5. Assignment of Proceeding
Timothy Alan Simon is the assigned Commissioner and John S. Wong is the assigned ALJ in this proceeding.
Findings of Fact
1. D.10-06-035 resolved all of the cost allocation and rate design issues in this proceeding except for the core brokerage fee issue.
2. The core brokerage fee issue concerns the costs associated with the business functions that are necessary for procuring or purchasing natural gas for PG&E's core customers, and is one of the five cost components which make up PG&E's Schedule G-CP.
3. The amount of the core brokerage fee is a cost factor that gas customers may take into account in deciding whether to take gas service from PG&E or from one of the competitive gas providers.
4. As more costs are allocated to the core brokerage fee, there is a corresponding decrease in the transportation rate.
5. SAT seeks to broaden the definition of the core brokerage fee to include billing, collection, and other costs, while PG&E seeks to continue the same kind of procurement-related costs that have been included in the core brokerage fee in the past.
6. In the decisions addressing the rules for the CAT program, the Commission drew a distinction between commodity-related costs and the cost of transportation.
7. The billing costs that SAT seeks to include into the core brokerage fee are not procurement-related costs, but instead are recurring costs that are associated with revenue cycle services and are part of the transportation rate.
8. A subsidy will not result from limiting the core brokerage fee to procurement-related costs, and having billing and collection costs remain as part of the transportation rate.
9. As the default provider of revenue cycle services, PG&E's billing system must be ready to accommodate any customer who decides to return to PG&E for bundled core gas service.
10. Since the rates in Schedule G-ESP are directly related to the revenue cycle services of billing and collecting from customers, the use of Schedule G-ESP as a proxy for the core brokerage fee would be inappropriate.
11. We are not persuaded by SAT's argument that PG&E's cost study of the core brokerage fee is deficient because the type of costs that SAT seeks to include are revenue cycle services that are separate and distinct from the procurement/purchasing costs.
12. To encourage competition between PG&E and competing gas suppliers, a balance must be reached with the amount of the core brokerage fee.
13. The adoption of a core brokerage fee of $0.025 per Dth is reasonable, and will help maintain a competitive playing field for gas customers considering taking gas from a competing gas supplier.
Conclusions of Law
1. Based on a review of past Commission decisions, the core brokerage fee represents the costs associated with gas procurement/purchasing, and not the costs associated with customer service fees such as billing and payment policies, meter reading, and safety inspections.
2. The definitions of "basic gas service" and "revenue cycle services" in § 328.1(a) make clear that the Legislature intended to distinguish between the purchasing/procurement of natural gas on behalf of a customer, and revenue cycle services such as billing and collection services.
3. Since revenue cycle services are distinct from the costs of procuring or the purchasing of gas, and the core brokerage fee is part of the costs of procuring or the purchasing of gas, SAT's proposal to expand the definition of the core brokerage fee to include billing, collection, and other costs, should not be adopted.
4. SAT's proposal to use an interim core brokerage fee of $0.1347 per Dth until an independent study of the cost elements that are necessary to provide commodity gas supply on the PG&E system is completed, should not be adopted.
5. To encourage the continuing growth of competition between PG&E and competing gas suppliers, a core brokerage fee of $0.025 per Dth should be adopted for the period from January 1, 2011 until PG&E's next cost allocation proceeding is resolved.
6. PG&E should file an advice letter with the Energy Division under Tier 1 of General Order 96-B, with an effective date of January 1, 2011, to implement the adopted core brokerage fee component of PG&E's Schedule G-CP rate.
O R D E R
IT IS ORDERED that:
1. A core brokerage fee of $0.025 per decatherm is adopted for Pacific Gas and Electric Company's Schedule G-CP for the period from January 1, 2011 until PG&E's next cost allocation proceeding is resolved.
2. Within 15 days from today's date, Pacific Gas and Electric Company (PG&E) shall file an advice letter with the Energy Division under Tier 1 of General Order 96-B to implement the adopted core brokerage fee component of PG&E's Schedule G-CP rate, with an effective date of January 1, 2011. Any interested party may protest the advice letter filing as provided for in General Order 96-B.
3. Application 09-05-026 is closed.
This order is effective today.
Dated December 16, 2010, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
TIMOTHY ALAN SIMON
NANCY E. RYAN
Commissioners
APPENDIX A
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Last Updated on 15-NOV-2010 by: AMT
A0905026 LIST
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Ken Bohn |
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Hilary Corrigan |
Norman A. Pedersen |
File Room |
Thomas Stoflet Paul Kerkorian |
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