10. Whether PG&E's Shareholders Should Contribute to Program Costs

10.1. Positions of Parties

PG&E states that its shareholders do not benefit from the proposal. Rather, they are given an opportunity to invest. Additionally, PG&E says that the risk of disallowances will provide a check on PG&E's actions.

DRA states that shareholders should not be required to contribute, but there must be some assurance that the CTM will remain positive for a reasonable period of time.

TURN states that while it would be fair for shareholders to contribute, it does not recommend doing so because it would be difficult to manage and track.

CCSF states that since shareholders would benefit from the incentives, they should share in the costs.

Hercules argues that, rather than requiring shareholders to contribute, the public interest would be better served by requiring shareholders to improve the quality of service or decrease the cost to ratepayers of expensive corporate perks.

MID says PG&E's shareholders should pay for 25% of the costs of the proposal because they will benefit from it.

10.2. Discussion

PG&E justifies its incentive proposal by saying that incentives will only be offered if they would provide a positive CTM when analyzed for a 30-year period. There is a risk, particularly when forecasting costs and benefits 30 years into the future, that the forecast could be wrong. In addition, the forecast NPV of the CTM could be as low as $1 for any individual project. Thus, the proposed incentives would impose a risk on ratepayers.

Shareholders will benefit from the incentives because they will have the opportunity to earn a return on their capital investment made to serve the resulting new customers. There is some risk to shareholders regarding the return on investment. However, their risk is not directly associated with whether the incentives generate a positive CTM. In addition, the record does not indicate that the risk faced by shareholders due to the incentives is as great as the risk faced by ratepayers.

One way to reduce the risk to ratepayers, in addition to or instead of a threshold CTM as discussed previously, would be to have shareholders bear some of the costs. CCSF and MID both propose that if the application is approved, shareholders bear some of the costs. Only MID makes a specific recommendation of 25% of the cost of the incentive. However, neither CCSF or MID propose how the sharing would be implemented. Therefore, although having shareholders bear some of the costs associated with the incentives merits consideration as a reasonable way to lessen the risk on ratepayers, the record is not sufficient for us to do so.