The Catastrophic Event Memorandum Account Proceeding

PG&E's Application 06-11-005 asked for review of and authorization to recover $60.87 million of costs arising from the 2005-2006 New Year's storms and the July 2006 heat storm. On July 26, 2007, the Commission dismissed PG&E's request for recovery of costs arising from the July 2006 heat storm. (See Decision 07-07-041.) As a result, PG&E's request for recovery of costs was reduced to $22.84 million ($8.16 million in expense and $14.68 million in capital) of costs arising from the restoration of service and repairs following the 2005-2006 New Year's storms. The $22.84 million of costs would translate into a total revenue requirement of $18.85 million to be recovered over the 2008 through 2010 period. PG&E's June 11, 2007 updated testimony reduced the expense portion of its request by $0.02 million and excluded $0.05 million of capital costs that were still classified as Construction Work in Progress as of April 30, 2007.

After conducting discovery and analysis on PG&E's showing, DRA served a report on July 6, 2007 that recommended a reduction of $12.027 million ($5.68 million in expense and $6.347 million in capital) of the original costs requested by PG&E. Based on its investigation and audit of PG&E's showing, DRA argued that PG&E did not demonstrate the incremental nature of some of the costs. DRA also argued that PG&E did not provide sufficient documentation of some of the costs.

PG&E's July 27, 2007 rebuttal testimony argued that its costs are justified and are incremental to those authorized in base rates, but agreed that $0.82 million in capitalized Administrative and General (A&G) costs should be removed from PG&E's request. The net result of the changes is that PG&E's updated requested revenue requirement for the 2005 through 2010 time period for the 2005-2006 New Year's storms is $18.31 million.