Discussion

The Commission is concerned with concluding this combined BCAP proceeding in as expeditious manner as is logistically possible. Potentially, the inclusion of the embedded cost-based methodology, to be considered along side the LRMC methodology could complicate and prolong the proceeding. Therefore, there is a certain appeal to EGA's motion to strike the embedded cost testimony from this proceeding. Continuing with just the long-standing LRMC methodology might simplify and expedite this combined BCAP.

However, the Commission is also concerned with state-wide consistency. In PG&E's last BCAP, LRMC were used to allocate costs for distribution and customer costs. PG&E's rates will be in effect for two more years. As many parties argued, to use different methodologies for the utilities may result in some inconsistencies in rates for classes of customers. While consistency alone is not a primary goal, the Commission has frequently deviated from cost allocations based solely on LRMC, and has been moving towards embedded costs for unbundled transmission and storage functions, as evidenced in both the recent decision in the GIR, and in the Gas Accord for PG&E. Therefore, it is apparent that the Commission is interested in comparing LRMC and embedded cost for cost allocation purposes. For this reason, EGA's motion to strike testimony on embedded cost-based allocation is denied. Testimony on embedded costs will be compared with the testimony on LRMC, to enable parties and the Commission to determine which method, or combination of methods, is most appropriate for allocation among customers of each utilities' non-gas costs of service. Including an embedded cost analysis in this BCAP might require more work from all the parties, but the record will then be as complete as possible so that the Commission can make a well-informed decision.