4. Positions of the Parties
Comments in response to the Joint Petition were filed on November 30, 2007 by the Division of Ratepayer Advocates (DRA), The Utility Reform Network (TURN), Community Environmental Council (CE Council) and the Natural Resources Defense Council (NRDC).4
DRA, TURN and CE Council urge the Commission to deny the Joint Petition, arguing that revising D.07-09-043 as requested would undermine the balance struck by that decision and skew the possibility of rewards in favor of shareholders. In TURN's view, the modifications proposed by the utilities are contrary to the intended purpose of the adopted risk/reward incentive mechanism because it would "reward program implementation rather than program savings achievement."5 Moreover, TURN contends that the Joint Petition is vague in terms of what ex ante assumptions for load impacts (including net-to-gross ratios) should be used in calculating the interim claims. DRA and TURN also argue that the proposed modifications would serve to inflate ex ante forecasting rather than prudent portfolio management.
If the Commission is inclined nevertheless to grant the Joint Petition, DRA, TURN and CE Council recommend that the Commission revise the earnings rates adopted by D.07-09-043 downward as well.
NRDC supports the Joint Petition, with certain modifications and suggested clarifications. In NRDC's view, the potential swings in ex ante load impact assumptions and ex post results undermine the effectiveness of the shareholder risk/reward incentive mechanism adopted in D.07-09-043. For this reason, NRDC believes that the Commission should handle the true-up of load impacts (including net-to-gross ratios) in different manners for different aspects of the incentive mechanism, as the utilities propose. However, NRDC strongly urges the Commission to adopt a 50% (instead of 30%) hold-back to minimize the risk of earnings overpayment to the utilities. In addition, NRDC suggests that certain clarifications be made to the utilities' proposed changes to D.07-09-043, to ensure that the meaning is clear in all cases. Finally, if the Commission adopts the utilities' Joint Petition, NRDC stresses the importance of using net-to-gross ex ante assumptions during the planning process that incorporate the best-available information, through new evaluation results as they become available.
4 Pursuant to Rule 16.4(g) of the Commission's Rules of Practice and Procedures, the utilities requested permission to submit reply comments, and were granted that permission by the assigned Administrative Law Judge and assigned Commissioner. The utilities jointly filed reply comments on December 10, 2007.
5 Response of TURN to the Amended Petition to Modify D.07-09-043, November 30, 2007, p. 6.
