VII. Interaction with Other Proceedings

Several parties, e.g., WPTF, ARM, Commonwealth, New Energy, and CEC, request that the Commission, in this proceeding, affirm that PX credit issues will definitively be resolved in the 1999 RAP, A.99-08-022 et al. Specifically, these parties argue that UDCs have an unfair advantage in competing with ESPs because the PX price is passed through to bundled customers at the wholesale level, while ESPs must charge retail prices to cover their costs. In other words, the competitors state that the UDCs' costs of procuring energy (overhead, scheduling, bidding, etc.) are subsidized by distribution rates, while the ESPs have no such subsidy. They want the Commission to strongly convey that it intends to remedy the situation in the 1999 RAP. WPTF also recommends that the Commission take no position in this proceeding regarding default rates that would later bind the options of the Commission in determining the default provider issue.

The CEC advocates that this decision "should clarify that PECA is the basis for the frozen rate energy charge on all customer bills for SCE and PG&E during the balance of the rate freeze period for these two utilities, as well as the basis for default energy procurement service following the termination of the rate freeze for any UDC." (CEC brief, p. 30.) ARM argues that the Commission should make clear that the methodology developed in the 1999 RAP for calculating PX credits during the rate freeze will be the methodology used for calculating generation rates for the post-freeze period and will be applied immediately to SDG&E.

PG&E, SCE , SDG&E, and Farm Bureau argue that a Scoping Memo in the 1999 RAP was issued on October 19, 1999, stating the issues to be reviewed in that proceeding. Since that ruling recognizes that PX credit issues are designated for the RAP, no further statement here is necessary. The issues are squarely before us in A.99-08-022 et al.

In this decision we adopt a PECA to record procurement costs and revenues in order to set the procurement rate. In the post rate freeze era, PECA effectively replaces the PX credit approach as the way of setting energy rates. We agree that all elements adopted as part of the PX credit during the rate freeze should also be reflected in the post-rate freeze procurement rate. The costs booked to PECA and the resultant rate should reflect all costs adopted as part of the PX credit in the 1999 RAP for each utility. SDG&E should adjust its PECA tariffs accordingly.

SDG&E and UCAN also point out that there is an overlap in the RAP and this proceeding in relation to the Rate Reduction Bond Memorandum Account. SDG&E argues that an audit of the balances in that account may be reviewed in the RAP. We agree and find that this audit should occur in SDG&E's next RAP. We direct Energy Division to conduct an audit of SDG&E's Rate Reduction Bond Memorandum Account and associated savings to ratepayers. We leave it to the assigned Commissioner and ALJ to set the schedule for this audit report.

ORA agrees with Edison's proposal to maintain both the RAP and the ATCP post rate freeze. The modified RAP would be a forecast proceeding and would include the justification for various revenue requirement forecasts and consolidation for various costs and payments. The ATCP would be a reasonableness proceeding, which would review transition cost recovery for ongoing transition costs. PG&E would rather consolidate those two proceeding and call it the Annual Electric Ratesetting Proceeding (AERP), with both a forecast and reasonableness phase.

The RAP was first discussed in D.96-12-077 and D.96-12-088. It was established to compare each utility's authorized revenue requirement with actual recorded revenues and to update authorized revenues for PBR and other proceedings. By Coordinating Commissioner's Ruling issued March 14, 1998 in R.94-04-031 and the Scoping Memo issued in A.98-07-006, the RAP has evolved into a consideration of revenue allocation and rate design during the rate freeze, the accuracy of the PX credit, and other accounting issues, such as the elimination or modification of balancing accounts and memorandum accounts. The ATCP was established in D.97-06-060 and D.97-11-074 to review recorded TCBA entries and to review accelerated amortization of uneconomic generation assets. The purpose of this proceeding is to review transition-cost related costs and revenues and to determine if all entries are justified.

On both procedural and substantive grounds, we agree with Edison and ORA's proposal to retain separate proceedings. The modified RAP will address forecast issues as necessary and the modified ATCP will address reasonableness issues, including a review of procurement costs to the extent costs above the wholesale PX or qualified exchange rate are included in the PECA. The issues are likely to be different, with different procedural tracks. Because the Commission is encouraged to close ratesetting proceedings within 18 months (SB 960, Stats. 1996 Ch.856), it is reasonable to ensure that the issues addressed in these proceedings are discrete. ORA appears to agree with Edison that the modified ATCP should include the review of the operation of various balancing and memorandum accounts, such as accounts associated with PBR exclusions, and public purpose programs. Edison has clarified that this review should include a review of the reasonableness, status, and compliance with Commission decisions or legislation. It may be reasonable to consolidate the RAP and ATCP proceedings after the rate freeze, but we need a better sense of what each of these proceedings will accomplish at that time.

Finally, as we have stated previously, D.99-10-065 designated a timeframe for deciding the default provider issue.