VIII. Prospective Remedies

A. Changes to Rule 9

Rule 9 provides that estimated usage, for the purpose of issuing an estimated bill, will be calculated considering the customer's prior usage and the general characteristics of the customer's operations. PG&E's estimation methodology is as follows: If it is available, PG&E uses the customer's average daily usage (ADU) from the prior year, same month multiplied by the number of days in the current billing period. If the prior year's ADU is not available, and the customer's current year, prior month's ADU is based on an actual read, PG&E uses the prior month's ADU at the same service point multiplied by a trend factor for the customer's area and the number of days in the current billing period. If no historical information is available, PG&E uses a trend table to calculate an estimate based on a number of factors including rate schedule, baseline territory, and billing month.

CPSD recommends that we amend Rule 9 to require calculation of estimated usage based on the customer's ADU from the same time in the prior year, multiplied by the number of days in the current billing period, even if the prior year's ADU was an estimated read. CPSD notes that using the prior year, same month's ADU shown on the customer's bill as the estimated usage, even if the ADU is itself an estimate, is straightforward and easy for the customer to understand. CPSD also notes that PG&E's alternative methodologies can result in a higher estimate than using the estimated prior year, same month ADU.³²

We do not adopt CPSD's proposal. The record does not demonstrate that using a prior year's ADU that was based on an estimated read results in a better estimate than PG&E's alternative methodologies in the absence of historical information. To the contrary, the record suggests that PG&E's methodologies result in more accurate estimates. We are mindful that, as this case highlights, PG&E cannot collect undercharges on estimated bills beyond Rule 17.1 backbilling time limits. Under these circumstances, on balance we conclude that accuracy is more important than simplicity.

B. Ratemaking Treatment of Uncollectible Amounts

Pursuant to its tariffs, PG&E records amounts never billed because of Rule 17.1 time limits in its balancing accounts. Its balancing accounts serve to ensure that PG&E reaches, but does not exceed, its costs or authorized revenue requirements. Thus, the marginal decrease in the billed revenues for uncollectible amounts is passed on to other ratepayers at the next rate change.

TURN recommends prospective ratemaking treatment to place the financial risk of billing errors on the utility, as it is has the opportunity to detect and correct them. Specifically, TURN recommends that uncollectible amounts arising from the Rule 17.1 backbilling time limits be recorded simultaneously in PG&E's balancing accounts and as uncollectible by tariff, above and apart from a $250,000 threshold for uncollectible amounts associated with residential estimated bills; this threshold allowance recognizes that some small threshold level of estimated bills is unavoidable, even if within PG&E's control.

We reject TURN's recommended ratemaking treatment, without prejudice to the opportunity to reconsider it in PG&E's future general rate cases or, if PG&E's performance in minimizing billing error falters, in a complaint or investigation. We expect PG&E to report on its performance in this regard in its future general rate cases.

The record is insufficient to determine the cost of implementing TURN's recommendation. PG&E asserts that modifying the system to allow it to track undercollections from estimated bills into each of these accounts so that the $250,000 annual threshold could be recognized would be complicated and expensive and increase the potential for error. Although TURN counters, in its reply brief, that its proposal can be implemented with a simple one-time programming change to the company's billing and accounting systems to treat the $250,000 as an uncollectible adder, TURN does not cite to any record evidence for this suggestion.

In addition, the record suggests no pressing need to adopt ratemaking changes in order to encourage the utility to minimize billing error. PG&E's misinterpretation of billing error as excluding delayed and estimated bills presumably contributed to its failure to minimize those billing errors. Since our reaffirmation in Resolution G-3372 that delayed bills and estimated bills within the utility's control are billing error, PG&E has made significant progress in reducing these bills. Indeed, TURN bases its recommended $250,000 threshold for uncollectible amounts associated with residential estimated bills on PG&E's performance since we addressed its misinterpretation of Rule 17.1.

In weighing our interest in providing an incentive for PG&E to minimize billing error (Retroactive Billing Decision, supra, 21 CPUC2d at 274-275) against the absence of evidence that PG&E's performance has been unacceptable since the issuance of Resolution G-3372 and the inconclusiveness of evidence on the cost of implementing TURN's proposal, we conclude that TURN's proposal is not supported by the record. Nevertheless, in order to monitor PG&E's performance and progress in minimizing billing error, we direct PG&E to routinely report on its performance in this regard in its future general rate cases. Specifically, we require PG&E to report in its general rate cases on the number and amount of delayed bills and estimated bills, over time, that are uncollectible pursuant to Rule 17.1 time limits.

³² CPSD does not suggest, and the record does not demonstrate, that these higher estimates result in overcharges.