5. Assignment of Proceeding

This matter is assigned to Commissioner Wood and ALJ Wetzell.

Findings of Fact

1. PG&E agrees that all invoices and supporting documentation for accounting entries in PG&E's financial books must be available for inspection by the Commission staff.

2. PG&E agrees that it should provide technical support for Commission staff in using the SAP System during regulatory audits, that it should keep ORA informed of any new modules or other SAP System upgrades, that it should provide continued access to SAP as was provided during the current review along with readily available technical staff to assist in the access to appropriate SAP data, and that it is subject to critical review of expenditures incurred for any modifications or upgrades to the SAP system.

3. PG&E's and ORA's joint recommendations to remove $2.0 million from PG&E's distribution rate base and to remove $1.5 million from the expense-related distribution revenue requirement reflect the informed judgments of PG&E and ORA regarding the effects of the overstated M&S inventory balances in 1997, and are therefore reasonable.

4. PG&E waived any argument that the prohibition against retroactive ratemaking precludes any revenue requirement adjustments, including decreases, necessary to reflect the final decision in this GRC.

5. ORA's initial audit recommendation to remove $10.5 million from recorded 1997 rate base and the agreed upon adjustments of $2.0 million in rate base and $1.5 million in expenses are "issues pertaining to the ORA verification audit of PG&E's SAP business system."

6. Pursuant to Ordering Paragraph 21 of D.00-02-046, the agreed-upon rate base and expense adjustments are unresolved issues in PG&E's test year 1999 GRC.

Conclusions of Law

1. PG&E should make its business and accounting system accessible to the Commission staff, including ORA, in a meaningful way, for all data for which the Commission has a right of access.

2. With respect to issues pertaining to the ORA verification audit of PG&E's SAP business system, D.00-02-046 was not a "final decision in this GRC" as that term is used in Ordering Paragraph 1 of D.98-12-078.

3. The rate base and expense adjustments adopted by this order should be made effective January 1, 1999 in accordance with D.98-12-078 and D.00-02-046.

4. This proceeding should remain open to resolve pending issues in these consolidated dockets.

ORDER

IT IS ORDERED that:

1. Pacific Gas and Electric Company's (PG&E) authorized revenue requirements shall be adjusted to reflect the agreement between PG&E and the Office of Ratepayer Advocates to remove $2.0 million from rate base and to remove $1.5 million from expense-related revenue requirement as set forth in more detail in the August 22, 2000 letter from PG&E to the Administrative Law Judge. Said adjustments shall be made effective January 1, 1999 in accordance with Decision (D.) 98-12-078.

2. The final results of operations analysis to be performed pursuant to the Commission's order in D.01-10-031, at p. 45, shall reflect and incorporate the adjustments ordered in Ordering Paragraph 1.

3. These proceedings shall remain open.

This order is effective today.

Dated February 13, 2003, at San Francisco, California.

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