11. Assignment of Proceeding

Geoffrey Brown is the Assigned Commissioner and ALJ Kim Malcolm is the principal hearing officer in this proceeding.

Findings of Fact

1. ORA, TURN, and PG&E filed an agreement that resolves several ratemaking, rate design and allocation issues. The agreement is identified in the record as Exhibit 29 and no party protested any of its elements.

2. A $3 minimum monthly transportation bill for residential customers would not create hardship for customers and recognizes that PG&E incurs costs even when a customer does not use any gas commodity.

3. Including the month of April in the summer gas baseline and setting the baseline differential at 20% between Tier 1 and Tier 2 when the transportation difference is no less than 1.6 would ease rate impacts during cold months for customers who use gas in the second tier.

4. Accelerating the pace of deaveraging beyond 10% a year between residential and commercial customers would increase rates too much.

5. Because it limits rate increases and bill complexity, adding two rate tiers for small commercial customers is a reasonable compromise to combining small and large commercial customer classes into a single class.

6. A total gas throughput forecast of 742,545 MDth/year and electric generation throughput forecast of 264,913 MDth/year reasonably recognizes gas customer demand for the test period.

7. PG&E erroneously billed two facilities of West Coast Gas Distribution Company as transportation level customers, although they are distribution level customers. West Coast is a regulated utility whose customers may suffer extraordinary rate increases if West Coast's distribution rates are set according to existing ratemaking principles for industrial customers.

8. PG&E, WMA and TURN filed an agreement resolving issues related to master meter discounts for mobile home park owners, which is consistent with past Commission statements of how the discounts should be structured. No party protested the agreement.

9. PG&E's general proposal to update its gas transportation balancing accounts every year as part of the annual "true-up" advice letter for rates effective January 1 of each year would not create any administrative problems or harm customers.

10. Splitting the liability for noncore distribution revenue requirement forecasts between PG&E and ratepayers is reasonable in light of market volatility and considering that it is unlikely to create any unintended consequences with regard to PG&E's system management.

11. PG&E and Clean Energy agree that (1) PG&E's Natural Gas Vehicle Compression rate should increase by $.0.15 and escalate by $0.03 beginning January 1, 2006 and each year thereafter until the next BCAP rates become effective, (2) customer compression services be fully deaveraged, and (3) PG&E should update its cost study for review in PG&E's next BCAP. No party opposes this settlement, which would increase rates to recognize PG&E's allocated costs and thereby reduce the likelihood that PG&E's compression rates are anti-competitive.

12. CARE program benefits are not limited to residential customers and there is no evidence to support the contention that CARE surcharges have caused businesses to fail.

13. PG&E's proposal to allocate SGIP costs to all customers on an equal-cents-per-therm basis is reasonable and consistent with the Commission's policy to spread the costs of environmental programs to all customers.

14. Economic literature does not resolve whether replacement costs are appropriately included in long run marginal cost calculations.

15. PG&E argues convincingly that replacement cost for distribution facilities are already recognized in marginal distribution costs.

16. CCC/CMTA proposes a variation of a way to calculate the "hook-up" portion of marginal customer costs that it refers to as the "mortgage method" that is comparable to the "rental" method the Commission has rejected in the past.

17. CCC/CMTA has not adequately justified changing the calculation of that element of marginal customer costs referred to as "hook-up costs."

Conclusions of Law

1. The agreement submitted by PG&E, ORA and TURN and identified in this proceeding as Exhibit 29 is consistent with the law, the record of the proceeding and otherwise reasonable except to the extent set forth herein.

2. As a regulated utility, the Commission should grant West Coast some rate relief. PG&E should be ordered to bill West Coast at the rates adopted herein.

3. The agreement submitted by PG&E, WMA and TURN resolving master meter discounts for mobile home park owners is reasonable and consistent with § 739.5.

4. The Commission should decline to change the allocation of $21 million of CARE costs.

5. PG&E should be required to allocate SGIP costs to all customer classes on an equal cents per therm basis. It should seek recovery of SGIP costs as part of its annual advice letter process, as it requests, except that in future funding periods, PG&E may not recover SGIP costs prior to a Commission review or audit of SGIP expenditures.

6. The calculation of marginal customer costs for gas service should not continue to include a value recognizing replacement costs of gas facilities.

7. The gas throughput forecasts proposed by PG&E, TURN and ORA in Exhibit 29 should be adopted.

8. PG&E's risk for noncore gas distribution throughput should be set at 25% of revenues, as proposed by PG&E, TURN and ORA in Exhibit 29.

9. The provisions of the agreement between PG&E and Clean Energy addressing PG&E's natural gas vehicle compression charges should be adopted.

10. The minor changes to marginal costs described in Section 8.c of this decision should be adopted.

11. The agreement between West Coast and PG&E to gradually increase West Coast's distribution rates is reasonable as a way to prevent extraordinary rate increases to West Coast's residential customers.

INTERIM ORDER

IT IS ORDERED that:

1. Pacific Gas and Electric Company (PG&E) shall file, no later than 30 days after the effective date of this order, revised tariff schedules which implement the adopted changes shown in Appendix A. The revised tariff schedules shall comply with General Order 96-A and shall apply to service rendered on or after their effective date of July 1, 2005. The tariffs shall not include any modifications except those expressly authorized by this decision.

2. PG&E's subject application is granted to the extent expressly set forth herein.

3. The Agreement between The Utility Reform Network, PG&E and Office of Ratepayer Advocates identified as Exhibit 29 is approved except to the extent set forth herein.

4. The Agreement between PG&E and Clean Energy resolving natural gas compression charges is approved.

5. The Agreement between PG&E, TURN and Western Mobilehome Community Housing Association addressing master meter discounts for mobile home park owners is approved.

6. The agreement between West Coast Gas Company and PG&E for distribution services to West Coast is adopted.

7. Application 04-07-044 is closed.

This order is effective today.

Dated June 16, 2005 at San Francisco, California.

Previous PageTop Of PageGo To First Page