VII. Order of Collection of DA CRS Elements
For DA customers both the ongoing CTC charge and the DA DWR power charge (as well as the bond charge once it is collected from direct access customers) will be recovered via the capped DA CRS. Since not all of these charges fit under the cap, this requires that the charges be deemed to be collected in some order, in order to determine how the shortfall should be tracked for ratemaking purposes.
In D.02-11-022, the Commission determined an order in which the DWR bond charge, the ongoing CTC, and the DA DWR power charge should be deemed to be collected. The Commission determines that the DWR bond charge should be deemed to be collected first, the DA DWR power charge second, and the ongoing CTC charge third.51
A. Parties' Positions
PG&E recommends that the order of collection be modified, so that the DWR bond charge be deemed to be collected first, ongoing CTC be deemed to be collected second, and the DA DWR power charge be deemed to be collected third.52 PG&E argues that changing the collection order will have no substantive effect on customers' charges, but will significantly simplify the necessary cost recovery mechanisms.53
The order in which the charges are deemed to be collected does not make any substantive difference because it does not affect how much money is collected from either bundled or direct access customers. Regardless of whether the shortfall is labeled as (1) a direct access obligation to reimburse bundled customers for DWR power charges attributable to direct access customers but borne by bundled customers, (2) a direct access obligation to reimburse bundled customers for ongoing CTC amounts attributable to direct access customers but borne by bundled customers, or (3) a combination of both, the shortfall is the same. DWR receives the same amount from PG&E regardless of the level of the DA DWR power charge component in the DA CRS.
Further, regardless of its label(s), the shortfall occurs because the amount collected from direct access customers is not sufficient to cover the indifference amount. In particular, therefore, any shortfall should bear the same interest rate, regardless of how it is broken down for regulatory tracking purposes, and regardless of the regulatory label applied to it.
However, even though there is no substantive difference depending on whether the DA DWR power charge or the ongoing CTC is deemed to be collected second (after the DWR bond charge), PG&E contends that the cost recovery mechanisms necessary if the DA DWR power charge is ordered second and ongoing CTC third will be more complex. PG&E claims that this resulting additional complexity provides no substantive benefit, and therefore should be avoided.
B. Discussion
We agree with PG&E that changing the order of collection of the DA CRS elements will simplify the necessary accounting mechanism. DWR was the only party to raise any objection to PG&E's proposal to change the order of collection. We are not persuaded that changing the order of collection prevents DWR from correctly accounting for the remittances it has already received. PG&E proposed order of collection provides a simpler solution, and we hereby adopt it.
Regardless of whether the DA DWR power charge is second or third, a shortfall is expected. It will be larger if the DA DWR power charge is ordered third but the shortfall, and therefore the need to track the shortfall, is not avoided by ordering the DA DWR power charge second. Thus, since there is a DA DWR power charge shortfall in any event, there is no difference with respect to the DA DWR power charge cost recovery mechanism whether the DA power charge is ordered second or third.
However, the effect of the ordering on the ongoing CTC cost recovery mechanism is quite different. If the ongoing CTC power charge is ordered second, no ongoing CTC shortfall is expected, because the sum of the bond charge and the ongoing CTC are not expected to approach the DA CRS level. Thus, if the ongoing CTC is ordered second there is only one shortfall to track, the DA DWR power charge shortfall, and it is tracked in the DA DWR power charge cost recovery mechanisms.
Not having a shortfall to track in the ongoing CTC ratemaking mechanisms simplifies them substantially. One component can be set for each customer class, applicable to all customers who pay the charge, regardless of whether they are bundled are direct access. Only one balancing account is necessary, to track the difference between revenues from the ongoing CTC rate component, and the costs to be recovered via that component.
By contrast, if there is an ongoing CTC shortfall, then different ongoing CTC components need to be set for bundled and direct access customers. The direct access ongoing CTC component will be set with reference to the adopted DA CRS level, and then the bundled ongoing CTC component will be set with reference to the shortfall created by the direct access ongoing CTC.
If the ongoing CTC is ordered third, two amounts relating to ongoing CTC need to be tracked, not just one. Not only does the difference between ongoing CTC revenues and costs need to be tracked, but also the ongoing CTC shortfall resulting from the cap on the DA CRS needs to be tracked. This complexity, too, is avoided if ongoing CTC is ordered second.
So long as there is a DA CRS cap, bundled customers' cost responsibility for the DWR power charge revenue requirement in any given year will be dependent on the amount contributed by direct access customers. But one can avoid having a second cost component, ongoing CTC, complicated in the same way.
By adopting PG&E's proposal, accounting for continuing DA load is also simplified. Continuous direct access customers do not bear responsibility for the DA DWR power charge. Therefore, they can bear the full ongoing CTC component.54 There is no need to distinguish whether these customers be charged the "capped" ongoing CTC charge like most direct access customers would, or the full ongoing CTC charge.
In the case of SCE, there is an additional element, the HPC in the DA CRS collection process. In D.02-11-022, we authorized SCE to recover the HPC second in order after the DWR Bond Charge. Thus, in keeping with this requirement, the effect of the change in the sequence of collection ordered herein will mean that SCE collects CTC third in order after the DWR bond charge and the HPC.
DWR, in its comments, notes that without a final amount yet determined for CTC, the utilities will not know what residual amount of DA CRS collections remains available to apply to the DWR power charge. As a result, DWR expresses concern that the utilities are likely to resist remitting any amount from DA CRS collections to apply to the DWR power charge, causing bundled customers to pay higher rates to continue financing this portion of the DWR power charge. To guard against this result, DWR proposes that the change in the order of collection not be made effective until the Commission adopts a final CTC element.
As noted by DWR, in the absence of final CTC values adopted for 2001-03, the utilities will not know what amounts remain available to remit to DWR. We thus shall adopt DWR's suggestion that the implementation of the revised collection sequence become effective concurrent with the final determination of the CTC amounts applicable for 2001-03. In this way, a one-time adjustment for remittances due to DWR for the effects of past CTC can be made, and any going-forward remittances to DWR will properly reflect the residual amounts available after collections for CTC.
