STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
April 6, 2004
TO: PARTIES OF RECORD IN APPLICATION 02-11-017 ET AL.
RE: NOTICE OF AVAILABILITY OF PROPOSED DECISIONS ON:
(1) INTERIM OPINION ON STORM AND RELIABILITY ISSUES (AGENDA ID #3431)
(2) OPINION: PHASE 1 ISSUES (AGENDA ID #3432)
Consistent with Rule 2.3(b) of the Commission's Rules of Practice and Procedure, I am issuing this Notice of Availability of the above-referenced proposed decisions. These proposed decisions are issued by Administrative Law Judge (ALJ) Julie M. Halligan on April 6, 2004. An Internet link to these documents were sent via e-mail to all the parties on the service list who provided an e-mail address to the Commission. An electronic copy of these documents can be viewed and downloaded at the Commission's Website ( www.cpuc.ca.gov).
Any recipient of this Notice of Availability who is not receiving service by electronic mail in this proceeding or who is unable to access the link to the Commission's web site given above may request a paper copy of the above documents from the Commission's Central Files Office, at (415) 703-2045; e-mail cen@cpuc.ca.gov.
These are the proposed decisions of ALJ Halligan, previously designated as the principal hearing officer in this proceeding. They will not appear on the Commission's agenda for at least 30 days after the date they are mailed. This proceeding was categorized as ratesetting and is subject to Pub. Util. Code § 1701.3(c). Pursuant to Resolution ALJ-180, a Ratesetting Deliberative Meeting to consider these proposed decisions may be held upon the request of any Commissioner. If that occurs, the Commission will prepare and mail an agenda for the Ratesetting Deliberative Meeting 10 days before hand, and will advise the parties of this fact, and of the related ex parte communications prohibition period.
When the Commission acts on the proposed decisions, it may adopt all or part of them as written, amend or modify them, or set them aside and prepare its own decisions. Only when the Commission acts does the decision become binding on the parties.
Parties to the proceeding may file separate sets of comments on each of the proposed decision as provided in Article 19 of the Commission's "Rules of Practice and Procedure." These rules are accessible on the Commission's website at http://www.cpuc.ca.gov. Pursuant to Rule 77.3 opening comments shall not exceed 15 pages for each proposed decision.
Consistent with the service procedures in this proceeding, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, including ALJ Halligan at jmh@cpuc.ca.gov. Service by U.S. mail is optional, except that hard copies should be served separately on ALJ Halligan, and for that purpose I suggest hand delivery, overnight mail or other expeditious methods of service. In addition, if there is no electronic address available, the electronic mail is returned to the sender, or the recipient informs the sender of an inability to open the document, the sender shall immediately arrange for alternate service (regular U.S. mail shall be the default, unless another means - such as overnight delivery is mutually agreed upon). The current service list for this proceeding is available on the Commission's Web page, www.cpuc.ca.gov.
/s/ ANGELA K. MINKIN
Angela K. Minkin, Chief
Administrative Law Judge
ANG:jva
Attachment
ALJ/JMH/avs DRAFT Agenda ID #3432
Ratesetting
Decision PROPOSED DECISION OF ALJ HALLIGAN (Mailed 04/06/2004)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company for Authority, Among Other Things, To Increase Revenue Requirements for Electric and Gas Service and to Increase Rates and Charges for Gas Service Effective on January 1, 2003. (U 39 M) |
Application 02-11-017 (Filed November 8, 2002) |
|
Investigation on the Commission's Own Motion into the Rates, Operations, Practices, Service and Facilities of Pacific Gas and Electric Company. |
Investigation 03-01-012 (Filed January 16, 2003) |
|
Application of Pacific Gas and Electric Company Pursuant to Resolution E-3770 for Reimbursement of Costs Associated with Delay in Implementation of PG&E's New Customer Information System Caused by the 2002 20/20 Customer Rebate Program. (U 39 E) |
Application 02-09-005 (Filed September 6, 2002) |
(See Attachment E for List of Appearances)
OPINION: PHASE 1 ISSUES
Title Page
4. The Distribution Settlement 1616
5. The Generation Settlement 2020
6. Commission Review of the Settlements 2121
7. Terms of the Distribution Settlement 2424
7.1 Total Revenue Requirement 2424
7.4 Administrative and General (A&G) Expense 3333
7.5 Unbundling of A&G Expenses 4444
7.6 Nuclear Decommissioning Trust Administrative Fees 4545
7.7 Distribution Operations and Maintenance Expense 4747
7.8 Customer Accounts and Services Expense 4949
7.9 Line Extension Administration 5151
7.17 Other Operating Revenues 6565
7.18 New Customer Connections and E-Net Costs 6767
7.19 Insufficient Funds Fee 6767
7.20 Public Utilities Code Section 739.10 6868
7.21 Recovery of Expenses Associated With the 20/20 Program 7070
7.22 Customer Information System (CIS) Capital 7474
7.24 Integrated Resource Planning 7878
7.25 Service Guarantees Under the Quality Assurance Program and
Customer Service Issues 7979
TABLE OF CONTENTS
Title Page
8. Terms of the Generation Settlement 8181
8.1 Return on Regulatory Assets 8282
8.2 Amortization of the Statement of Financial Accounting Standard No. 109
(FAS 109) Regulatory Asset 8282
8.3 Diablo Canyon Depreciation 8383
8.4 Diablo Canyon O&M Expense 8383
8.5 Additional Security Costs at Diablo Canyon 8383
8.6 Post Test Year Capital Applications 8484
9.1 Reasonable in Light of the Whole Record 8484
9.2 Consistent with the Law 8686
9.3 In the Public Interest 8686
10.1 Pension Contributions 8989
10.2 Diablo Canyon Independent Safety Committee (DCISC) 9292
10.3 Compensation Issues 112112
10.3.1 Executive Compensation 112112
10.3.2 Retention Bonuses 118118
10.3.3 SrERP Is Funded By Shareholders, Not Ratepayers 121121
10.4 GO 77-K Report and Dividend- Related Advice Letter 127127
TABLE OF CONTENTS
Title Page
10.5 Service Drop Maintenance 137137
10.6 Adopted Rate Changes 138138
10.7 Rulings of the Administrative Law Judge 141141
Comments on Proposed Decision 142142
ATTACHMENT A Settlement Agreement (PG&E, ORA, TURN, AGLET,
Modesto Irrigation District, Natural Resources Defense
Council and Agricultural Energy Consumers Assoc.
ATTACHMENT B Settlement Agreement (PG&E, ORA, TURN, City and County of
San Francisco, and Aglet).
ATTACHMENT C Stipulation Agreement (PG&E, San Luis Obispo Mothers for Peace,
Diablo Canyon, Independent Safety Committee, ORA, CEC, and TURN.
ATTACHMENT D Results of Operations TY 2003
ATTACHMENT E Service List
1. Summary
This decision resolves issues litigated in the revenue requirement phase (Phase 1) of Pacific Gas and Electric Company's (PG&E) test year (TY) 2003 General Rate Case (GRC). In this decision, we consider two comprehensive settlements filed by the majority of parties in this proceeding. Pursuant to Rule 51 et seq. of the Commission's Rules of Practice and Procedure, we consider a Settlement Agreement proposed by PG&E, the Office of Ratepayer Advocates (ORA), the Utility Reform Network (TURN), Aglet Consumer Alliance (Aglet), Modesto Irrigation District (MID), the Natural Resources Defense Council (NRDC), and the Agricultural Energy Consumers Association (AECA), (collectively, "the Settling Parties"), that resolves all but one of the issues raised by the Settling Parties regarding PG&E's forecast TY 2003 electric and gas revenue requirements and 2004, 2005, and 2006 attrition requests (the Distribution Settlement). We also consider a separate Settlement Agreement proposed by PG&E, ORA, TURN, Aglet, and the City and County of San Francisco (CCSF) regarding PG&E's forecast TY 2003 generation revenue requirements and related attrition, (the Generation Settlement).
Taken together, the Distribution Settlement and the Generation Settlement (also referred to jointly as the Settlements) provide for a TY 2003 revenue requirement of approximately $2.493 billion for electric distribution, $927 million for gas distribution, and $912 million for generation. Excluding revenues related to procurement, this represents an increase of approximately $236 million, or 10.44% in electric distribution revenues, $52 million, or 5.90% in gas distribution revenues, and $38 million, or 4.35% in generation revenues. A portion of the increase in GRC-related revenues is collected as other operating revenues, rather than from sales of electricity and gas. Therefore, the increase in revenues from sales to customers resulting from the Settlements is 8.46% electric distribution, 4.60% gas distribution and 3.90% generation.
With one modification, we find that the Settlements are reasonable in light of the whole record, consistent with the law, and in the public interest. While the Settlements are to a certain extent "black box" settlements that do not represent the increased level of precision we sought when we approved PG&E's TY 1999 revenue requirement request, we are satisfied that they are in the public interest.
The 2003 base revenues authorized today are effective as of January 1, 2003, consistent with our decision in Decision (D.) 02-12-073. However, as a result of our recent approval in D.02-04-062 of a Rate Design Settlement lowering PG&E's rates by $799 million, the increase in PG&E's revenue requirements for electric distribution and generation authorized today has already been reflected, and to a large degree, offset, as part of the revenue requirement reductions approved in D.02-04-062.
PG&E's bundled gas distribution base revenues are changed by this decision as shown in the following table.1
Class |
Changes in Annual Revenues ($000's) |
Revenue Change |
Core Customers |
||
Residential |
$30,147 |
1.8 |
Small Commercial |
9,355 |
1.9 |
Large Commercial |
126 |
0.9 |
0 |
0 | |
Wholesale |
||
Non-Core Customers |
||
Industrial Distribution |
1,349 |
3.4 |
Industrial Transmission |
0 |
0 |
Electric Generation |
54 |
0.2 |
Cogeneration |
30 |
0.2 |
Shareholder Absorption2 |
115 |
4.7 |
Total Change |
$41,1763 |
1.8% |
As a result of this decision, a residential gas customer using an average of 50-therms per month on a year-round basis would see average monthly bill increases of 67 cents.
As part of the Distribution Settlement considered and adopted in this decision, the next test year for PG&E will be 2007. We therefore direct PG&E to tender its Notice of Intent for the TY 2007 GRC consistent with the Rate Case Plan.4
In addition to the issues addressed in the Settlements, we consider Applicant's request for approval of a $128.6 million (total Company) contribution to the Company's Retirement Plan trust. Today's decision denies PG&E's request, finding that PG&E did not provide clear and convincing evidence that a contribution is needed at this time.
We also resolve disputed issues related to the Diablo Canyon Independent Safety Committee (DCISC). Today's decision approves a Stipulation filed by PG&E, ORA, the DCISC, TURN, and the Mothers for Peace, which provides that the DCISC shall continue with its current responsibilities and funding through "the term of this GRC." Today's decision also grants, in part, the Mothers for Peace Petition to modify D.88-12-083.
Finally, in this decision, we examine issues related to PG&E's executive compensation. We review and comment on certain executive bonuses designed to promote the retention of certain corporate officers during the difficult period of the energy crisis and the financial insolvency and bankruptcy of PG&E and PG&E Corp.'s non-utility affiliates. We find that the Senior Executive Retention Bonus Program has been, or will be, funded by shareholders, not ratepayers, and we adopt additional accounting and reporting measures to ensure that this remains the case.
This decision resolves all issues in Phase 1 of PG&E's TY 2003 GRC. Phase 2 of this proceeding will address marginal cost, revenue allocation and rate design. This proceeding remains open.
1 Revenue changes are allocated to customer classes using the marginal cost revenues adopted in PG&E's 2000 Biannual Cost Allocation Proceeding (BCAP) (D.01-11-001). 2 Amount represents 50% of the scaled distribution marginal cost revenue allocated to industrial transmission customers. D.98-06-073 (p. 20) ordered PG&E to reduce the distribution revenue requirement by 50% of the amount allocable to this customer class through the end of the Gas Accord period. 3 This is the total increase in CPUC revenue from sales; an additional amount of $10,442 from Other Operating Revenue (OOR) must be added to this amount to get the total rate case CPUC revenue increase of $51,618. 4 The Rate Case Plan was adopted in D.89-01-040.
