costs for the SmartMeter evaluation described in Exhibit PG&E-13 shall be treated as any other eligible costs in the SmartMeter balancing accounts.

22. Direct Access and Community Choice Aggregation fees shall be conditionally adopted as proposed. Pacific Gas and Electric Company shall file an application by January 1, 2012 to comprehensively reassess all of its Direct Access and Community Choice Aggregation service fees. Pacific Gas and Electric Company is allowed to cease recording costs and revenues to the Direct Access Discretionary Cost/Revenue Memorandum Account, pending review of the account balance in the upcoming application.

23. Pacific Gas and Electric Company's proposal to adjust reconnection fees is denied.

24. Pacific Gas and Electric Company's proposal to adjust local office hours is adopted.

25. Pacific Gas and Electric Company's Non-sufficient Funds Fee is reduced to $9 from its current level of $11.50.

26. Pacific Gas and Electric Company shall modify its current Below-the-Line Guidelines to provide for:

(1) Establishment and maintenance of above-the-line and
below-the-line orders that would provide sufficient detail to identify discrete matters and/or activities and to enable the undertaking of an annual compliance review. This compliance review shall be undertaken by Pacific Gas and Electric Company and shall be made available to interested parties on an annual basis.

(2) Below-the-line accounting for certain Pacific Gas and Electric Company activities, including all marketing and lobbying activities, in response to initiatives or proposals of local agencies for municipalization or for the formation or ongoing activities of Community Choice Aggregators, not just activities in response to ballot measures.

(3) Annual e-mails to all employees regarding their obligation to comply with the Below-the-Line Guidelines, including the name(s) and contact information for persons to contact with questions, and a link to the guideline document.

(4) Annual training on Below-the-Line Guidelines for departments that regularly direct charge to below-the-line orders.

(5) Extending applicability of Below-the-Line Guidelines to Pacific Gas and Electric Company Corporation employees.

27. During the term of this 2011 test year general rate case cycle, Pacific Gas and Electric Company shall not accept a permanent transfer of an employee from an affiliate (including Pacific Gas and Electric Company Corporation) unless Pacific Gas and Electric Company is able to demonstrate that there was a need for that employee, that the employee was fully qualified for the position compared to other persons (including non-employees) that may be reasonably available to Pacific Gas and Electric Company, and that the compensation to be paid the employee is within market range. Prior to any such transfer, Pacific Gas and Electric Company shall memorialize its assessment of need and qualifications, including whether Pacific Gas and Electric Company interviewed other candidates to fill the position. To the extent that costs associated with such transfer of employees are sought in the next general rate case, Pacific Gas and Electric Company shall make its assessments available to interested parties in the next general rate case.

28. Concerning meals expenses, Pacific Gas and Electric Company shall keep records of business reasons for all meals, the number of attendees, and, where practical, a list of attendees by the dates shown below: (1) Beginning January 1, 2011, all meals over $1,000, whether the meals are billed through Concur Central, to commercial credit cards, or to any other program or system Pacific Gas and Electric Company uses to track the expenses; (2) Beginning April 1, 2011, all meals under $1,000, billed through Concur Central; and (3) Beginning July 1, 2011, all meals under $1,000, purchased through Commercial Credit cards or similar types of credit cards.

29. Nuclear fuel and fuel oil carrying costs shall continue to be recovered through the Energy Resource Recovery Account at short-term commercial paper rates.

30. Pacific Gas and Electric Company's requests for new balancing accounts for health care costs; New Business/Work at the Request of Others/Rule 20A; renewable energy projects; uncollectibles; emergencies and catastrophic events; and research development and demonstration expenses are denied. Pacific Gas and Electric Company shall continue with current electric and gas sales mechanism balancing accounts (Distribution Revenue Adjustment Mechanism, Utility Generation Balancing Account, Core Fixed Cost Account, and Noncore Distribution Fixed Cost Account) through 2013.

31. The resulting revenue requirements from future cost of capital proceedings shall be calculated using the adopted 2011 rate base amounts.

32. Administrative and general expenses allocated to the Unbundled Cost Categories adopted in this 2011 general rate case shall be used in determining the administrative and general expenses in related proceedings in 2011 and future years until Pacific Gas and Electric Company's next test year general rate case, if the outcome of those proceedings would otherwise require specific calculation of administrative and general expenses. Specifically, the Unbundled Cost Categories and related proceedings are: Gas Transmission (Gas Accord III and subsequent Pacific Gas and Electric Company Gas Transmission and Storage proceedings) and Nuclear Decommissioning (including SAFSTOR), the 2009 Nuclear Decommissioning Cost Triennial Proceeding and subsequent Nuclear Decommissioning Cost Triennial Proceeding filing.

33. The Memorandum of Understanding between Disability Rights Advocates and Pacific Gas and Electric Company included in Exhibit PG&E-16 as Attachment A is approved.

34. The Aglet Consumer Alliance proposal to eliminate the requirements of Decision 86-12-095 that requires Pacific Gas and Electric Company to prepare total factor productivity studies is adopted.

35. Pacific Gas and Electric Company is relieved of the requirement in Decision 04-05-055 to include information about long-term incentives, which are not funded by ratepayers, in future total compensation studies.

36. Prior to submission of a Results of Operation model in Pacific Gas and Electric Company's Notice of Intent to file its next general rate case application, the Division of Ratepayer Advocates and Pacific Gas and Electric Company shall review Pacific Gas and Electric Company's Excel-based Results of Operation model used for the 2011 general rate case, and jointly determine what changes should be made to enhance the model.

37. In future general rate cases, Pacific Gas and Electric Company shall not add a new type of cost to the revenue requirement without estimating and including in the revenue requirement the cost savings to be achieved by the new type of cost or an explanation of the reasons there will be no cost savings.

38. Pacific Gas and Electric Company shall suspend Allowance for Funds Used During Construction accruals for the ten Transform Operations projects identified by The Utility Reform Network. Pacific Gas and Electric Company shall ensure that future requests for capital recovery of the projects do not include Allowance for Funds Used During Construction for the period starting with the dates (November 2008 for seven projects, and February 2009 for three projects) identified in The Utility Reform Network's testimony and continuing until spending on the projects resumes.

39. In its next general rate case, Pacific Gas and Electric Company shall submit testimony on the status of its workforce training programs. Pacific Gas and Electric Company shall also submit testimony on the status and other results of its program for hiring in advance of employee attrition at the Diablo Canyon Power Plant and its request for additional hydroelectric department engineering and project management resources.

40. Pacific Gas and Electric Company shall provide an annual
information-only report to the Energy Division that describes, on a prospective basis, Pacific Gas and Electric Company's specific plans for expansion into any of the areas currently authorized for the other utilities. As part of the report, Pacific Gas and Electric Company shall identify 1) the underutilized or excess capacity acquired for the non-tariffed products and services; 2) the steps that will be taken by Pacific Gas and Electric Company to ensure that the project will not affect the quality or cost of the utility service; and 3) proof that the expanded non-tariffed products and services will not distort non-utility markets or be anticompetitive. The report shall be made available to the parties to this proceeding as well as the parties in Rulemaking 05-10-030. Pacific Gas and Electric Company shall not offer any such expanded service until at least 30 days after the issuance of the annual information-only report.

41. Pacific Gas and Electric Company's costs and revenues associated with the expansion of non-tariffed products and services shall be treated on a cost of service basis. Pacific Gas and Electric Company's proposals concerning the 50/50 net revenue sharing mechanism and a sharing mechanism for shareholder capital is not adopted.

42. Pacific Gas and Electric Company shall provide the following expense and capital expenditure information for electric distribution, electric generation, and gas distribution.

Within 90 days of the issuance of this decision:

· Pacific Gas and Electric Company's authorized budgeted amounts for 2011, as of January 31, 2011, by major work category, with an explanation of any differences with what is assumed in the Settlement Agreement for 2011.

By March 31, 2012:

· Pacific Gas and Electric Company's authorized budgeted amounts, by major work category, for 2012, as of January 31, 2012.

· The recorded amounts for 2011, by major work category, with explanations for significant deviations from Pacific Gas and Electric Company's January 31, 2011 authorized budget for 2011.

By March 31, 2013:

· Pacific Gas and Electric Company's authorized budgeted amounts, by major work category, for 2013, as of January 31, 2013.

· The recorded amounts for 2012, by major work category, with explanations for significant deviations from Pacific Gas and Electric Company's January 31, 2012 authorized budget for 2012.

This information shall be provided through compliance filings in this docket. Energy Division shall report to the Commission if it observes any spending patterns that are of concern with respect to the provision of safe and reliable service.

43. In its next general rate case, as part of its showing, Pacific Gas and Electric Company shall fully describe any reprioritizations and deferrals of costs explicitly identified in the Settlement Agreement or costs that can reasonably be imputed from the Settlement Agreement. Pacific Gas and Electric Company shall fully explain its reprioritization process, justify deferrals of specific activities and projects, and justify the implemented higher reprioritized activities and projects that were not identified in this general rate case. For activities and projects that were deferred and are now being re-requested, Pacific Gas and Electric Company shall fully explain why they are needed now when they were able to be deferred before.

44. Pacific Gas and Electric Company shall submit gas distribution pipeline safety reports to the Directors of the Commission's Consumer Protection and Safety Division and Energy Division. The requirements of the reports are detailed in Attachment 5 to this decision. Reports shall cover activity over six month periods and continue until further notice of the Commission.

45. The undepreciated balance of electromechanical electric meters replaced by SmartMeters, amounting to $340,966,000, shall be amortized over the six-year period 2011 through 2016. The applicable rate of return on the unamortized balance shall be 6.3%. As part of Pacific Gas and Electric Company's test year 2014 general rate case, the applicable rate of return used for the retired electromechanical meters for the years 2014 through 2016 may be modified to reflect the most recent authorized returns for long-term debt, preferred stock, and a recalculated return on equity equal to the average of the most recent
long-term debt rate and otherwise applicable return on equity. Whether the remaining balance should be amortized on a levelized or declining basis may also be addressed at that time.

46. With respect to the amortization of retired meters replaced by SmartMeters, Pacific Gas and Electric Company may file a Tier 2 advice letter that sets forth additional revenue requirements for this general rate case cycle on a levelized basis consistent with the discussion in this decision. In no event shall such additional revenue requirements exceed $15 million for this general rate case cycle. Such additional revenue requirements shall become effective when approved, retroactive to January 1, 2011. In the advice filing, Pacific Gas and Electric Company shall also include a schedule setting forth the actual amortization of retired meters over this general rate case cycle, which shall be used as a basis for determining the retired metered costs in Pacific Gas and Electric Company's next general rate case covering the period 2014 to 2016.

47. The Joint Comparison Exhibit, dated July 30, 2010, is identified as Exhibit PG&E-69 and is received in evidence.

48. Energy Division workpapers, which support the Administrative Law Judge's proposed decision, are identified as Exhibit ALJ-1. Workpapers supporting the assigned Commissioner's alternate decision are identified as Exhibit ALJ-2. Workpapers supporting the assigned Commissioner's revised alternate decision are identified as Exhibit ALJ-3. Exhibits ALJ-1, ALJ-2, and
ALJ-3 are received in evidence.

49. The Greenlining Institute's request for final oral argument is denied.

50. Application 09-12-020 and Investigation 10-07-027 are closed.

This order is effective today.

Dated May 5, 2011, at San Francisco, California.

I reserve the right to file a concurrence.

/s/ TIMOTHY ALAN SIMON

Commissioner

I abstain.

/s/  MICHEL PETER FLORIO

I dissent.

/s/ CATHERINE J.K. SANDOVAL

Commissioner

I reserve the right to file a concurrence.

/s/ MARK FERRON

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