11. The Costs to be Recovered by the MRTU
Memorandum Account are Verifiable
PG&E incurred and is requesting review of $50.56 million in capital expenditures for the initial implementation of MRTU, and $0.09 million in capital expenditures for the 2009 pre-summer release. PG&E incurred MRTU expenses of $11.96 million from June 7, 2007, when the MRTUMA was authorized, through the end of 2009. In managing the initial MRTU implementation capital project PG&E points out it had to deal not only with the complexity of the project, but also with its continually evolving nature. CAISO modified the project timelines and project scope many times from when FERC issued its September 21, 2006, order approving MRTU until MRTU was finally implemented on April 1, 2009.
11.1. Overview of PG&E Departments
Incurring MRTU Implementation Costs
Several PG&E departments have been involved in implementing MRTU. The departments discussed below incurred incremental MRTU capital expenditures and/or expenses through the end of 2009. DRA did not take issue with any of the expenditures.
The Project Management Office (PMO) is responsible for the overall program management of MRTU implementation. The PMO's responsibility includes coordinating and providing oversight to the overall program, including tracking progress, identifying and mitigating ongoing risk issues, resource management, and budgeting cost control.
The Energy Policy Planning and Analysis group is responsible for the policy formation related to market design, market monitoring, and avoided costs. The function of this group is to oversee and provide policy insight into the changes in market designs mandated by FERC. This group is responsible for the policy formation and calculation of avoided energy and capacity costs.
The Front Office is responsible for meeting PG&E's electric load obligations in a least cost manner. With the introduction of the LMPs, the IFM, RUC, the HASP/RTM, and CRRs, the Front Office had to change the manner in which it forecasts PG&E's supply and demand; it also performs resource optimization, and trades electricity.
The Middle Office is responsible for carrying out PG&E's risk management control objectives, which are designed to mitigate aberrant trader activities, minimize business operational risks, enable portfolio managers and traders to comply with risk management policies and procedures, facilitate setting of control and limits, and provide decision makers with reports to manage the portfolio market and credit risks. Risk and portfolio management systems and processes were significantly redesigned to support the expanded number of positions at potentially thousands of LMPs, and to model CRR risks at these LMPs.
The Back Office is responsible for the maintenance of electric contracts for generation that serves PG&E's service area, invoicing and settlements, disputes, and charge code reconciliation with CAISO.
The ISTS organization is responsible for supporting the MRTU business changes that are driven by the Front, Middle, and Back Office functions, as well as demand response activities.
The Demand Response Department is responsible for managing most aspects of PG&E's retail demand response programs, including program design and development, customer marketing and enrollment, customer notifications for events, and post-event evaluations.
Other areas of PG&E's business are also affected by MRTU. For example, MRTU requires PG&E's transmission operation departments to modify the manner and timing in which they provide transmission information to CAISO to ensure CAISO's FNM accurately depicts PG&E's system.
