PG&E's Request

PG&E requests authorization to recover, on a prospective basis, the cost of franchise fees it pays to cities and counties in conjunction with the revenues it collects under electric Preliminary Statement Part AS - Fixed Transition Amount Charge, to repay the RRBs authorized by D.97-09-055. PG&E states that it does not currently recover the cost of franchise fees paid to local governments in conjunction with the revenues collected to repay RRBs because PG&E failed to include the necessary ratemaking mechanisms in the tariffs it filed to implement D.97-09-055. PG&E seeks to correct this oversight through an entry in the Preliminary Statement Part CZ -DRAM of its tariff.

In support of its argument that the Commission intended that PG&E should recover the cost of these franchise fees, PG&E states that when it modeled the ratepayer savings calculations in its prepared testimony (chapter 4) in the RRB proceeding related franchise fees were included in the revenue requirement calculations for both the asset amortization table (Table 4-A, pp. 4-8, line 22) and the bond repayment alternatives (Table 4-A, pp 4-9 through 4-11, line 31). Also, the Financing Order (D.97-09-055, p. 16) discusses ratepayer benefits ". . . calculated in accordance with the bond sizing model described in PG&E's prepared testimony . . ." and Finding of Fact 3 states, "Residential and small commercial customers will benefit from the issuance of rate reductions bonds and the reduction of rates provided that the net present value of fixed transition amounts and rate reductions is positive when calculated in accordance with methodology set forth by PG&E in its application and related testimony." PG&E says it was the Commission's (as well as PG&E's) intention to include related franchise fees in both the costs and benefits of the RRB transaction.

Further, PG&E states that it normally deducts the cost of franchise fees from any revenue stream it receives before those revenues are applied against other costs. However, because legally no restrictions can be placed on the revenues collected to repay RRBs, PG&E does not remove RRB revenue franchise fee costs from the amounts collected under Preliminary Statement Past AS - Fixed Transition Amount Charge. PG&E states that all additional benefits from the RRB financing were, and are, returned to customers through the Rate Reduction Bond Memorandum Account.

Also, PG&E points out that Southern California Edison Company (SCE) recovers the cost of RRB revenue franchise fees in its electric rates. PG&E submits that, consistent with its financing order and the treatment SCE is receiving under its financing order, PG&E should be authorized to recover these franchise fee costs on a prospective basis.