The Capital Spending Consultant's Report

Ordering Paragraph 12 of D.00-02-046, in relevant part, states:

"In addition, the Energy Division shall contract with a consultant who will assess the contribution of capital spending to system reliability, capacity and adequacy of service. PG&E shall reimburse the Commission for the cost of this contract. PG&E is authorized to record these costs in a memorandum account. PG&E shall file an advice letter implementing this memorandum account. The advice letter shall be effective on completion of review by the Energy Division for compliance with this order."

This decision is scheduled to issue in January 2002. The consultant's report was expected in August 2001, but was delayed to October 1, 2001. It has not yet been received. When received, a prehearing conference is expected to be set to review the report's findings.

ORA comments that although the consultant's report is currently due on October 1, 2001, there is no assurance it will be completed by that date and even if it is, it is unlikely that its recommendations could be incorporated into a decision by the end of the year. PG&E recommends that the consultant's report be addressed in the context of its 2002 GRC proceeding. ORA has no objection to addressing the report in that forum. However, to the extent the consultant finds that PG&E's capital spending in 1999 was unreasonable, ORA recommends that this proceeding be left open to incorporate the ratemaking effects of a lower rate base.

We do not believe this proceeding should be kept open to receive the consultant's report. Should the report, in ORA's opinion, have a more than minor impact on attrition results of operation we will look favorably on a petition for modification pursuant to Rule 47.