COM/CXW/mnt ALTERNATE DRAFT
Agenda ID #3937
(Alternate to Agenda ID #3936)
Ratesetting
Decision ALTERNATE PROPOSED DECISION OF COMMISSIONER WOOD
Mailed ________
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of SOUTHERN CALIFORNIA GAS COMPANY for authority to update its gas revenue requirement and base rates. (U 904 G) |
Application 02-12-027 (Filed December 20, 2002) |
|
Application of SAN DIEGO GAS & ELECTRIC COMPANY for authority to update its gas and electric revenue requirement and base rates. (U 902-M) |
Application 02-12-028 (Filed December 20, 2002) |
|
Investigation on the Commission's Own Motion into the Rates, Operations, Practices, Service and Facilities of Southern California Gas Company and San Diego Gas & Electric Company. |
Investigation 03-03-016 (Filed March 13, 2003) |
(See Appendix A for a list of appearances.)
COST OF SERVICE TEST YEAR 2004 FOR
SOUTHERN CALIFORNIA GAS COMPANY AND SAN DIEGO GAS &
ELECTRIC COMPANY
TABLE OF CONTENTS
Title Page
PHASE ONE DECISION 2
COST OF SERVICE TEST YEAR 2004 FOR 2
SOUTHERN CALIFORNIA GAS COMPANY AND SAN DIEGO GAS & 2
ELECTRIC COMPANY 2
I. Summary 2
II. Overview of the Applications 2
III. The Framework for These Cost of Service Proceedings 4
IV. Legal Standards 8
A. The Public Utilities Act 8
B. Scoping Memo 10
3.1. Investment Planning 11
3.2. Safety and Reliability 11
3.3. Customer Service 11
3.4. Utility Operations 12
3.5. Diversity, Outreach, Contributions, and Minority Contracting 12
C. Burden of Proof 14
V. Procedural History 17
VI. Partial Settlements 19
A. The Partial Settlements are not Reasonable 21
B. The Greenlining Institute and SoCalGas and SDG&E Settlement Agreement 26
VII. Test Year Forecast Methodology 29
VIII. Return to the Rate Case Processing Plan 31
IX. Agreement Between Litigants 33
X. Escalation 35
XI. Employee Total Compensation 38
A. SoCalGas and SDG&E Incentive Compensation 44
B. Maturing Work Force 47
C. Pension and Benefits (Account 926) 48
D. Pension (Account 926.206) 50
1. Conversion to a Cash Benefit Plan 51
2. Reorganization Impacts on Pension Expense 52
3. Other Pension Issues 52
4. Recoverability of Pension Expenses in Rates 52
5. Supplemental Pension Requests 53
6. Corporate Center Pension Expenses 54
7. Conclusion 55
E. Medical Benefits 55
F. Dental and Vision Care Benefits 57
G. Other Benefits 58
H. Supererogatory Benefits 59
XII. Workers' Compensation - Account 925 61
XIII. Rate Base 63
XIV. Capitalization Policy 65
XV. SoCalGas Plant Additions 66
A. Gas Transmission 67
1. Gas Transmission Retrofit - Pipeline Integrity 67
2. Laboratory Equipment - Budget Category 718 69
B. Gas Engineering 70
1. Capital - Software Development Budget Category 723 70
C. Gas Distribution Operations - Capital Expenditures 70
1. Natural Gas Vehicle Project (Category 734) 70
2. New Business & Pressure Betterment 71
3. Routine Main Replacement 71
4. Routine Service Replacement 73
5. Freeway/Franchise Work 74
6. Other Capital Replacements 75
7. Cathodic Protection 76
8. Special Main Replacements 76
9. Measurement Equipment 77
10. Support Labor 80
11. Software Application - Gas Maintenance & Inspection 80
D. Information Technology Capital Expenditures 81
1. Windows 2000 82
E. Information Technology - Desktop and Laptop Computers 82
F. Customer Service 89
1. Dispatch Phase I and II 89
XVI. SDG&E Capital Additions 89
A. Gas Distribution 90
1. Geographic Information System and Maintenance & Inspections System 90
2. Budget Reduction Factor 92
3. Voice System Replacement Project 93
4. Otay Mesa Betterment Project 93
B. Electric Distribution 96
C. Blanket Budgets 96
D. Project 230 - Underground Cable Replacement Program 99
E. Capital Projects Other Than Blanket & Information Technology - Electric 100
1. Escalation 100
2. Sorento Substation 101
3. Sustainable Community Energy Systems 101
a) Determining the Right Level of Capital Additions Funding 103
F. Information Technology - Electric 106
G. Hourly Billing System (Phase II) - Electric 107
H. San Onofre Nuclear Generating Station - Electric 108
I. SONGS Costs Not In Edison's Rate Case 110
J. SDG&E Line Extension Issues 117
XVII. Working Cash - SoCalGas and SDG&E 118
A. Federal & State Tax Payment Lag 118
B. Municipal Taxes 119
C. Revenue Lag 120
D. Accrued Vacation and Withholdings 121
E. Customer Deposits 122
F. Hub and Swap Revenues 126
XVIII. Depreciation - SoCalGas and SDG&E 127
A. Simple Example of Depreciation 128
B. Remaining Life Estimates for SoCalGas and SDG&E 128
C. Simple Example of Net Salvage 129
D. Net Salvage Estimates for SoCalGas and SDG&E 130
XIX. Land Rights 132
XX. Test Year 2004 Customer Forecast 133
XXI. Clearing Accounts 134
A. SDG&E Account 163 - Purchasing and Warehousing 134
B. SoCalGas Account 184.2 - Business Solutions 134
C. SDG&E Account 184.2 - Fleet 135
D. SoCalGas Account 184.3 - Capital Tool Repair and Reconditioning 136
E. SoCalGas Account 184.4 - Customer Services 136
F. SoCalGas Account 184.6 - Tools and Uniforms 137
XXII. Operating & Maintenance - Gas Storage (SoCalGas) 138
A. SoCalGas Account 807 Gas Acquisition Costs 139
B. FERC Account 814 - Engineering and Supervision 139
C. FERC Account 824 - Other Expenses 141
D. Other Gas Storage Adjustments 142
E. SoCal Account 832 - Maintenance of Reservoirs and Wells 142
F. O&M - Gas Transmission 143
XXIII. Gas Distribution Operations 149
A. SoCalGas Account 870.0: Operation Supervision and Engineering - Distribution 150
B. SoCalGas Accounts 870.5 & 870.7: Operation Supervision and Engineering 151
C. SoCalGas Account 878: Meter and House Regulator Expense 151
D. SoCalGas Account 879 - Customer Installation Expense 151
1. Meter Replacements 151
2. Supervision 152
3. Seismic Valve Inspections 152
4. Maturing Workforce 153
5. ORA's Spreadsheets and Testimony 153
E. Fumigation Costs (Within Account 879) 154
F. SoCalGas and SDG&E CO Testing - Costs in Account 879 156
G. SoCalGas Account 880.3: Other Expenses - Distribution Field 157
H. SoCalGas Account 880.4: Other Expenses - Distribution Field 157
I. SoCalGas Account 880.5 - Safety & Emergency Services 158
J. SoCalGas Account 887 - Distribution Main Maintenance 159
K. SoCalGas Account 892 - Distribution Service Maintenance 161
L. SoCalGas Account 893.2 - Tin Meter Testing 162
M. SoCalGas - Information Technology Expense - Accounts 880, 903, & 923 163
N. SDG&E - Information Technology Expense - Accounts 588, 880, 903, 920, 921 and 935 164
O. SoCalGas Account 901 - Supervision (Staff Support Services) 165
P. SoCalGas Account 902 - Meter Reading Expense 165
Q. SDG&E Account 902 - Meter Reading 168
R. SoCalGas Account 903 - Customer Records and Collection Expenses 170
1. Call Volume (1) 171
2. Multi-Language Costs (2) 172
3. Maintenance (3) 174
4. Quality Assurance and Span of Control (4 & 6) 174
5. Pay Station Technology (5) 175
6. Paper Orders & Processing - Customer Billing (7) 175
7. Credit Analysis Staff (8) 176
8. Meter Reading - $0.455 million (9) 177
9. Call Volume Related Adjustments Customer Growth - Communications Expense (10) 178
10. Unadjusted Impact for Errata Ex. 7-E (11) 179
11. Fumigation Calls (12) 179
S. SDG&E Account 903.1 - Customer Records & Collections 179
1. Customer Information Expenses 180
2. Call Volume and Customer Growth 182
3. Special Services Staff 182
T. SDG&E Account 903.3 - Credit Collection 183
U. SDG&E Account 903.1 - UCAN's Adjustments 184
1. Entertainment Expenses - Commercial and Industrial Customers (1) 184
2. Computer Tech. Staff (2) 185
3. CO Testing - Demand-Side Management Related Costs (3) 185
4. Support of Federal Accounts (4) 186
5. Newspaper Advertising (5) 187
6. Outage Notification Staff (6) 187
7. Computers (7) & (8) 187
8. SDG&E Account 903.1 - Dynamic Tariff & Demand Reduction (UCAN) 188
V. SDG&E Account 903.5 - Net Metering (UCAN) 188
W. SDG&E Account 903.5 - Hourly Billing (UCAN) 189
X. SDG&E Account 903.7 - Postage Expenses 190
Y. SoCalGas Account 904 - Uncollectables 190
Z. SoCalGas Account 908 - Customer Assistance 191
1. Outreach (1, 2 & 3) 192
2. SDG&E Fleet Service Related Adjustments (UCAN) - Account 184.2 194
3. SoCalGas and SDG&E Real Estate Software 195
AA. SoCalGas Account 909 - Customer Information/Instruction 195
XXIV. SoCalGas Administrative and General Expenses 196
A. SoCalGas and SDG&E Account 920 - Administrative and General Salaries 196
B. SoCalGas and SDG&E - Sarbanes-Oxley Act Costs 196
1. SoCalGas and SDG&E Cost Accounting Positions for Capital Expenditures 198
2. SoCalGas and SDG&E Results of Operations Models 199
C. SoCalGas Accounts 920 & 921 Administrative and General - Salaries and Expenses for Regional Public Affairs 201
D. SDG&E Accounts 920 & 921 Administrative and General - Salaries and Expenses for Regional Public Affairs 203
1. SoCalGas - Human Resources Account 920.2 204
2. SDG&E - Human Resources 204
3. SoCalGas and SDG&E Severance Payments 205
4. Other Proposed SDG&E Adjustments 205
E. SDG&E Account 920 "B" A&G Salaries - Incentive Compensation Plan and Spot Cash Awards 205
F. SDG&E Account 920 - "C" Environmental Services 206
G. SoCalGas Account 921 - Administrative and General Non-Labor Expense 206
H. SoCalGas Account 921.6 Administrative and General - Real Estate & Facilities 207
I. SDG&E Account 921 "A" and "F" - A & G Office Supplies & Expenses 208
1. SDG&E Controller's Department (2) 209
2. SDG&E Human Resources (3) 209
3. SDG&E Labor Relations (4) 210
4. Strategic Planning (5) 211
5. Long-Term Incentives (7) 211
J. SDG&E Account 921 "C" Office Supplies & Expenses - Supplies Management 212
XXV. Shared Services 212
A. SDG&E Account 921 "E1" and "E2" Sempra Energy Corporate Center (Administrative & General Costs) 215
1. Undisputed Items (1, 5, 9, 12, & 13) 217
2. Employee Volunteer & Giving (2) 217
3. Accounting Shared Services (3) & Tax Services (4) 217
4. Leadership Training & Development (6) 218
5. Diversity Affairs (7) 219
6. Allocation of General Counsel (8) 220
7. Executive Dues and Events (10) 220
8. Shared Assets (11) 221
9. Compensation-Related (14, 15 & 16) 221
10. Miscellaneous (17) 221
B. UCAN's Review of Shared Services 222
1. External Affairs Senior Vice President (A-1) 224
2. Legislative Governmental (A-3) 224
3. Affiliate Compliance (A-4) 225
4. Community Affairs (A-6) 227
5. Communications (A-9) 227
6. Holding Co.'s Chief Financial Officer (B-1) 227
7. Investor & Shareholder Relations (B-2) 228
8. Auditing Services (B-3) 228
9. Payroll (B-4) 229
10. Accounting (B-5) 229
11. Corporate Planning (B-6) 229
12. Corporate IT (B-7) 230
13. Treasury (B-8) 231
14. Risk Management - Insurance (B-9) 232
15. Tax Services (B-11) 233
16. Human Resources Senior VP & Staff (C-1) 234
17. Corporate Staffing (C-2) 235
18. Diversity Affairs (C-3) 235
19. Human Resources Information System 235
20. Corporate Security (C-5) 236
21. Compensation & Benefits (C-6) 236
22. Training & Development (C-7) 237
23. Corporate Secretary (D-3) 238
24. Legal Department (D-4) 238
25. Nuclear Property Insurance (IP-2) 239
26. All Risks Insurance (IP-3) 240
27. Officers & Directors' Liability Insurance (IL-2) 240
28. Excess Liability Insurance (IL-3) 241
29. Other Liability Insurance (IL-5) 241
C. SoCalGas Shared Corporate Services 242
1. SoCalGas Account 923 - Outside Services 243
2. Insurance Costs 245
3. SDG&E Account 923 - Outside Services 245
4. SoCalGas and SDG&E Account 924 - Property Insurance 246
5. SoCalGas and SDG&E Account 925 - Directors and Officers' Insurance 246
6. SoCalGas Account 930 - Miscellaneous Expense Accounts 248
a) Account 930.0 - Miscellaneous 248
b) Account 930.2 - Research Development & Demonstration 248
c) Power Generation 248
d) Integrated Energy System Controls 249
e) Administration 250
D. SDG&E Account 930 "C" - Environmental Services 250
E. SDG&E Account 930A - Administration Costs for Rate Reduction Bonds 251
F. SoCalGas Account 935 - Real Estate & Facilities Expense 251
XXVI. SoCalGas and SDG&E - Income and Other Taxes 251
XXVII. SDG&E Electric Department Operations & Maintenance Expense 252
A. SDG&E Nuclear Operations & Maintenance Expense 252
B. SDG&E Account 556 - System Control & Load Dispatch 252
C. SDG&E Account 557 - Purchase Power 253
D. SDG&E Account 580 - Operation Supervision & Engineering 253
E. SDG&E Account 581 - Load Dispatch 255
F. SDG&E Account 582 - Station Expense 255
G. SDG&E Account 584 - Underground Line Expense 256
H. SDG&E Account 588 - Miscellaneous Distribution Expenses 256
I. SDG&E Account 590 - Maintenance Supervision - Engineering 257
J. SDG&E Account 593 - Maintenance of Overhead Lines 258
1. Vegetation Management 258
2. General Order 165 Inspections - Mapping 259
3. Other Adjustments 260
K. SDG&E Account 594 - Maintenance of Underground Lines 260
L. SDG&E Account 870 - Operating Supervision and Engineering 261
M. SDG&E Account 880 - Other Expenses 262
N. SDG&E Account 887 - Mains 262
O. SDG&E Account 892 - Services 262
P. SDG&E Account 586 - Electric Meter Testers 263
Q. SDG&E Account 878 - Relocation of Gas Meters and Regulators 265
R. SDG&E Account 879 - Gas Customer Installation Expenses 265
S. SDG&E Account 910 - Miscellaneous Customer Service and Informational Expenses 266
XXVIII. ORA's Historical Review 268
A. Gain on Sale of Blythe Property 268
B. Independent Audit Fees 270
C. Reconciliation of Base Year 2001 270
XXIX. Electric Rate Design - SDG&E 271
XXX. Comments on Alternate Decision 272
XXXI. Assignment of Proceeding 272
Findings of Fact 272
Conclusions of Law 319
ORDER 322
SETTLEMENT AGREEMENT BETWEEN THE GREENLINING INSTITUTE AND SOCALGAS AND SDG&E 1
APPENDIX A - List of Appearances
APPENDIX B - List of Acronyms and Abbreviations
APPENDIX C - SDG&E Combined Summary of Earnings Test Year 2004
APPENDIX D - SDG&E Gas Summary of Earnings Test Year 2004
APPENDIX E - SDG&E Electric Summary of Earnings Test Year 2004
APPENDIX F - SoCalGas Summary of Earnings Test Year 2004
APPENDIX G - Settlement Agreement between the Greenlining Institute and SoCalGas & SDG&E
COST OF SERVICE TEST YEAR 2004 FOR
SOUTHERN CALIFORNIA GAS COMPANY AND SAN DIEGO GAS &
I. Summary
In this decision, the Commission establishes the authorized base electric and gas revenue requirements for Southern California Gas Company (SoCalGas) and San Diego Gas & Electric Company (SDG&E) in the consolidated applications for Test Year 2004 Cost of Service. This decision rejects the two proposed partial Settlement Agreements filed in these proceedings. Phase 1 of these proceedings was submitted on February 19, 2004.
We authorize for SoCalGas $1,465.6 million in natural gas distribution revenues for Test Year 2004. We authorize SDG&E $731.2 million in electric distribution revenues and $208.2 million in natural gas distribution revenues for Test Year 2004.
Note that this alternate was prepared by using the proposed decision as a starting point. We are continuing to review the draft, and may make additional changes, based on comments.
