Revenue Requirement Adopted in D.04-12-015

In D.04-12-015 the Commission adopted a test year 2004 revenue requirement based upon the following discussion:

Based on D.04-07-022, this decision [D.04-12-015] includes $27.648 million for 2004 capital expenditures and $61.067 million for 2004 operating expenses. It should be noted that these costs were based in principle on the text of D.04-07-022, and numerically relied upon the SCE Results of Operation (RO) model [Ex. 409] for calculations of SONGS costs billed to participants by SCE. While it appears that SCE and SDG&E have an intricate system for billing of SONGS-related costs pursuant to their Operating Agreement, the costs approved in this Decision reflect not only the deductions that the Commission made in the SCE Decision, but also the costs that SCE deducted in its model to reflect billing to the other participants. This is what ultimately determines the approved revenue requirement. (Mimeo., p. 24.)

SDG&E sought rehearing for a portion of this calculation in D.04-12-015. There is no dispute over the forecast for any of the costs directly incurred by SDG&E.

It should be noted that the ALJ's Proposed Decision described the same test year 2004 allowance differently:

Based on D.04-07-022, this decision includes $7.597 million for 2004 capital expenditures and $41.848 million for 2004 operating expenses.⁶

The ALJ's Proposed Decision is helpful here because it delineated the specific Edison Operation and Maintenance (O&M) accounts (in footnote 201) which were used as the basis of the Commission's calculation in both the ALJ's Proposed Decision and the alternate that was subsequently adopted as D.04-12-015.

SDG&E seeks an additional $9.485 million for the test year 2004 forecast of SONGS O&M costs.⁷

1. Edison Results Sharing $2.999 million

2. Edison Internal Market Mechanism $2.486 million

3. Edison PBOPs⁸ $0.683 million

4. Methodology for Contractual Overheads $2.538 million

5. Escalation Rates $0.779 million

Total $9.485 million

SDG&E's original request was $66.180 million for SONGS 2 and 3 O&M expenses in the Edison rate case,⁹ and a further $2.579 million for SONGS 1 Shutdown O&M¹⁰ for a total of $68.759 million for test year 2004. These were later updated to $67.586 million and $2,635 million for a total of $70.221 million. In its own rate proceeding SDG&E offered testimony that it estimated the costs as (1) a 20% share of the 100% level of SONGS O&M costs, (2) a share of Edison overhead costs for Administrative and General expenses, Pension and Benefits, and Payroll taxes billed to SDG&E by Edison, and (3) "adjustments were made to account for costs which do not appear in SCE's (Edison's) SONGS GRC exhibits, but which are billed to SDG&E (i.e., SCE's Results Sharing, SCE Post-Retirement Benefits other than Pensions and SCE Internal Market Mechanism Costs)."¹¹ The following table is derived from Ex. 261, Table 1, and Appendix A-6 in Ex. 170 without SDG&E's rounding upward. (Thus, SDG&E variously refers to $66.179 million or $66.2 million or $66.180 million.)

SDG&E's Original Request for 2004 SONGS O&M ($000)
Songs 2 & 3 at 100% - 2000$12	$196,967
SDG&E Share 2000$	39,393
SCE Results Sharing	2,400
Total SDG&E Share (2000$)	$41,793
Escalation (2000$ to 2004$)	5,687
SCE Labor A&G Overhead	8,919
SCE Non-Labor Overhead	192
SCE Pension and Benefits Overhead	4,821
SCE Payroll Taxes	1,948
SCE Internal Market Mechanisms	2,316
SCE PBOPS	503
Total SDG&E SONGS 2&3 O&M (2004$)	$66,179

SDG&E updated its SONGS 2 and 3 O& M request in Table 1, Ex. 414, (Ex. 170, Appendix B-4).

SDG&E's Updated Request for 2004 SONGS O&M ($000)
Songs 2 & 3 at 100% - 2000$	$197,783
SDG&E Share 2000$	39,557
SCE Results Sharing	2,400
Total SDG&E Share (2000$)	$41,793
Escalation (2000$ to 2004$)	5,287
SCE Labor A&G Overhead	8,860
SCE Non-Labor Overhead	192
SCE Pension and Benefits Overhead	6,141
SCE Payroll Taxes	2,211
SCE Internal Market Mechanisms	2,435
SCE PBOPS	503
Total SDG&E SONGS 2&3 O&M (2004$)	$67,586

SDG&E also requested SONGS 1 Shutdown costs that totaled $2.579 million - or rounded as $2.6 million. Again, SDG&E rounded $2,581 million down in Ex. 261, Table 3, and Appendix A-7, Ex. 170 to $2.579 million.

SDG&E Request for 2004 SONGS 1 Shutdown O&M ($000)
Songs 1 Direct 100% - 2000$	$3,864
SONGS 1 Common - 2000$	3,310
Total SONGS 1 - 2000$	$7,174
SDG&E Share (2000$)	$1,435
Escalation (2000$ to 2004$)	208
SCE Labor A&G Overhead	405
SCE Non-Labor Overhead	5
SCE Pension and Benefits Overhead	219
SCE Payroll Taxes	80
SCE Internal Market Mechanisms	49
SCE PBOPS	180
Total SDG&E SONGS 1 Shutdown (2004$)	$2,581

SDG&E up-dated its SONGS 1 Shutdown O&M request also in Table 3, Ex. 414 (Ex. 170, Appendix B-6).

SDG&E Updated Request for 2004 SONGS 1 Shutdown O&M ($000)
Songs 1 Direct 100% - 2000$	$3,864
SONGS 1 Common - 2000$	3,310
Total SONGS 1 - 2000$	$7,174
SDG&E Share (2000$)	$1,435
Escalation (2000$ to 2004$)	193
SCE Labor A&G Overhead	402
SCE Non-Labor Overhead	5
SCE Pension and Benefits Overhead	279
SCE Payroll Taxes	90
SCE Internal Market Mechanisms	51
SCE PBOPS	180
Total SDG&E SONGS 1 Shutdown (2004$)	$2,635

From the Commission's discussions in D.04-07-022 of (1) SDG&E's request in A.02-05-004, and (2) other Edison costs related to SONGS O&M, we need to determine what the Commission intended to allow SDG&E for rate recovery in D.04-07-022, and compare that to the allowance included in D.04-12-015 for SDG&E's A.02-12-028.

⁶ "These expenses are included in Accounts 517, 519, 520, 523, 524, 525, 528, 529, 530, 531, and 532, in the results of operations in support of this decision." This was footnote 201 in the ALJ's Proposed Decision. This detailed listing of accounts was not included in D.04-12-015.

⁷ Ex. 170, p. MRO-8.

⁸ Post-retirement Benefits Other than Pensions.

⁹ See Ex. 261, Table 1 (Edison's A. 02-05-004), and also, Appendix A-7 in Ex. 170 (SDG&E's A.02-12-028). Both citations are relevant because it is important to discern whether or not the evidence presented now by SDG&E in rehearing was before the Commission when it decided A.02-05-004.

¹⁰ Ex. 261 Table 3 and Ex. 170, Appendix A-8.

¹¹ Ex. 261, pp. 1 - 2, and Ex. 170, Appendix A-3.

¹² Dollar values are stated in a constant-year value as 2000$, 2001$, etc., to denote the constant year.