Decision 00-02-048 February 17, 2000
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company for Review and Recovery of the Costs and Revenues in the Transition Cost Balancing Account (U 39 E) |
Application 98-09-003 (Filed September 1, 1998) |
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Application of Southern California Edison Company to Review and Recovery Transition Cost Balancing Account Entries from January 1, 1998 through June 30, 1998 and Various Generation-Related Memorandum Account Entries. |
Application 98-09-008 (Filed September 1, 1998) |
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Application of San Diego Gas & Electric Company in the Annual Transition Cost Proceeding Regarding the Transition Cost Balancing Account (TCBA). |
Application 98-09-009 (Filed September 1, 1998) |
(See Appendix A for list of appearances.)
TABLE OF CONTENTS
Title Page
OPINION REGARDING FIRST ANNUAL TRANSITION
COST PROCEEDING 2
Summary 2
Procedural History 2
SDG&E 4
A. Settlement 4
Edison 6
PG&E 13
Audit Issues 27
Comments on Proposed Decision 63
Findings of Fact 64
Conclusions of Law 71
FINAL ORDER 75
Appendix A
Appendix B
Appendix C
Appendix D
OPINION REGARDING
FIRST ANNUAL TRANSITION COST PROCEEDING
In this decision, we adopt settlements presented to us by San Diego Gas & Electric Company (SDG&E), Southern California Edison Company (Edison), and Pacific Gas and Electric Company (PG&E) and various settling parties regarding disputed issues in each utility's Annual Transition Cost Proceeding (ATCP).
The Office of Ratepayer Advocates (ORA) and SDG&E have settled SDG&E's application. The settling parties joining Edison are ORA and Aglet Consumer Alliance (Aglet). The settling parties joining PG&E are ORA and the Coalition of California Utility Employees (CUE). The Edison and SDG&E applications are uncontested. Aglet opposes PG&E's application.
We also provide clarification for various accounting issues impacting the operation of the Transition Cost Balancing Account (TCBA). We provide further clarification for the recovery of authorized depreciation for assets with an estimated market value above net book value or accelerated amortization for assets with estimated market value below above book value. We explain how estimated market value should be accounted for in the TCBA on a prospective basis. We also consider various recommendations made in independent reviews of each utility's TCBA and clarify our decisions, as necessary.
Procedural History
As required by Decision (D.) 97-06-060 and D.97-11-074, PG&E, Edison, and SDG&E filed applications to initiate the first ATCP for each utility. The purpose of these proceedings is to review entries in each utility's TCBA and each utility's recovery of uneconomic assets, or transition costs. These applications were preliminarily categorized as ratesetting in Resolution ALJ-176-3000, as noticed in the Daily Calendar of September 21, 1998. On December 16, 1998, Commissioner Duque issued the Scoping Memo for this proceeding, which affirmed the categorization and determined that hearings would be required. This ruling designated Administrative Law Judge (ALJ) Minkin as the principal hearing officer. Commissioner Duque attended the first prehearing conference. Two days of evidentiary hearings were held. These proceedings were submitted upon receipt of reply briefs, on October 8, 1999.1 The proposed decision was timely issued, 90 days after submission.
We also consider the results of two audit reports in this proceeding, both conducted either by or under the supervision of the Energy Division. 2 Mitchell & Titus, LLP and the Barrington Wellesley Group, Inc. (jointly, Mitchell-Titus) audited the transfer of interim accounts to the TCBA and reviewed the calculation of headroom revenue in compliance with Ordering Paragraph 19 of D.97-11-074. In addition, by ruling dated December 16, 1998, Commissioner Duque directed the Energy Division to perform a compliance audit on each utility's TCBA for the record period.
1 At the request of Edison, the briefing dates were extended by permission of the ALJ. 2 The Energy Division conducted a regulatory review of the expenses recorded in each utility's TCBA for the record period. A regulatory review is much smaller in scope than a regulatory audit and consists of gaining an understanding of relevant decisions, inquiries of utility personnel, evaluations of supporting documents, and various analytical procedures applied to regulatory and financial data. The Mitchell-Titus audit was entitled a Special Procedures Audit and Evaluation of Regulatory Compliance. We recognize that each of these reports differs significantly from an audit report according to Generally Accepted Auditing Standards. However, for convenience, we refer to each of these reports as an audit report.
