ALJ/MEG/jyc Mailed 9/9/2002

Decision 02-09-021 September 5, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application Of Pacific Gas And Electric Company (U 39 M) For Ex Parte Approval Of The 2002 California Alternate Rates For Energy Budget.	Application 02-04-031 (Filed April 8, 2002)
In the Matter of the Application of San Diego Gas & Electric Company (U 902-M) for Approval of 2002 CARE Activities and Budget.	Application 02-04-034 (Filed April 18, 2002)
Southern California Edison Company's (U 338-E) Application Regarding California Alternate Rates For Energy Program Funding for Program Year 2002.	Application 02-04-035 (Filed April 18, 2002)
In the Matter of the Application of Southern California Gas Company (U 904-G) for Approval of 2002 CARE Activities and Budget.	Application 02-04-036 (Filed April 18, 2002)

O P I N I O N

TABLE OF CONTENTS

Title Page

O P I N I O N 1

Summary 2

Background 4

Discussion 7

3.1 Procedures For Reasonableness Review 9

3.2 Review of Proposed PY2002 CARE Administrative Budgets 15

3.2.1 Outreach 19

3.2.2. Processing, Certification and Verification 24

3.2.3. Billing Systems/Programming 27

3.2.4. Measurement and Evaluation 29

3.2.5. Regulatory Compliance 30

3.2.6. General Administration 32

3.2.7. Indirect Costs 34

3.2.8. Other Expense Categories 35

3.3. Adopted PY2002 CARE Budgets 37

SCE 38

SoCal 38

3.4. Ratemaking Treatment 39

3.4.1. SDG&E and SoCal 40

3.4.2. PG&E 41

3.4.3. SCE 42

Need for Expedited Consideration 45

Findings of Fact 46

Conclusions of Law 51

ORDER 52

ATTACHMENT 1 - Acronyms/Abbreviations

ATTACHMENT 2 - Calculation of PY2002 Minimum Targets - Net Enrollment

ATTACHMENT 3 - CARE Proposed and Authorized PY2002 Budgets,

With Expenditure Information

ATTACHMENT 4 - PY2002 Plans for Multi-Lingual Recertification Letters

ATTACHMENT 5 - SCE's Proposed Modification to CARE Ratemaking

Summary ¹

By this decision, we adopt the following program year (PY) 2002 budgets for the California Alternate Rates For Energy (CARE) programs of Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison Company (SCE) and Southern California Gas Company (SoCal), collectively referred to as "the utilities:"

AUTHORIZED PY2002 CARE BUDGETS
Cost Category	PPG&E	SSCE	SSDG&E	SSoCal
Outreach	$ 5,095,000	$ 840,840	$ 2,011,074	$ 3,087,794
Processing/Certification/Verification	$ 1,320,000	$ 520,798	$ 212,235	$ 766,030
Billing/Programming	$ 20,000	$ 500,000	$ 35,000	$ 596,898
Measurement/Evaluation	$ 266,600	$ 344,000	$ 301,366	$ 55,800
Regulatory Compliance	$ 100,000	$ 80,000	$ 86,286	$67,045
General Administration	$ 321,552	$ 464,500	$ 189,185	$ 24,794
Indirect Costs	$0	$82,700	$ 416,058	$0
Energy Division	$ 82,700	$ 195,500	$ 30,000	$ 68,950
LIAB/LIOB	$ 100,000	$50,000	$ 47,832	$ 35,000
Total Administration	$ 7,305,852	$ 3,078,338	$ 3,329,036	$ 4,702,311
CARE Subsidy	$ 125,000,000	$ 93,400,000	$ 25,568,477	$ 42,533,000
Total CARE Program	$ 132,305,852	$ 96,478,338	$ 28,897,513	$ 47,235,311

These budgets cover all CARE-related activities with the exception of those specifically associated with the automatic enrollment program we adopted in Decision (D.) 02-07-033. As explained in that decision, the costs associated with automatic enrollment are difficult to estimate until we gain experience with program implementation. Moreover, certain other CARE administrative costs are likely to decrease once automatic enrollment is underway, and we cannot predict the net effect on CARE budgets. Per D.02-07-033, the utilities should separately track the costs of automatic enrollment in their CARE balancing accounts. We plan to reassess today's adopted budgets during 2003 in light of the impact that automatic enrollment has on CARE enrollments and overall administrative costs.

Senate Bill (SB) No. 2 from the Second Extraordinary Session (SBX2 2 Stats. 2001, Ch. 11) amends Public Utilities Code Section 739.1(b) to authorize the recovery of CARE program administrative costs through a balancing account, subject to the Commission's determination that such costs are reasonable. By today's decision, we make modifications to the current ratemaking treatment for these costs to comply with this direction. We also establish procedures for the reasonableness review of CARE administrative expenditures. They consist of an examination of the utilities' proposed budgets, such as the one we perform in today's decision, followed by a reasonableness review of actual utility expenditures.

Our examination of the proposals in this proceeding reveals serious inconsistencies in administrative cost accounting conventions across the utilities. As described in this decision, these inconsistencies make it difficult to compare the budget proposals and expenditure history across utilities in conducting our review, particularly for certain categories of overhead costs. They also raise concerns that the utilities may be including costs in their budgets that are not incremental to the CARE program. For these reasons, we direct Energy Division to conduct a thorough audit of the utilities' PY2002 CARE administrative expenditures as part of our ex post reasonableness review. The utilities should track the actual costs of the Energy Division audit in the CARE balancing account, to be reimbursed along with other CARE-related Energy Division costs.