2. Procedural Background
A January 2, 2007 ruling consolidated the applications pursuant to Rule 7.4. DRA, Disability Rights Advocates, PCOC, Southern California Generation Coalition, and TURN timely filed protests. The Commission preliminarily categorized these matters as ratesetting and requiring hearings in Resolution ALJ 176-3185. The categorization of these proceedings is determined herein to be ratesetting. A prehearing conference (PHC) was held on February 9, 2007, for a discussion on the scope of the proceeding, guidelines on discovery,1 lead counsel to reduce duplication,2 scheduling, and a mandatory effort for settlement. An assigned Commissioner's scoping ruling was subsequently issued on February 27, 2007. The scoping ruling confirmed that this was a ratesetting proceeding and evidentiary hearings were necessary. There were 13 days of evidentiary hearings,3 followed by concurrent opening and reply briefs on October 5 and October 19, 2007, respectively.
During hearings, several limited scope agreements, or settlements, between applicants and various parties were received as exhibits in the record. After submittal, the assigned Administrative Law Judge (ALJ) granted motions to set aside submission and accept for filing late-filed comprehensive settlements of Test Year 2008 revenue requirements, dated December 20, 2007.4 Parties were allowed to file comments and replies under Rule 12.2 on January 31, 2008, and February 15, 2008, respectively. The ALJ granted further motions to set aside submission and accept for filing late filed comprehensive settlements of post test year ratemaking and related issues dated January 18, 2008. Parties were allowed to file comments and replies under Rule 12.2 on February 19, 2008, and March 5, 2008, respectively.
The record is composed of all filed and served documents. It also includes all testimony and exhibits received at hearing and late-filed exhibits as ordered by the ALJ. Also, the ALJ sealed as confidential various exhibits. We affirm all ALJ rulings on confidential exhibits and rulings allowing the late filing of settlements between applicants and one or more other parties.
2.1. Scope
The purpose of this proceeding is primarily to establish just and reasonable rates for Test Year 2008 and make all other necessary orders for both SDG&E and SoCalGas to offer safe and reliable service. We will determine:
a. The just and reasonable test year revenue requirements for 2008 inclusive of all operating expenses and capital costs. This includes the costs of all operating or customer-related programs necessary to provide safe and reliable utility service in the test year.
b. A just and reasonable post-test year ratemaking mechanism to adjust annual revenue requirements in subsequent years until the Commission adopts a test year revenue requirement in a subsequent proceeding.
c. Whether to adopt, and if so, what incentive mechanisms to adopt, that potentially reward or penalize SDG&E and/or SoCalGas for the safe and reliable operation of their utility services.
Excluded from this proceeding were all matters of cost allocation, determination of marginal costs, and rate design for SDG&E's electric department. These matters were properly considered in a separate proceeding, A.07-01-047 and resolved in Decision (D.) 08-02-034. All matters of cost allocation and rate design for the gas department of SDG&E and for SoCalGas are properly included in the next Biennial Cost Allocation Proceeding. We affirm all ALJ rulings on scope.
2.2. Standard of Review
SDG&E and SoCalGas bear the burden of proof to show that the rates they request are just and reasonable and the related ratemaking mechanisms are fair.
In order for the Commission to consider any possible proposed settlement in this proceeding as being in the public interest, the Commission must be convinced that the parties had a sound and thorough understanding of the application, and all of the underlying assumptions and data included in the record. This level of understanding of the application and development of an adequate record is necessary to meet our requirements for considering any settlement. Applicants submitted separate limited-scope settlement of issues with parties: Disability Rights Advocates; Utility Workers Union of America, Local 132 (Local 132); Utility Workers Union of America, Local 483 (Local 483); Coalition of California Utility Employees (CCUE); the PCOC; and the Greenlining Institute. We can review these limited-scope settlements within the overall scope of the proceeding to adopt reasonable test year revenue requirement, post-test year ratemaking mechanisms, incentive performance mechanisms, and the reasonable operations of the utilities to provide safe and reliable service.
Applicants late-filed four other settlements. First, on December 20, 2007, there were two settlements on total Test Year 2008 revenue requirements: for SDG&E the settlement was with only DRA; and for SoCalGas the settlement was with DRA and TURN. Finally, on January 18, 2008, there were two settlements addressing post-test year ratemaking: for SDG&E the settlement was with DRA, TURN and Aglet; and for SoCalGas the settlement was also with DRA, TURN and Aglet.
Based upon our review of the extensive prepared testimony, lengthy hearings and comprehensive briefing of the litigated applications, we find that the parties to the settlement had a sound and thorough understanding of the application, and all of the underlying assumptions and data included in the record and, thus, we can consider the various settlements as offered by competent and well-prepared parties able to make informed choices in the settlement process.
1 For discovery, the parties preferred that any deadlines be more "guidelines" than "rules," thus no specific limits were set.
2 TR., p. 10, ff.
3 August 6-10, August 13-16, and September 10-13, 2007.
4 All late-filed settlements were reviewed pursuant to Rules 12.1 through 12.7, as discussed in detail in this decision. No settlement was an all-party settlement.
