Discussion

As we have noted, processing a GRC for a major gas or electric utility is a considerable task that expends an enormous amount of resources of the Commission, the applicant, and intervening parties. The timing of GRCs for the major utilities is generally staggered to allow those involved to concentrate on one utility's application in a given year. As stated in the ACR, it is reasonable to delay PG&E's GRC rather than SCE's, because it has been several years since SCE's last GRC.

We will adopt ORA's recommendation and delay the filing of PG&E's NOI by nine months. We adopt this date for three reasons. First, an important reason for this delay is to avoid expending staff resources on both PG&E's and SCE's GRCs simultaneously. This also benefits intervenors. Second, having PG&E file its NOI in May 2001 and its application in August 2001 allows the utility to use recorded year 2000 data. Using recorded data from 2000 is an additional advantage that should help to streamline this proceeding, because it avoids the update problems encountered in the TY 1999 GRC. Finally, a nine-month delay provides time for PG&E to simplify and make transparent is Results of Operations Model. Our advisory staff is currently working with PG&E on efforts to achieve model simplification and transparency. As we have learned from both the Phase 1 GRC in A.97-12-020 and the Phase II GRC in A.99-03-014, modeling efforts have been complicated, controversial, and time-consuming. The single most important effort we can make to streamline this proceeding is to allow time for PG&E, our staff, intervenors, and interested parties to work together to ensure that PG&E's models are transparent and avoid the problems encountered in previous proceedings.

We expect that PG&E has already begun work on streamlining the RO model used in the TY 1999 GRC, so that it is more accessible to Commission staff and intervening parties. The procedure used in the TY 1999 GRC for decision support in which PG&E ran its "simplified model" at the Commission offices under Energy Division's oversight was time consuming, labor intensive, and required detailed safeguards to protect the Commission's deliberative process. This should not be repeated in the next GRC. Additionally, the Commission allowed PG&E to revise by Advice Letter, the revenue requirement adopted in D.00-02-046 based on the "complete tax version" of its RO model.⁵ The complete tax model lacked accessibility and transparency since it was not available on a PC and had to be run by PG&E at its corporate offices. The process of modifying the adopted revenue requirement by advice letter after the GRC decision is issued is inefficient and potentially confusing.

We will not encourage formal settlement discussions until all parties submit testimony. While alternative dispute resolution is often an expedient way to resolve matters, GRCs tend to be very controversial and to address many issues. The Commission must be aware of the issues before it and, at any rate, must consider the whole record in assessing the reasonableness of any settlement. In D.00-02-046, we expressed concern with PG&E's showing in A.97-12-020 and wish to ensure that the cost-of-service showing is understandable, well-documented, and receives the proper scrutiny. That being said, we do encourage parties to begin discussions of issues early in the proceeding so that parties can develop an understanding of each position and can attempt to narrow issues as discovery is going forward.

We will maintain the convention of having TURN and other intervenors submit testimony after ORA. We intend to combine hearings addressing direct and rebuttal testimony. This will require a modification of D.89-01-040 and we put parties on notice that we intend to make this modification, pursuant to Pub. Util. Code § 1708. Parties that object should so indicate in their comments to this decision. We emphasize that PG&E must make its showing in its application and supporting testimony. There will be no opportunity to update information and rebuttal will be used only to rebut the positions put forward by intervenors and interested parties--not as an opportunity for PG&E to update or change its position.

As was indicated in the ACR, we affirm that the 2002 test year should not change for the delayed application. We also affirm that the rates for the delayed application will become effective on January 1, 2002, although the decision in the proceeding will not be rendered until later in 2002. To address the delay in the decision in PG&E's TY 1999 GRC for which rates became effective on January 1, 1999, the Commission granted interim rate relief in D.98-12-078. We intend to follow the same approach for the new application and invite PG&E to make a proposal for interim rate relief, based on this approach. We will not address the merits of an attrition increase for 2002 at this time.

We also agree that it is reasonable to defer consideration of the gas resource plan to PG&E's next BCAP and we will address marginal cost proposals in Phase II of the GRC. As ORA and PG&E agree, it is reasonable that PG&E adjust the results of compensation study from A.97-12-020 for use in the TY 2002 GRC. The effort study is more problematic. We wish to fully consider this study but encourage PG&E, ORA, and other interested parties to confer on issues and approaches, as TURN suggests. Nor will we institute a generic proceeding to address depreciation parameters. This may be a suggestion we wish to pursue in the future, but this is not the forum to consider this type of generic proceeding. We agree with ORA that it is not clear how it would streamline the TY 2002 GRC.

Additionally, as discussed above, we expect to consider the results of the 1999 electric distribution capital audit in PG&E's next GRC application. If PG&E's GRC is delayed, the results of the audit and investigation would be available much earlier in the rate case process. This would allow the Commission and parties to more thoroughly consider and incorporate these results during the course of PG&E's TY 2002 GRC.

While no time frame is perfect, we are satisfied that requiring PG&E to delay filing its NOI by nine months addresses our concerns by allowing for reasonable staffing and allowing adequate time for working with Energy Division to develop a transparent approach to modeling. We will defer other issues related to scope and schedule to the assigned Commissioner and ALJ for the new proceeding.