Discussion

The Commission has a clearly established practice of establishing memorandum accounts to allow GRC case decisions delayed past the start of the test year to be effective as if the decisions had not been delayed, notwithstanding the general rule against retroactive ratemaking. Such memorandum accounts were implemented in the last GRC for each of the major California energy utilities. In D.06-10-033, the Commission authorized a memorandum account to leave shareholders and ratepayers essentially indifferent to the actual future date of the delayed GRC decision that would authorize Pacific Gas and Electric Company's (PG&E) Test Year (TY) 2007 revenue requirement. In SCE's last GRC, the Commission issued D.06-01-020, granting a memorandum account to track the eventual decision that had been delayed in that proceeding. Finally, in SDG&E's and Southern California Gas Company's last consolidated GRC, Application (A.) 06-12-009/A.06-12-010, the Commission issued D.07-12-053, which authorized a memorandum account to track the eventual outcome of the final decision (subsequently issued in August 2008) back to the start of the test year, January 1, 2008, although due to circumstances of that proceeding, it left open when revenue requirement adjustments would be effective.

In each of these cases, memorandum accounts were established when it was clear that a final decision would not be issued in a timely manner consistent with the Commission's Rate Case Plan. In SCE's current GRC proceeding, while it has been anticipated that the Commission would issue a final decision prior to December 31, 2008, it is possible that will not happen. Therefore, we will authorize both SCE and SDG&E to establish memorandum accounts as requested. Such authorization advances our previously stated policy objectives of holding utility shareholders and ratepayers harmless for any required procedural delays, removing incentives for any party to seek or promote delay, and providing parties and decision makers with sufficient time to review and analyze the record.

To the extent needed, the disposition of the memorandum accounts will be addressed in the final decision.