Comments on Draft Decision
PG&E, Edison, Enron, the Western Power Trading Forum (WPTF), and the Alliance for Retail Markets (ARM) filed timely comments on the draft decision.5 Enron and Edison filed timely reply comments. We have incorporated comments that provided technical corrections and factual clarifications, as appropriate.
1. Pursuant to D.00-02-048, PG&E and Edison are required to credit their respective TCBAs for the estimated market value on an aggregate basis and for not less than the aggregate net book value of their remaining non-nuclear generation assets.
2. In recognizing the concerns expressed by parties, the Commission inadvertently did not establish the corresponding debit to this credit and did not intend that these amounts be charged to earnings.
3. In order to correct this inadvertent error, PG&E and Edison should establish a GABA to record this debit.
4. This account should be established as a balancing account to avoid problems associated with limits for short-term borrowing purposes.
5. The GABA should earn the 90-day short-term commercial paper interest rate.
6. The balance remaining in the GABA should be zeroed out at the time of final market valuation. This approach is consistent with § 367 and does not allow for additional or unauthorized stranded cost recovery, as demonstrated by the simple accounting examples described herein.
7. If final market valuation is greater than the aggregate credit, ratepayers benefit because of the early credit to the TCBA and benefit further from final
market valuation when the GABA is zeroed out and the difference is credited to the TCBA.
8. If final market valuation is less than the aggregate credit, ratepayers benefit because of the early credit to the TCBA, but Edison and PG&E are not at risk since the remaining debit in the GABA is appropriately charged to the TCBA.
9. Since the TCBA and the GABA earn the same interest rate, both ratepayers and shareholders are made whole.
1. It is reasonable to establish the GABA as a balancing account in order to avoid problems with short-term borrowing limits and to facilitate the ratemaking described herein.
2. It is reasonable to apply the 90-day commercial paper interest rate to the GABA because it also applies to the TCBA and is consistent with D.00-03-058. PG&E and Edison should apply the same interest rate to the GABA.
3. It is reasonable to adopt the ratemaking approach described herein, as this approach is consistent with our determinations in D.99-10-057 and ensures that both ratepayers and shareholders are protected. The balance in the GABA should be zeroed out at the time of final market valuation, whether positive and an additional credit is recorded in the TCBA or negative, and an additional debit is recorded in the TCBA.
4. Now that the GABA is established, Edison and PG&E should comply with our orders in D.00-02-048.
5. This decision should be effective today in order to allow Edison and PG&E to establish the GABA expeditiously.
IT IS ORDERED that:
1. Within 10 days of the effective date of this decision, Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (Edison) shall file compliance advice letters to establish the Generation Asset Balancing Account (GABA), as described herein. These advice letters shall become effective five days after filing.
2. The GABA shall earn the 90-day commercial paper interest rate.
3. The balance in the GABA shall be zeroed out at the time of final market valuation, as described herein.
4. Within 15 days of the effective date of this decision, Edison and PG&E shall comply with all ordering paragraphs of Decision 00-02-048.
5. This order is effective today.
Dated June 8, 2000 , at San Francisco, California.
LORETTA M. LYNCH
President
HENRY M. DUQUE
JOSIAH L. NEEPER
RICHARD A. BILAS
CARL W. WOOD
Commissioners
(See Formal Files for the Attachment.)
5 WPTF and ARM have moved to intervene in this proceeding. Both entities state that they do not wish to broaden the scope of the proceeding, but wish to comment on the proposed accounting treatment. Although they do not state their interest in this proceeding, both WPTF and ARM have participated extensively in A.99-01-016 et al., the post-rate freeze proceedings. Edison objects to their participation. However, both WPTF and ARM have an interest in how various accounting treatments may impact the end of the rate freeze. Although we do not address this issue here, it is reasonable to allow this intervention. Both motions are granted.
