XXXIII. Additional Issues Identified in the
Scoping Memo

As a part of I.03-03-016 that is consolidated with these applications, the Assigned Commissioner Carl Wood directed SoCalGas and SDG&E other parties to present testimony on several issues. It is apparent on the record that in a forum primarily focused on adopting a reasonable test year revenue requirement the parties are most interested in addressing immediate rate impacts and not taking a longer-term view as intended by the directives of the scoping memo. We thank SoCalGas and SDG&E for their supplemental testimony in response to the Assigned Commissioner's requests. Regrettably, the other parties did not explicitly address all of these issues except for their reflection in the testimony on a reasonable forecast for Test Year 2004 revenue requirements. ORA's project managers for SoCalGas and SDG&E both testified that staff was not assigned to examine the questions as posed in the scoping memo.⁴⁹⁶ Greenlining was the one exception, its focus was on Diversity, Outreach, and Contributions, one of the identified areas.

California energy utility regulation is in a difficult transitional stage following the breakdown of the wholesale electricity market in 2000 and 2001, and it is important to engage in dialogues, such as were proposed in the Scoping Memo, in order to ensure that future regulation is informed by the views and expertise of all stakeholders. To a large extent, the matters have either been explicitly or implicitly addressed in this decision, or do not warrant lengthy discussion here in the interests of brevity. In the following discussion, we will however briefly review and comment on them.

(1) Investment Planning: "to determine how SDG&E is, and how it should be, positioning itself to resume provision of fully integrated electric utility service." Parties were also asked to "submit proposals on how the Commission should structure and oversee SoCalGas and SDG&E's investment planning process."⁴⁹⁷

Investment planning was adequately examined in the course of developing capital expenditure forecasts for plant additions, and also by the review of the shared services for strategic planning. No intervenor made a specific examination of the organizational structure, training of employees or their skill-sets available for investment planning by SoCalGas or SDG&E. Nevertheless we are satisfied that the review of the test year was adequate to allow us to adopt reasonable test year capital investment estimates.

(2) Safety and Reliability: "an examination of SoCalGas and SDG&E's safety, reliability, and maintenance standards and performance." Parties were also asked to "propose an appropriate level of maintenance expenditures, including recommendations for parts of the two natural gas systems, and SDG&E's electric system."⁴⁹⁸

Safety and reliability was addressed in course of developing reasonable test year forecasts of the appropriate expense accounts, and in Phase Two, we consider past safety and reliability measurements in our review of the applicants' proposed safety and reliability incentive measures.

(3) Customer Service: to "evaluate and suggest improvements to SoCalGas and SDG&E's customer service programs." Parties were also asked to "evaluate current PBR customer satisfaction standards, compare SoCalGas and SDG&E's standards to those of other utilities, and make recommendations on new standards and performance measures." And also "assess the effectiveness of SoCalGas and SDG&E's billing system, website, and call center to meet customer needs, including web-based contacts and responses, 800 telephone numbers, call management systems, and voice mail."⁴⁹⁹

Customer Service expenses were addressed in the development of the test year revenue requirement and they are also the subject of the Phase Two review of specific applicant proposals for customer service incentives and monitoring.

(4) Utility Operations: "to develop a consistent overall policy for how SoCalGas and SDG&E undertake their operations ... to examine the decision-making processes the utilities use to determine how to provide safe and reliable service to customers at a reasonable cost. ... to conduct a review of SoCalGas and SDG&E's land-use and land management practices, especially with respect to environmental impacts, use of utility lands for unregulated activities by SoCalGas and SDG&E, their affiliates, or third parties, and incidental benefits to ratepayers and the community at large."⁵⁰⁰

Utility Operations were addressed in the development of the test year revenue requirements, but were not scrutinized in a more holistic approach to examine how SoCalGas and SDG&E are managed. SoCalGas and SDG&E filed brief supplemental testimony on their land management practices that are general in nature and do not cite to specific management practices, written policies or practices or designates who has primary management responsibility for land-use management.⁵⁰¹ SoCalGas stated that it has "secured programmatic state and federal permits over two thirds of its service territory" that establish protective and conservation measures SoCalGas will undertake during its daily operations. In the testimony, SoCalGas stated further that it was in the process of obtaining a final programmatic permit for the remainder of its lands.⁵⁰² SDG&E stated that in 1995 the company prepared the SDG&E Subregional Natural Community Conservation Plan, that is a 50-year plan, and there are additional protections limiting the company's use of its land.⁵⁰³

We make no specific findings in this proceeding, and will continue to examine the stewardship of SoCalGas and SDG&E over the natural resources in their service territory in every subsequent GRC-like ratesetting proceeding.

(5) Diversity, Outreach, Contributions, and Minority Contracting: where "matters within the scope⁵⁰⁴ of R.03-03-035 (were) excluded from the scope of these consolidated proceedings. Any other WMDVBE issues beyond the scope of R.03-02-035 may be pursued to the extent they are relevant to the 2004 test year revenue requirement." And to "address GO 77K related issues to the extent they are relevant to the 2004 test year revenue requirement."⁵⁰⁵

Diversity, Outreach, Contributions, and Minority Contracting were narrowly reviewed within the constraints of adopting a test year revenue requirement. As discussed elsewhere, we disallowed SoCalGas and SDG&E philanthropic contributions but we did not intrude upon the scope of other regulatory programs that address either R.03-02-035 into the Commission's General Order 156: Rules Governing the Development of Programs to increase Participation of Women, Minority and Disabled Veteran Business Enterprises in Procurement of Contracts from Utilities as required by Public Utilities Code Sections 8281-8286 or GO 156 compliance generally. Also as discussed elsewhere, we do not exercise jurisdiction over the workforce diversity or outreach of SoCalGas and SDG&E, except that we require them to be in compliance with all applicable employment and labor laws and we provide in the test year revenue requirements adequate funding to employ, recruit, retain and train the best possible workforce. We otherwise limited our review to revenue requirements impacts and we disallowed various identified philanthropic contributions included in the rate requests of SoCalGas and SDG&E.

(6) Resource Plans: Were required to be served by SoCalGas and SDG&E "to supplement their testimony ... as defined in D.02-11-073. ... and the applicants must further supplement their cases to demonstrate that their systems are adequate and they are positioned to comply with the recently adopted reliability standards."⁵⁰⁶

SoCalGas and SDG&E served three exhibits (Exs. 52, 54 and 55) that provided supplemental testimony on their resource plans.

With respect to gas system planning for both companies the supplemental testimony was sufficient to reasonably inform us as a part of adopting the projected test year capital expenditures and the operating expenses to support planning and oversight of the gas systems. In D.04-05-039, the Commission dismissed without prejudice the pending Biennial Cost Allocation Proceedings for SoCalGas and SDG&E, A.03-09-008 and A.03-09-031, in part because of the stay on the Gas Industry Restructuring pending Commission adoption of an order in Phase One of R.04-01-025. We do not need to pursue the gas resource plans further at this time.

At issue for electric planning, was the adequacy of SDG&E's staffing to perform that planning function, as clarified in May 22, 2003 Ruling. We have addressed this issue by our adoption of reasonable forecasts for Test Year 2004. The question of reviewing and approving SDG&E's electric procurement plan is germane to R.04-04-003, and we do not need to pursue the electric resource plan further at this time.

⁴⁹⁶ Transcript, p. 2041, lines 6-28, and p. 2112 line 8 through p. 2113, line 12.

⁴⁹⁷ Scoping Memo, p. 3.

⁴⁹⁸ Scoping Memo, p. 4.

⁴⁹⁹ Scoping Memo, p. 5.

⁵⁰⁰ Scoping Memo, pp. 5-6.

⁵⁰¹ Ex. 53 and 56, are both about six pages long, and share much identical text, which is consistent with the centralization of utility management in the Corporate Center.

⁵⁰² Ex. 53, p. RAK-5.

⁵⁰³ Ex. 55, pp. RAK-4 and 5.

⁵⁰⁴ "By this order, we grant the Petition of the Greenlining Institute and Latino Issues Forum (Greenlining/LIF) to institute a rulemaking to amend General Order (GO) 156. We institute this rulemaking to eliminate the exclusions currently permitted under GO 156, and to refine certain aspects of GO 156 verification and reporting." (R.03-02-035, dated February 27, 2003, mimeo., p. 1.)

⁵⁰⁵ Scoping Memo, pp. 6-7.

⁵⁰⁶ Scoping Memo, pp. 8-9.