10. The Costs to be Recovered Via the MRTU
Memorandum Account are Incremental

PG&E considered incremental costs to be those labor, equipment, material, and contract costs associated with MRTU implementation that have not been approved by the Commission in any prior proceeding. PG&E identified two proceedings in which recovery of MRTU-related costs might have been previously authorized: the 2009-2011 Demand Response program (A.08-06-003), and the 2007 GRC Phase I (A.05-12-002). PG&E showed that there was no overlap in the costs requested for recovery in this proceeding and costs recovered in those proceedings.

10.1. PG&E Established Specific Orders
to Track MRTU Implementation Costs

To ensure that it is not seeking recovery of costs already approved in other proceedings, PG&E established specific orders to track incremental capital costs and expenses associated with the MRTU project. PG&E instructed all relevant business areas to record only those costs that are related to MRTU and incremental to work authorized in PG&E's 2007 GRC (D.07-03-044), and work authorized in PG&E's Bridge Funding for 2009 Demand Response Programs (D.08-12-038) and PG&E's 2009-2011 Demand Response Programs (D.09-08-027). To determine which MRTU-related activities and costs would fall under the definition of MRTU expenses, PG&E followed a systematic process. Meetings were held with each business area impacted by MRTU, and the types of MRTU-related costs (PG&E labor, non-labor, and contract labor) were discussed.

10.2. There is no Overlap Between MRTUMA
Cost Recovery and Cost Recovery
in Demand Response Proceedings

Focusing first on demand response costs related to MRTU, D.08-12-038 adopted bridge funding for the 2009 demand response program year that allowed PG&E to continue certain 2008 demand response programs and implement certain pilots until final programs for 2009-2011 were adopted. D.09-08-027 approved the demand response program application for the 2009-2011 program years. Other than those demand response programs and pilots, D.09-08-027 did not authorize the recovery of costs associated with any MRTU-related demand response programs. Therefore, PG&E has excluded all costs associated with 2009-2011 demand response programs from the MRTUMA. PG&E has established specific orders to track incremental demand response MRTU costs and has included those costs in the demand response sub-account of the MRTUMA.

10.3. There is no Overlap Between MRTUMA
Cost Recovery, and Cost Recovery
in PG&E's General Rate Case

Turning to non-demand response costs related to MRTU, the only proceeding in which such costs were authorized for recovery is PG&E's 2007 GRC. No Information Systems Technology Services (ISTS) capital projects relating to MRTU were included in the 2007 GRC. Therefore, PG&E determined that the revenue requirements associated with all of the incremental MRTU capital projects described in its testimony are appropriately reflected in the MRTUMA. PG&E established specific orders to track the project capital expenditures and project expenses associated with each release of the MRTU initiative.

PG&E requested some expense increases associated with the MRTU initiative in its 2007 GRC. Therefore, PG&E further reduced the total expenses associated with MRTU implementation activity by subtracting $1.0 million per year from the expenses recorded in the MRTU orders, to take out the MRTU expense dollars that were authorized for recovery in the 2007 GRC.

Resolution E-4093, which authorized the MRTUMA, recognized this needed reduction. In the findings of fact, the resolution states, "in its 2007 GRC, PG&E included a forecast of approximately $1.8 million in expenses associated with an additional six full time employees [FTE] and new hardware and software to support the CAISO's MRTU. Of this amount, PG&E believes $1.0 million was approved by the Commission on March 17, 2007, in D.07-03-044, which adopted the 2007 GRC settlement."¹⁵

¹⁵ Resolution E-4093, at 12.