2. Procedural and Factual Background
Decision (D.) 94-03-076 approved a GCIM for SoCalGas. The GCIM is a ratemaking mechanism designed to provide regulatory controls superior to reasonableness reviews. We modified certain aspects of the SoCalGas GCIM in D.96-01-003 and D.97-06-061. The GCIM is structured to provide a profit incentive in addition to its rate of return for SoCalGas to make sound gas purchasing decisions. This is done by granting SoCalGas 50 percent of gas cost savings it achieves by purchasing gas below certain published market price benchmarks and by disallowing 50% of gas costs above the benchmarks.
D.94-03-076 further provided that the Commission Advisory and Compliance Division (duties of which have since been assumed by the Energy Division was to issue an evaluation report reviewing the program by August 1, 1996, for the Commission's consideration. For a number of reasons, including questions about the necessity for the evaluation, the report was never submitted. On June 8, 2000, the Commission in D.00-06-039 ordered the Energy Division to conduct such a study to guide the Commission in whether to extend operation of the GCIM on an annual basis beyond March 31, 2000.
The SoCalGas GCIM requires the utility to file an application by June 15 of each year to address the reasonableness of its operations and provide information regarding the GCIM results for the prior 12 months ending March 31. This is the sixth such application, and it covers the period from April 1, 1999 through March 31, 2000. Notice of the application was published in the Daily Calendar on June 21, 2000.
On July 21, ORA filed a response to the application in which it stated that it was preparing a monitoring and evaluation report that would be served on October 30, 2000.
Following a prehearing conference on August 16, 2000, Commissioner Bilas issued a Scoping Memo and Ruling bifurcating the proceeding and establishing the following schedule:
Phase I
October 30, 2000 - Report of ORA on its audit and evaluation of SoCalGas Year Six results.
November 13, 2000 - Comments on the ORA report by SoCalGas.
January 2001 - Phase I Proposed Decision (if no hearings are conducted).
January 2, 2001 - Energy Division staff report on the SoCalGas GCIM.
January 23, 2001 - Prehearing conference to set dates for the Phase II proceeding.
The Scoping Memo and Ruling identified the issues in this proceeding as follows:
· Does the calculation of shareholder award for Year Six by SoCalGas conform to the requirements of the GCIM? (Phase I)
· Did the acquisition operations of SoCalGas during Year Six conform to the reasonableness requirements of the GCIM? (Phase I)
· Should the GCIM be extended into Year Seven with or without modification? (Phase II)
· Should the GCIM be extended into Year Eight and beyond and, if so, what modifications are required based on the Energy Division evaluation that was issued on January 4, 2001, and on the results of the gas restructuring decision in Investigation 99-07-003? (Phase II)
On June 22, 2000, the Commission issued Resolution ALJ 176-3041 which preliminarily categorized this proceeding as ratesetting and preliminarily determined that no hearings were necessary. It is now clear that Phase I of this proceeding requires no hearings, and the preliminary determinations are confirmed.
