10. SDG&E's Wildfires Update

When SDG&E filed A.04-06-035, $66.4 million had already been recorded to SDG&E's Wildfires Account through May 31, 2004. As updated in Ex. SDG&E-9,⁴⁹ SDG&E's actual total firestorm costs recorded through December 31, 2004 are $70.6 million, representing a difference of $4.2 million from May 31, 2004. According to SDG&E, the difference is the result of approximately $0.2 million of O&M (primarily environmental costs and accounting adjustments) and $4.0 million of capital expenditures primarily incurred for the rebuilding of Circuit 79⁵⁰ and the smaller amount spent on Circuit 176 that serves the eastern area of the city of Poway.

$2.9 million of the additional costs recorded through December 31, 2004 are incremental Commission jurisdictional costs, and according to SDG&E, the balance of $1.3 million is non-incremental and should be excluded from the Wildfires Account. The capital costs were not included when the application was filed because SDG&E records the costs in the Wildfires Account after the work is completed.⁵¹

On February 4, 2005, SDG&E filed Ex. SDG&E-10, which as errata to Ex. SDG&E-9, made several adjustments to the update. As updated⁵² in Ex. SDG&E-10, SDG&E's actual total firestorm costs recorded through December 31, 2004 are $71.1 million, representing an increase of $4.7 million ($71.1 million less $66.4 million) from May 31, 2004. Thus the errata, Ex. SDG&E-10, increased the total by $500,000 compared to the Late-filed Update Ex. SDG&E-9 ($71.1 million less $70.6 million).

Wildfire Costs Including Update & Errata

			CPUC
	Total Cost	(FERC) Electric Transmission	Electric Distribution	Gas	Total CPUC
O&M Expenses:
Pre-Update O&M	$ 18,032	$ 1,569	$ 15,865	$ 598	$ 16,463
Internal Labor	$ 11	1	$ 10	$ -	$ 10
Materials	4	(1)	5	-	5
Overhead	10	1	9	-	9
Vehicle Charges	(2)	-	(2)	-	(2)
External Labor	8	-	8	-	8
Services/Other	225	16	$ 208	1	209
Update & Errata	$ 256	$ 17	$ 238	1	239
Total O&M	$ 18,288	$ 1,586	$ 16,103	$ 599	$ 16,702
Capital Costs:
Pre-Update Capital	$ 48,395	$ 6,847	$ 41,445	$ 103	$ 41,548
Internal Labor	$ 47	-	$ 41	$6	47
Materials	19	-	17	2	19
Overhead	1,229	2	1,213	14	1,227
Vehicle Charges	30	-	29	1	30
External Labor	342	-	342	-	342
Services/Other	2,813	6	2,807	-	2,807
Update & Errata	4,480	8	4,449	23	4,472
Total Capital	$52,875	$ 6,855	$ 45,894	$ 126	$46,020
Updated Total	$ 71,163	$ 8,441	$ 61,997	$ 725	$ 62,722

According to SDG&E, the final difference is the result of approximately $0.3 million of O&M (primarily environmental costs and accounting adjustments) and $4.4 million of capital expenditures primarily incurred for the rebuilding of Circuit 79⁵³ and the smaller amount spent on Circuit 176 that serves the eastern area of the city of Poway. As revised, $3.2 million of the additional costs recorded through December 31, 2004 are incremental Commission jurisdictional costs, and according to SDG&E, the balance of $1.5 million is non-incremental and should be excluded from the Wildfires Account.

Memo Account-Eligible Wildfire Costs
Including Update & Errata

	Total (CPUC) (a)	Memo Account (b)	Current Rates (b)
Pre-Update O&M Internal Labor Materials Overhead Vehicle Charges External Labor Services/Other Update & Errata Total O&M Capital Costs: Pre-Update Capital Internal Labor Materials Overhead Vehicle Charges External Labor Services/Other Update & Errata Total Capital Total Wildfire	$ 16,463	$ 12,056	$ 4,407
	$ 10	-	$ 10
	5	-	5
	9	44	(35)
	(2)	-	(2)
	8	-	8
	209	(17)	226
	$ 239	$ 27	$ 212
	$ 16,702	$ 12,083	$ 4,619
	$ 41,548	$ 25,605	$15,943
	$ 47	5	42
	19	19	-
	1,227	5	1,222
	30	-	30
	342	342	-
	2,807	2,745	$62
	$ 4,472	$ 3,116	$ 1,356
	$ 46,020	$ 28,721	$ 17,237
	$ 62,722	$ 40,804	$ 21,919
(a) Ex. SDG&E-10, attached Ex. D-1. (b) Ex. SDG&E-10, attached Ex. D-2.

On February 9, 2004, ORA and UCAN filed comments on SDG&E's updated testimony and errata. ORA had no objections. UCAN was succinct: it questioned the late inclusion of $600,000 of costs incurred prior to May 31, 2004; and secondly, UCAN pointed out that the update and errata include $209,000 of environmental costs which it believes supports UCAN's contention that the environmental costs are connected with the cost of installation of a capital project and should be capitalized.⁵⁴ UCAN does not convince us that SDG&E's earlier omission is somehow unrecoverable when included in an update. We know from SDG&E's testimony and ORA's review that SDG&E established reasonable accounting procedures to segregate and track the Wildfire costs. Corrections and updates are not innately unreasonable. We will not make this adjustment.

⁴⁹ Filed on January 18, 2005.

⁵⁰ "Circuit 79 is a 12 kV electric distribution line that traverses through Cuyamaca Rancho State Park. Circuit 79 was extensively damaged during the firestorm and as a result had to be rebuilt and relocated." (Ex. SDG&E-9. p. 1-2.)

⁵¹ Ex. SDG&E-9. p. 1.

⁵² Ex. SDG&E-10, p 2.

⁵³ "Circuit 79 is a 12 kV electric distribution line that traverses through Cuyamaca Rancho State Park. Circuit 79 was extensively damaged during the firestorm and as a result had to be rebuilt and relocated." (Ex. SDG&E-9. p. 1-2.)

⁵⁴ UCAN comments, p. 3.