2. Background
The Commission established the Energy Resource Recovery Account (ERRA) balancing account mechanism in Decision (D.) 02-10-062 to track fuel and purchased power billed revenues against actual recorded costs of these items. In the same decision, the Commission required regulated electric utilities in California to establish a fuel and purchased power revenue requirement forecast, a trigger mechanism (to address balances exceeding certain benchmarks), and a schedule for semiannual ERRA applications. Since that time, subsequent decisions regarding the ERRA balancing account have adopted minimum standards of conduct that regulated energy utilities must follow in performing their procurement responsibilities and requires that the Commission perform a compliance review as opposed to a reasonableness review of these items.2 A compliance review looks at whether a utility has complied with all applicable rules, regulations, opinions, and laws, while a reasonableness review looks at not only a utility's compliance, but also whether the data or actions resulting from, for example, the calculation of a forecasted expense, are realistic, based on the methods and inputs used.
In the first application each year, the utility requests adoption of the utility's forecast of what it expects its annual fuel and purchased power costs for the upcoming 12 months to be, while in the second a utility requests a determination of whether it is in compliance with applicable rules governing energy resource contract administration and least cost dispatch and, therefore, able to address any over- or under-collection in its ERRA balancing account. This decision resolves that second application.
On June 1, 2010, San Diego Gas & Electric Company (SDG&E) filed Application (A.) 10-06-001, in which it requested: 1) approval of its contract administration, least cost dispatch and power procurement activities, 2) approval of entries to its ERRA and Transition Cost Balancing Account3 (TCBA) during the period January 1, 2009 through December 31, 2009, and authority to refund in the year-end balances in the ERRA and TCBA; 3) recovery of the amounts recorded in selected balancing and memorandum accounts; and 4) revisions to selected memorandum accounts.
The Scoping Memo and Ruling of the Assigned Commissioner (Scoping Memo) was issued on August 13, 2010, which confirmed the categorization and need for hearings, ruled on the scope and schedule, and addressed other procedural items. In part, the assigned Commissioner ruled that the question of whether to bifurcate consideration of recovery from the Market Redesign Technology Upgrade Memorandum Account (MRTUMA) is outside the scope of the current proceeding, referencing our recent denial of a similar request from the Division of Ratepayer Advocates (DRA) in D.10-07-049.4 We confirm the assigned Commissioner's ruling, except as noted below. This proceeding was originally assigned to Commissioner Nancy E. Ryan, but has since been re-assigned to Commissioner Michel Peter Florio. A prehearing conference (PHC) took place on August 2, 2010. On November 22, 2010, DRA served its direct testimony.
On December 16, 2010, SDG&E filed a motion requesting that the current proceeding either be bifurcated or stayed to address the same San Onofre Nuclear Generating Station (SONGS) outage issues in Southern California Edison Company's (SCE) A.10-04-002. SCE and SDG&E are joint owners of SONGS. DRA filed a response on December 20, 2010. SDG&E filed a reply on December 21, 2010. On December 23, 2010, the assigned Administrative Law Judge (ALJ) issued a ruling, granting SDG&E's request, that this proceeding is bifurcated to separately address DRA's concerns regarding the effect of outages at SONGS, on recovery from the ERRA balancing account. All other issues remained in the first phase of this proceeding, and were resolved by D.11-10-029.5 Since this same SONGS issue was being litigated in SCE's ERRA proceeding, it was most efficient to delay consideration of the SONGS issue in the current proceeding until after we made a decision in the SCE proceeding. With D.11-10-002, the Commission adopted, among other things, that SCE's actions with respect to the December 28, 2008 SONGS Unit 2 outage were not reasonable.6 Accordingly, SCE was ordered to reflect a $1,442,200 disallowance associated with the December 28, 2008 SONGS Unit 2 outage in its ERRA.7 No other SONGS outages were found to be unreasonable. With that, the parties in the current proceeding met in order to resolve the SONGS issue as it affects SDG&E. As a result, on November 18, 2011, the parties noticed a Settlement Conference in A.11-06-001, and on December 19, 2011, the parties filed a Joint Motion of San Diego Gas & Electric Company and Division of Ratepayer Advocates for Approval of Settlement Agreement (Joint Motion). No protests or comments were filed regarding the Joint Motion.
2 See D.05-01-054, D.05-04-036, and Public Utilities (Pub. Util.) Code § 454.5(d)(2).
3 Eligible above market power costs, Competition Transition Charge revenues, and the applicable interest on any under or over collection are recorded in the TCBA.
4 In D.10-07-049, which addressed Southern California Edison's request for recovery from its 2008 ERRA and other regulatory accounts, the Commission denied DRA's request to address MRTUMA and non-ERRA regulatory accounts in a separate proceeding consolidated with Pacific Gas and Electric Company and SDG&E. Examination of whether the recovery from selected regulatory accounts should be separated or consolidated into unique proceedings is a generic issue that would affect other energy utilities. Given the Commission's recent order, and since the purpose of the current proceeding is to address the recovery of balances in regulatory accounts of SDG&E only, questions of bifurcation are outside the scope of this proceeding.
5 The Commission ruled that:
1. The current schedule in A.10-06-001 remains intact in order to address all remaining issues, other than the DRA's recommended disallowance due to outages at SONGS. In this way, the Commission will have all the information it requires to make a determination regarding these remaining issues in the first phase of A.10-06-001;
2. The determination in A.10-04-002 of whether the outages at SONGS were reasonable or not will not be re-litigated in A.10-06-001;
3. DRA's recommended disallowance due to outages at SONGS in A.10-06-001 will be addressed in the second phase of A.10-06-001;
4. After issuance of a decision in A.10-04-002, SDG&E, DRA, and all other parties that may be granted party status subsequent to December 21, 2010, in A.10-06-001, must meet and confer regarding the joint motion referenced in Item 5 below;
5. Within 30 days after issuance of a decision in A.10-04-002, SDG&E, DRA, and all other parties that may be granted party status subsequent to December 21, 2010 in A.10-06-001, must file a joint motion, to request adoption of a proposed schedule to address the SONGS issue, including dates for a second PHC, service of testimony, evidentiary hearings, and filing of briefs; and
6. A second PHC will be held to determine how to proceed in the second phase of A.10-06-001.
6 See D.11-10-002 at Conclusion of Law 3 "The evidence supports DRA's position that SCE's actions, with respect to the 18 day extension of the December 28, 2008 SONGS Unit 2 planned outage, were not reasonable."
7 See D.11-10-002 at Ordering Paragraph 1 " Southern California Edison Company shall appropriately reflect a $1,442,200 disallowance associated with the December 28, 2008 San Onofre Nuclear Generating Station Unit 2 outage, in its Energy Resource Recovery Account."
