6. Comments on Draft Decision

The draft decision of the ALJ in this matter was mailed to the parties in accordance with Section 311(g)(1) of the Public Utilities Code and Rule 77.7 of the Rules of Practice and Procedure on October 10, 2003, and comments were filed on October 30, 2003 by ORA, PG&E, SCE and jointly by SoCalGas and SDG&E. Reply comments were filed by PG&E on November 4, 2003.

We note that none of the parties object to the resolution of either the cost-effectiveness or NGAT-related issues contained in the draft decision. As discussed below, the comments request minor clarifications, raise issues that were not addressed by the Team, or request more time for certain tasks set forth in the draft decision.

Overall, in response to comments we make certain clarifications and minor corrections to the draft decision. We also direct the Standardization Project Team to address an implementation issue related to NGAT procedures that was raised in comments but not addressed in the Team's final report, i.e., the issue of what CO threshold levels the utilities should utilize when conducting secondary flue CO testing per the adopted NGAT procedures.

In their comments, PG&E, SoCalGas and SDG&E indicate that they will need adequate time to gather the detailed information on measure cost data that we request from their contractors, and that some of this information may need to be kept confidential. We modify the draft decision to address these concerns.

We do not, however, adopt SoCalGas and SDG&E's joint recommendation that we authorize them to fully recover the actual costs of complying with today's CO testing requirements in their pending general rate case proceedings, Application (A.) 02-12-027 and A.02-12-028. LIEE CO testing procedures are funded through base rates, as we have directed in prior decisions in this proceeding. Therefore, the forum for considering whether the utility's test year forecasts of gas department costs (including CO testing) require an upward adjustment on the basis of today's decision is the general rate case, not this rulemaking. We note, however, that the test year applications were filed in December of 2002. Since March 2001, with the issuance of D.01-03-028, Phase 4 of the Standardization Project has been underway. Without a careful evaluation of the test year cost estimates included in SoCalGas and SDG&E's general rate case applications, we have no basis for evaluating whether those estimates did or did not already anticipate an increase in CO testing costs based on the standardization effort in process. Moreover, we note that the procedures adopted today are not substantially different from the minimum standard in place since March 2001, as indicated in Attachment 7. Nonetheless, nothing in today's decision precludes SDG&E or SoCalGas from supplementing its general rate case application or petitioning for a reconsideration of test year revenue requirements based on a significant change in circumstances. Such a request would need to be made in the general rate case proceeding. It is only in that context that the Commission can appropriately consider this issue, since changed circumstances that affect actual costs would apply to other cost components, and a consideration of those could result in an adjustment in the test year forecast in either direction.

We also do not modify the draft decision to allow for the installation of evaporative coolers and window/wall air conditioners in Climate Zone 10, as requested by SCE in its comments. This issue was not raised by any Team member during the preparation of the report, in comments or public workshops or even presented as a consideration in the final report. To introduce such an exception at this stage would undermine our efforts to standardize the program and make decisions concerning what measures are offered both transparent and understandable to the public.

In its comments PG&E argues that duct seal and repair should be reconsidered for future LIEE programs, and recommends that that the Team develop a process by which the Commission would add measures. In our view, it is premature to consider new measures (or reconsider those that have been dropped) until we have better information on measure costs, and the reasons for the disparity across utilities. As discussed above, that information is required with the utilities' PY2005 program applications. We also believe that adding new measures or reevaluating current offerings should be considered in the context of the annual program planning cycle, and not intermittently, in order to avoid disruption or confusion in the field.

For these reasons, we modify the draft decision to identify the PY2006 program planning cycle as the next opportunity for the Standardization Team to present proposals regarding measure offerings under the program. We prefer that this effort be conducted by the Standardization Team in order to build on the expertise and consistency in cost-effectiveness methodology that the Team has accomplished to date. For PY2005, we will focus on ensuring that measure cost data is consistent across utilities so that our consideration of new measures for PY2006 will be based on the most consistent data available.

We note that the comments also contain discussion concerning policies regarding non-IOU fueled appliances. We direct the utilities and interested parties to express their views on this issue during the Standardization Team's Phase 4 follow-up work described in this decision.