II. GENERATION MEMORANDUM ACCOUNT REVENUES

The Utilities allege that the Accounting Decision errs in crediting Generation Memorandum Account (GMA) revenues to the TRA to offset procurement costs. They argue that, as with the netting of the TCBA and the TRA, this accounting change is confiscatory and illegally retroactive. In addition, the Utilities maintain that transferring the GMA overcollections to the TRA violates section 367 (b), which they claim requires these revenues to go toward transition cost recovery. PG&E also maintains that it is error to allow only credits, and not debits, to be transferred from the GMA, because therefore generation costs will go uncollected. These arguments are unconvincing.

For the reasons discussed in the preceding sections, applying the GMA revenues to operating costs through the TRA is not legal error. The accounting change is necessary to effectuate the purposes of AB 1890, which provides that the utilities are at risk for whether they will be able to recover all their transition costs. The change is not confiscatory and there is no prohibition against its limited retroactive impact.

The Utilities' arguments concerning section 367 (b) are based on a misinterpretation of that section. According to the Utilities, section 367 (b) requires the value of generation assets that are above book value to go toward recovery of transition costs. Section 367 (b) provides, in relevant part:

These uneconomic costs [which the commission shall identify] ... shall:

(b) Be based on a calculation mechanism that nets the negative value of all above market utility-owned generation-related assets against the positive value of all below market utility-owned generation related assets.

Contrary to the Utilities' contentions, this section merely provides a method for calculating transition costs, and does not mandate a method for recovering those costs. Therefore there is no violation of section 367 (b) as long as we use this method for measuring transition costs, as we have been doing. There is simply no revenue stream mandated by section 367 (b) which the new accounting procedures could misdirect.⁴

Moreover, section 367 (b) does not even concern the revenues at issue here. Section 367 (b) only refers to measuring the value of the generation assets, not the revenue from the assets. All we have done in the Accounting Decision is credit those revenues to the TRA. Therefore, although those revenues may be relevant to a determination of the value of the assets, diverting the actual revenues to a different account cannot be seen as violating the statute in any manner.

PG&E also complains that the transferring credits from the GMA to the TRA without transferring undercollections or debits, unfairly deprives them of the ability to recoup their generation costs. In general, since only overcollections are credited to the TRA, in the months that there are overcollections, the Utilities' costs are met. We recognized that this system may still result in some unrecovered costs, when we stated, "we will consider any adjustments, including addressing monthly GMA undercollections, needed, as we consider the interaction of AB 6X, AB 1X, and § 367 (c) with regard to recording the monthly balance." (Accounting Decision, at 35.) Because we explicitly said we would address any undercollections at a future time in this proceeding, the Utilities have no basis to apply for rehearing of that issue at this time.

⁴ We may have referred at times to this value netting process as recovery as a shorthand. The fact remains, however, that technically under the statute, the section 367 (b) netting process raises or lowers the amount of transition costs and does not impact their recovery.