2. Scope
The scope of this proceeding is as follows:
· Determine and adopt a forecasted revenue requirement for Pacific Gas and Electric Company's (PG&E) Energy Resource Recovery Account (ERRA) for 2006.
· Determine and adopt a forecasted revenue requirement for PG&E's ongoing Competition Transition Charge (CTC) for 2006.
· Set rates that will enable PG&E to recover its 2006 forecasted revenue requirement for the ERRA and ongoing CTC.
A key variable for determining the ongoing CTC revenue requirement is the benchmark price for electric power. The benchmark price used by this proceeding will be based on the 20-year levelized cost of a combined cycle gas-fired turbine (CCGT) computed by the California Energy Commission (CEC) or by CPUC staff running the CEC's CCGT model. The CCGT model will use (1) the non-gas inputs used to calculate the 20-year baseload market price referent adopted by Resolution E-3942, issued on July 21, 2005, and (2) a 20-year forecast of natural gas prices provided by the CEC or CPUC's Energy Division.1 It is anticipated that the CEC or CPUC staff will provide an updated benchmark price by September 9, 2005. PG&E shall incorporate this update into its forecast of ongoing CTC and file and serve by September 13, 2005, a supplement to Application (A.) 05-06-007 containing the updated ongoing CTC.
With one exception, this proceeding will not re-litigate issues decided in previous ERRA/CTC proceedings that are currently subject to applications for rehearing.2 The one exception is PG&E's proposal in A.05-06-007 to require departing load customers to pay a higher CTC rate than bundled service and direct access customers. Parties may address whether PG&E's proposal violates Decision (D.) 05-01-035. All other aspects of PG&E's proposal that are subject to applications for rehearing are outside the scope of this proceeding.
Also excluded from the scope of this proceeding are issues associated with (1) the manipulation of energy markets and other abuses that occurred during the energy crisis of 2000 - 2001, and (2) refunds that PG&E has or will receive from power producers for price gouging connected with the energy crisis of 2000 - 2001. All such refunds must be flowed through to PG&E's ratepayers. The mechanism for doing so is identified in D.04-11-015, and this mechanism does not include the ERRA and ongoing CTC that are the subject of this proceeding.3
1 This proceeding will use the 20-year gas forecast in the CEC's gas report if it is available on a timely basis. The CEC's preliminary gas report is available at the following internet address: http://www.energy.ca.gov/2005publications/CEC-600-2005-026/CEC-600-2005-026.PDF. Supporting documents are available at the following internet address: http://www.energy.ca.gov/2005_energypolicy/documents/index.html#071405. If the CEC's gas report is not available on a timely basis, this proceeding will use the CPUC's avoided cost gas forecasting methodology that incorporates recent market data.
2 It is anticipated that the rates established by this proceeding will be set subject to adjustment and true-up, if necessary, to reflect the resolution of pending applications for rehearing.
3 D.04-11-015 authorized PG&E to issue Energy Recovery Bonds (ERBs) to refinance costs incurred by PG&E during the energy crisis, including exorbitant prices paid to electric power suppliers. D.04-11-015 requires that any refunds received by PG&E from the power suppliers for price gouging be used to reduce the cost of the ERBs passed through to ratepayers. (See PHC transcript, pp. 3 - 4, for a brief description of the mechanism used to pass through the refunds to ratepayers.) Additionally, PG&E must pay interest to ratepayers on the refunds until the proceeds are passed through to ratepayers.
