3. ERRA Background

In 2002, the California Legislature and the Commission established the regulatory framework for PG&E, SCE, and SDG&E (collectively, the utilities) to resume electricity procurement, beginning January 1, 2003. In Decision (D.) 02-10-062, we established the ERRA balancing accounts for PG&E and the other utilities, requiring them to track fuel and purchased power revenues against actual recorded costs,¹ and to establish an annual ERRA compliance review for the previous year and, in a separate proceeding, an annual ERRA fuel and purchased power revenue requirement forecast for the following year.

¹ The ERRA records energy costs associated with serving bundled electric customers. These costs include post-2002 contracted resource costs, fuel costs of PG&E-owned generation resources, qualifying facility (QF) and purchased power costs, and other electric procurement costs such as natural gas hedging and collateral costs. The ongoing Competition Transition Charge (CTC) forecast revenue requirement consists of the above-market costs associated with eligible contract arrangements entered into before December 20, 1995, and QF contract restructuring costs. Ongoing CTC costs are recorded in the Modified Transition Cost Balancing Account (MTCBA).