IV. Protests

The key areas of parties' disagreement with PG&E's application are the following:

· A&M costs. Whether the $16.4 million in A&M costs that PG&E wishes to allocate to all ratepayers should instead be borne by PG&E shareholders and/or the participants in the program.

· Performance targets. Whether PG&E shareholders should be required to guarantee a certain level of emission reductions.

· Tax deductibility. Whether PG&E should pursue tax deductibility of premiums.

· Composition and authority of the EAG. Whether the EAG should have decision making authority over the program, or, as PG&E has agreed, include new member slots representing new viewpoints (e.g., agriculture).

· Types of emission reductions purchased. Whether the program should include only forestry programs (in which PG&E would use program premiums to contract with third parties to plant, conserve or manage forests, which sequester GHGs), or be expanded to other GHG reduction methods, such as manure management.

· Role of and funding to CCAR. Whether PG&E should allocate more than its proposed $900,000 in ratepayer dollars to CCAR to develop new emissions reduction protocols, and whether this expenditure gives PG&E undue influence in CCAR's processes.

· Marketing content and materials. Whether the Commission and others should have input into the marketing of the program to customers, and whether the marketing campaign should use recycled materials.

· Miscellaneous ratemaking issues.

· Disposition of the interest rate on amounts collected from customers and not yet spent on emission reduction projects.

· Credit to ratepayers of tax benefits created by retirement of GHG reductions.

· How A&M costs should be allocated to retail rate classes.

· Overall program structure. Finally, TURN advocates a different program structure altogether. It asserts that PG&E's application is lacking in detail, and that the market for forest projects is too uncertain at this time. Thus, TURN proposes that the Commission allocate PG&E a certain amount of ratepayer funding to directly purchase emissions reductions. In this way, PG&E would avoid incurring A&M costs because it would not need to sign up customers for its program. It would simply buy the reductions itself.

We discuss - and where appropriate, adopt - these proposed modifications below.