Comments
Comments on the proposed decision of ALJ Barnett were received from ORA, TURN, Aglet, and PG&E. PG&E recommends that the proposed decision be adopted without change. The gist of ORA, TURN, and Aglet comments is that the proposed decision is erroneous in not adopting their version of the evidence. This was the position taken in their briefs. Rule 77.3 states that "Comments which merely reargue positions taken in briefs will be accorded no weight and are not to be filed." Further, no proposed findings of fact and conclusions of law were included as an appendix to their briefs (Rule 77.3). Nevertheless, we have reviewed their comments on the proposed decision's treatment of capital costs, income taxes, and VMBA, and, with one exception, find they are no more than a repetition of their briefs. ORA, TURN, and Aglet note our reduction of capital costs as a result of our rehearing order in PG&E's general rate case (D.01-10-031), and request its inclusion herein.
In D.01-10-031, we granted partial rehearing of D.00-02-046, the PG&E general rate case upon which this attrition proceeding is based. We reduced the capital increase we approved in D.00-02-046 by $24.8 million and we granted rehearing regarding a portion of PG&E's estimated $171 million in capital spending for 1998. We "ordered that any rates that are raised based on the electric distribution capital forecast adopted in D.00-02-046 be made subject to refund." To the extent that the $24.8 million modification impacts the revenue requirement authorized in this decision, rather than reopen this proceeding to make a routine downward adjustment, we request the Energy Division to review PG&E's Advice Letter filing implementing this decision to assure compliance. Any further modification of this decision as a result of the rehearing ordered in D.01-10-031, should be made by petition to modify pursuant to Rule 47, or a compliance filing.
1. In D.00-02-046, the Commission left open the policy decision of whether any ARA increase should be granted.
2. In D.00-02-046, the Commission adopted a mechanism for determining the appropriate ARA allowance.
3. D.00-02-046 adopted an attrition increase method for 2001 based on one year of cost growth from 2000 to 2001.
4. D.00-02-046 approved an ARA mechanism to calculate the capital-related portion of the allowance for 2001 based on recorded 1999 capital additions as modified by the Energy Division's financial audit with one year of escalation.
5. The expense portion of the ARA is calculated by applying escalation to expense levels adopted in the GRC decision.
6. We should not wait until the Energy Division consultant's report on 1999 distribution capital expenditures is completed and reviewed before issuing a decision in this proceeding.
7. Attrition increases are based on forecast years. In D.00-02-046, we specifically found that attrition was denied for year 2000. Therefore, the forecast year 2000 is deemed the same as forecast year 1999, and the attrition year is 2001.
8. PG&E has not reduced electric distribution operating expenses because of its bankruptcy filing. In response to D.01-03-029, PG&E has reinstated programs to assure adequate service. The bankruptcy filing has had no appreciable affect on PG&E's distribution expenses. Its effect on PG&E's capital costs is less clear.
9. PG&E used recorded 1999 capital-related data as modified by the results of the Energy Division financial audit as the basis for calculating the capital-related portion of the ARA. This approach does not consider the potential for reductions in capital spending that may have resulted from PG&E's financial problems in 2001.
10. ORA's estimate of rate base included the adjustments recommended by the Energy Division audit. The only difference between PG&E's rate base and ORA's is ORA's exclusion of escalation for 2000. It is proper to exclude escalation for 2000 in regard to rate base. We adopt an attrition rate base of $7,292,186,000.
11. Making the capital-related portion of PG&E's attrition increase subject to true-up should actual 2001 capital-related costs be lower than assumed herein will protect ratepayers in the event that PG&E's unusual financial troubles led to a reduction in capital spending in 2001.
12. It is reasonable to base PG&E's attrition increase on the 9.12% rate of return authorized in D.00-06-040.
1. In an ARA application filed in response to authority granted in a GRC, the reasonable policy course is to use forecast expense and rate base unless the GRC decision specifies a different method. We do not disapprove of the use of recorded numbers or adjusted numbers to determine the need for attrition; but the history of this application and the order in D.00-02-046, do not support such use.
2. The entire rate increase authorized by this decision solely applies to PG&E's electric department. The rate increase will not be reflected in rate changes at this time due to the electric rate freeze.
3. Column E of the results of operation table set forth above is reasonable and is adopted.
4. Based on the escalators, rate of return, and rate base adopted in this decision, PG&E is entitled to an attrition rate adjustment rate increase of $150,838,000, which we find to be reasonable, subject to downward revision to reflect the $24.8 million ratebase reduction of D.01-10-031.
5. The capital-related portion of this increase should be adjusted downwards if PG&E's actual capital costs in 2001 are less than the costs underlying this increase.
6. PG&E's proposal to true-up both the VMBA and the TRA by crediting the $22.8 million underexpenditures from the VMBA to the TRA is reasonable.
7. A Humboldt Nuclear SAFSTOR revenue requirement increase of $379,000 is reasonable.
ORDER
IT IS ORDERED that:
1. Within 10 days of the effective date of this order, Pacific Gas and Electric Company (PG&E) shall file revised tariff sheets to implement the electric revenue requirements set forth in the relevant findings and conclusions of this decision, including a reduction in the capital-related portion of the adopted attrition increase should PG&E's actual 2001 capital costs be less than those assumed herein. In conformity with Decision 00-12-061, PG&E shall make one-time adjustments, with interest, to its electric Transition Revenue Account, other electric accounts, and all electric balancing accounts, to reflect the difference, including interest, between the electric revenue requirement amounts that have been recorded between January 1, 2001, and the effective date of the revised tariff sheets, and the amounts that would have been recorded had a final decision in this proceeding been issued by December 31, 2000. The revised tariff sheets shall become effective on filing, subject to a finding of compliance by the Energy Division with this decision and with the $24.8 million capital reduction ordered by D.01-10-031, and shall comply with General Order 96-A. The revised tariff sheets shall apply to service rendered on or after their effective date.
2. The Humboldt Nuclear SAFSTOR revenue requirement is increased by $379,000.
3. PG&E shall true-up both its Vegetation Management Balancing Account (VMBA) and its Transition Revenue Account (TRA) by crediting the underexpenditures from the VMBA to the TRA.
4. To the extent that the rehearing ordered in D.01-10-031 modifies the electric distribution capital forecast adopted in D.00-02-046, which in turn modifies the electric distribution capital forecast of this decision, the rates authorized in this decision are subject to refund.
5. The revised tariff sheets to be filed pursuant to this order will not be reflected in a rate increase at this time due to the electric rate freeze. Any rate change based on these revised tariff sheets shall go into effect only on further order of the Commission.
6. This proceeding is closed.
This order is effective today.
Dated February 21, 2002, at San Francisco, California.
LORETTA M. LYNCH
President
HENRY M. DUQUE
RICHARD A. BILAS
CARL W. WOOD
GEOFFREY F. BROWN
Commissioners
************ APPEARANCES ************ |
Norman J. Furuta |
William H. Booth |
********** STATE EMPLOYEE *********** |
********* INFORMATION ONLY ********** |
Bruce Foster |
(END OF APPENDIX B)
APPENDIX A
