XXXV. Assignment of Proceeding
Carl W. Wood is the Assigned Commissioner and Douglas Long is the assigned Administrative Law Judge in this proceeding.
1. As in any ratesetting proceeding, the Commission's primary task is to forecast reasonable revenue requirements for the test period, i.e., the amounts of revenues needed by SoCalGas and SDG&E to provide safe and reliable public utility service and earn a reasonable rate of return for 2004 under conditions of prudent management.
2. The management and planning for the operations of SoCalGas and SDG&E is primarily conducted by a single organization, with many of these tasks performed by one company for the benefit of both.
3. These applications were not filed in conformance with the rate case processing plan; they were filed in compliance with D.97-12-041 (77 CPUC 2d, 139) that allowed SoCalGas and SDG&E to file a "cost of service" application. ORA, TURN and UCAN did not have an opportunity under the process for these applications to review a NOI of the applications for deficiencies.
4. The conventional rate case processing plan would have provided ORA an opportunity to review the applications for deficiencies and expedite litigation. TURN and UCAN performed significant analysis in these proceedings and their effectiveness would benefit from participating in an NOI process for the next general rate case. By reinstating the rate case-processing plan, we can ensure that the applications receive an appropriate level of review and are processed in a timely and efficient manner.
5. Parties filed a partial settlement for both SoCalGas and SDG&E. Neither partial settlement resolved all matters. Neither partial settlement provided sufficient detail to ensure SoCalGas and SDG&E meet the Commission's expectations for service and capital expenditures.
6. Neither partial settlement determined a reasonable number of employees - full-time employee equivalent positions - to justify the labor compensation and benefits expense included in the settlements' rates.
7. Neither partial settlement justified why they differ in scope and scale of the work or task from the applicants' end-of-litigation positions.
8. Only TURN and ORA actively litigated the majority of the SoCalGas 2004 Test Year issues and the major portion of the costs recoverable in the revenue requirement.
9. Greenlining, SCGC, UWUA and Local 483 did not actively litigate the majority of the SoCalGas Test Year 2004 issues or the major portion of the costs.
10. Only UCAN and ORA actively litigated the majority of the SDG&E 2004 Test Year issues and the major portion of the costs recoverable in the revenue requirement.
11. Greenlining, CUE, City of Chula Vista and Coral did not actively litigate the majority of the SDG&E Test Year 2004 issues or the major portion of the costs.
12. Greenlining, SCGC, UWUA, CUE, and Coral did not file opening or reply litigation briefs.
13. The partial settlements lack specificity and merit only limited weight and credibility.
14. The Greenlining Settlements with SoCalGas and SDG&E make four commitments on workforce diversity, supplier diversity, philanthropy and annual meetings.
15. Although the Commission supports the goal of workforce diversity, the Commission has no jurisdiction over workforce diversity within SoCalGas and SDG&E.
16. Supplier diversity obligations are established in GO 156 and are otherwise beyond the scope of this ratesetting proceeding.
17. Corporate philanthropy is not a cost recoverable in retail rates. Greenlining's philanthropic proposals are beyond the scope of this ratesetting proceeding.
18. The Greenlining Settlement commitment for SoCalGas and SDG&E executives to attend an annual meeting is beyond the scope of this proceeding.
19. The partial settlement for SoCalGas included employee positions that were not consistent with the litigated record. The nine positions created in the Settlement do not correspond to the 15 positions proposed by Local 483.
20. The partial settlement for SoCalGas included 10 new apprentice positions without defined duties and they are not consistent with the litigated record.
21. For both SoCalGas and SDG&E, a Base Year 2001 of recorded data was identified and then adjusted for known downward changes for one-time or non-recurring expenses; the residual Base Year was then escalated for inflation in 2002, 2003 and Test Year 2004. For both SoCalGas and SDG&E proposed or known changes for 2002, 2003 and Test Year, 2004 were added to the adjusted base year. The SoCalGas and SDG&E forecast method is similar to a "budget-based" methodology that the Commission found to be a reasonable method if properly applied.
22. A utility's budget-based forecast may be more or less reliable than a forecast based on historical spending data. The relative appropriateness of a forecasting method depends on a thorough review of the supporting data.
23. The Joint Comparison Exhibits, Ex. 149 and Ex. 150, for both SoCalGas and SDG&E, respectively, adequately summarize the end-of-litigation agreements on estimates between the applicants and the intervenors.
24. ORA and SoCalGas and SDG&E used the same labor escalation forecast indices from Global Insight, but ORA used a more recent index from the first quarter of 2003.
25. SoCalGas and SDG&E actual labor costs are consistent with the earlier indices they used in forecasting Test Year 2004.
26. The applicants and ORA agreed on the non-labor escalation rates.
27. The applicants and ORA agreed on capital expenditure escalation rates.
28. ORA and applicants jointly prepared a total compensation study. Employee compensation is within a 2.8% range for SoCalGas and a 0.5% range for SDG&E of the studies' "market prices." Employee compensation is at market prices for the service territories for SoCalGas and SDG&E.
29. SoCalGas and SDG&E compensate many employees using combinations of base salaries and incentives that combine to equal market prices. ORA would disallow 50% of incentive compensation even though it is a part of market rate compensation.
30. There is no evidence in the record that SoCalGas and SDG&E unfairly evaluate or compensate employees. SoCalGas and SDG&E forecast all incentive compensation "at target" levels, which assumes all eligible employees are awarded or earn the target amount.
31. There is no evidence in the record that supports the conclusion all employees will earn target levels or that actual incentives will equal the forecast target total. Disallowance of stock incentive components would put compensation for those employees below market rates.
32. There is no agreement outside of the partial settlements on the number of positions needed or likely to be filled in the test year for either SoCalGas or SDG&E. SoCalGas and SDG&E do not need the labor forecast funding in retail rates if the position is not filled. The partial settlements make no commitment to employ people for the funded positions. TURN cannot support its generic vacancy disallowance.
33. The TLCBA would reasonably allow SoCalGas and SDG&E to recover actual costs and refund to ratepayers any excess allowance included in rates. The TLCBA should be capped at the adopted forecast of labor expense.
34. The TLCBA does not include the labor component of the capital expenditures adopted in this decision.
35. Including incentive compensation in the TLCBA will allow SoCalGas and SDG&E to recover actual incentive costs.
36. SoCalGas and SDG&E should have the authority to shift labor funding between programs based upon actual need. The Commission has previously adopted an advice letter process to allow funds to be shifted for energy efficiency programs. A series of sub accounts are sufficient to track the transfer of unspent funds between accounts. Approval by advice letter here would be too cumbersome and slow.
37. SoCalGas and SDG&E did not provide convincing evidence that its workforce is maturing and retiring at an accelerated rate. SoCalGas and SDG&E did not provide convincing evidence that any replacement workers would take 15 years to become fully proficient. A maturing workforce is not a new issue as argued by SoCalGas and SDG&E: it has been considered before in SDG&E's 1991 rate proceeding. SoCalGas did not provide a credible justification of the maturing work force request.
38. SoCalGas and SDG&E have minimum required contributions as required by the IRS Code Section 412 (Minimum Funding Standards) as amended by the Employee Retirement Income Security Act of 1974 (ERISA-minimum contributions). SoCalGas and SDG&E proposed balancing account treatment for recovery of any actual pension contributions.
39. Conversion to a cash benefit plan has a lower cost compared to retaining the old plan.
40. ORA did not examine the pension fund allocation after the reorganization of company operations after the merger and between regulated and non-regulated affiliates. The pension costs of Corporate Center employees are recoverable costs.
41. The supplemental pension expenses are necessary market rate compensation.
42. A pension expense balancing account will reasonably protect ratepayers from paying for costs not incurred.
43. SoCalGas and SDG&E have negotiated new contracts for medical benefits. The number of employees and their eligible dependents drives the cost of medical benefits. ORA did not demonstrate that the new health care rates were a recovery of deferred prior years' costs.
44. TURN incorrectly linked medical costs to labor costs and not the number of employees and dependents. This cost cannot be accurately forecast.
45. SoCalGas and SDG&E made reasonable forecasts of medical expenses based upon provider premiums.
46. SoCalGas and SDG&E should recover the actual costs of medical expenses in a two-way balancing account.
47. Dental and vision benefit costs, as forecast by SoCalGas and SDG&E at the end of litigation, reflect later contracts and are reasonable.
48. ORA did not support its proposed miscellaneous adjustments to employee benefits. ORA could demonstrate no ratepayer harm from employee benefits that it described as supererogatory. The forecasts for miscellaneous and any so-called supererogatory expenses are reasonable.
49. TURN argued that SoCalGas' workers' compensation expense should be adjusted to reflect employee totals. But SoCalGas and SDG&E are self-insured, so that there are no payroll-based premiums.
50. We have no record to support adjustments to the SoCalGas and SDG&E forecasts of expense and reserve requirements for workers' compensation.
51. A memorandum account would track the difference between the adopted forecast and actual expense and reserve contributions for workers' compensation.
52. Any excess forecast in the memorandum account should offset the expense in the next rate proceeding.
53. The adopted forecasts for SoCalGas and SDG&E are an upper cap on cost recovery.
54. Rate base is a regulatory mechanism to recover over a long time the investment in the plant and facilities necessary to provide safe and reliable service to ratepayers.
55. Capitalizing certain costs allows recovery over the investment's useful life. It is convenient to expense certain minor items rather than burden the ratemaking process to recover those costs over a long period.
56. SoCalGas and SDG&E had different capitalization policies for small items; $500 for SoCalGas and $2,500 for SDG&E. Increasing the capitalization requirement reasonably reduces the accounting and ratemaking burden.
57. SoCalGas and SDG&E did not change the requirements for authorizing purchases when they raised the expense limit before capitalizing a purchase.
58. SoCalGas proposed a pipeline integrity project to retrofit 110 miles of gas transmission for $32,820,000, including valves, verification digs and pig inspections.
59. Although ORA stated that it used ORA's recorded data for earlier retrofitting on SoCalGas Line 3007, e.g., ORA's estimate is incomplete and inaccurate compared to SoCalGas' estimate.
60. TURN's proposed non-pigging options were not convincing.
61. TURN's proposed blanket adjustment to gas transmission capital expenditures was based on one delayed project and relied on workpapers not in evidence.
62. SoCalGas' $32,820,000 estimate for the pipeline Integrity Project is reasonable based on the record.
63. ORA proposed to reduce laboratory equipment purchases by relying on a two-year average. This is too low to include a new FTIR analyzer and/or a new electron microscope as forecast by SoCalGas. ORA failed to address whether this equipment is needed or not.
64. The partial settlement for SoCalGas would adopt SoCalGas' forecast without requiring SoCalGas to purchase a new FTIR analyzer and/or a new electron microscope.
65. Budget Category 718 is reasonable, based on the record, and SoCalGas should acquire the proposed equipment.
66. ORA corrected the weighting in rate base to reflect the likely in-service date for SoCalGas' Software Development Budget Category 723.
67. Only the mandatory program costs for SoCalGas' Natural Gas Vehicle Project (Category 734) are within the scope of this proceeding. They are correctly reflected in the SoCalGas end-of-litigation revenue requirement spreadsheets.
68. SoCalGas developed a detailed estimate for New Business and Pressure Betterment plant expenditures whereas ORA used an historical trend.
69. SoCalGas has pre-1947 pipeline in place that is cathodically unprotected, i.e., it is subject to corrosion. SoCalGas provided detailed cost estimates supporting a rate $278,900 per mile. ORA relied on a seven-year average rate of $205,997 per mile.
70. In the partial settlement, parties accepted SoCalGas' estimate without mandating pipeline replacement. It is reasonable however to require SoCalGas to replace the amount of pipeline forecast in exchange for including the forecast in rates.
71. SoCalGas provided specific details for routine service replacement superior to ORA's trended data. Accurate records will demonstrate that SoCalGas replaced a significant amount of service connections consistent with the funding provided in rates.
72. SoCalGas must move its facilities at the request of the CalTrans or local agencies (Franchises) when either of these two is making their own infrastructure changes. SoCalGas could not support its franchise capital expenditure estimate except for known projects.
73. TURN showed that SoCalGas did not consider the budget reductions affecting CalTrans. ORA's estimate is more reliable and based on the likely identifiable projects for the test year.
74. ORA made a more likely detailed forecast than SoCalGas for replacing regulator stations.
75. ORA used 2001 actual expenses a forecast for cathodic protection whereas SoCalGas made a reasonable detailed forecast. SoCalGas has already made the easier retrofits.
76. SoCalGas forecast extensive replacement or abandonment of mainly older, pre-1931 mains installations based on an engineering survey for those facilities that are more susceptible to earthquake damage due to inferior welding. SoCalGas demonstrated that the detailed costs for eight likely projects exceed ORA's simple trend of mains replacement.
77. ORA used a seven-year average rather than the rate of new business, which under funds GEM meter replacement. ORA incorrectly allocated GEM replacement costs to individual non-core customers and excluded the cost from revenue requirements. ORA would unreasonably require customers to make a second individual contribution for a replacement. The applicant's proposal is reasonable.
78. Any cost allocation of replacement GEMs should occur in the BCAP.
79. SoCalGas established that the Rockwell and Tin meters leak excessively. ORA incorrectly proposed a five-year average rate to replace leaky meters, which does not account for the inability to determine which meters leak. ORA's forecast would leave too many dangerous meters in place. SoCalGas' meter replacement forecast is reasonable.
80. ORA's support labor adjustment is unnecessary because none of the other related adjustments are adopted.
81. The $5.522 million for Test Year 2004 to replace Distribution Operations Maintenance and Inspection systems with new technology to automate field order and data capture processes is necessary for compliance with Federal Department of Transportation as well as Commission regulations.
82. SoCalGas did not justify a further $1.1 million in 2004 for a Windows 2000 Active Directory Services Project completed in 2003.
83. A reasonable replacement cycle for personal computers including laptop computers is four years.
84. TURN demonstrated that computer costs are highly variable and subject to decline over time. TURN's newer estimated costs will allow SoCalGas and SDG&E to replace computers with technology adequate for the applicants' specifications.
85. SoCalGas and SDG&E should buy the best equipment available with the funding provided in rates. It is reasonable to expect SoCalGas and SDG&E to show in the next proceeding that they fully expended the funding to replace personal computers on a four-year cycle.
86. In D.01-12-018, the Commission adopted Comprehensive Settlement Agreement, with some modifications, for changes to the regulatory and market structure of the natural gas industry. The Commission issued D.04-04-015 on April 1, 2004, approving the implementation of the CSA without further modifications to it or to D.01-12-018. The software costs were for preliminary work.
87. Implementation in July is more probable than January 2004; therefore, it is reasonable that the rate base calculation be adjusted for a weighting for an in-service date on July 1, 2004.
88. We can rely on SoCalGas and SDG&E spreadsheets for the agreed-upon costs of Customer Service Dispatch Phase I and II.
89. Capital expenditures of $7.2 million ($5.5 million in 2003 and $1.71 million in 2004) have been delayed until 2008 for a Geographic Information System that would provide an automated system of mapping to improve the companies' ability to plan and manage the system, especially for maintenance and service restorations. The Measurement & Inspection System project is also delayed beyond the test year. Its budget was $2.74 million ($0.9 million in 2003 and $1.836 million) in 2004.
90. The capital expenditures forecast should recognize known changes.
91. SDG&E expects to spend $2.4 million in 2004 on the Pipeline Integrity Management project that can reasonably be substituted in the test year.
92. ORA proposed a blanket adjustment after eliminating the high and low years in a six-year average. An average does not address the specific needs of the test year.
93. ORA would adjust 10% of the 2004 forecast capital expenditure for the Voice System Replacement Project based on its in-service date. ORA believed SoCalGas would otherwise be over-compensated over a five-year life for rates. ORA's adjustment is inconsistent with having rates in effect for five years because SoCalGas would be short by 10% for all five years.
94. Pressure Betterment Project 2466 would modify SDG&E's gas supply system to allow multi-directional flow through the Otay Mesa Metering Station. Gas could alternatively flow northward from the Mexico and U.S. border into the SDG&E system.
95. The project interconnects SDG&E with an unregulated foreign Sempra affiliate, Transportadora de Gas Natural de Baja California.
96. SDG&E does not have a contract with a gas supplier and does not have approvals from both the Federal Energy Regulatory Commission and the U.S. Department of Energy for gas to flow northward.
97. The Otay Mesa betterment is not providing service at this time, it is not used and useful, and should not be in the 2004 rate base.
98. ORA examined the SDG&E electric distribution blanket capital expenditures five-year average. There were some blanket items with less than five-years' experience.
99. ORA rejected the entire $7.5 million for information technology projects in 2004, because of a concern that these types of information technology projects cannot be forecast like capacity projects, and the similarity of the project to another that also dealt with future information technology projects.
100. ORA relied on trends and assumed project duplication, but SDG&E provided reasonable detailed descriptions and budgets.
101. The SDG&E partial settlement includes an adjustment to the blanket category inconsistent with the ORA litigation position; three specific projects not at issue in litigation are removed for a total of $5 million in both 2003 and 2004.
102. The partial settlement would unreasonably cut projects for a Distribution System Capacity Improvements Program aimed at heavily loaded circuits.
103. The $7.5 million for information technology projects in 2004 was presumed by ORA to be duplicative of other projects but this is not demonstrated in the record.
104. UCAN proposed an adjustment to the Underground Cable Replacement Program (Project 230) by relying on 2002 data to support a reduction. UCAN uses recorded data in a piecemeal fashion to support a downward trend. The correct trend is an upward trend, with SDG&E replacing more cable because underground cable is now a high percentage of its system and cable maintenance and replacement is critical to reliability. The SDG&E forecast is reasonable.
105. For Capital Projects Other Than Blanket & Information Technology - Electric, ORA presented by a clear simple example that, for projects with a multiple-year construction life, SDG&E over-stated the escalation, by $816,000 in 2003 and $697,000 for 2004, by applying the rate applicable only to the last-year's expenditures to total costs instead of escalating each year's costs separately. SDG&E's estimates are not reasonable and should be adjusted.
106. The costs of the Sorento Substation were reduced by SDG&E after it filed the application. This stipulation lowers the 2003 capital expenditures by $1.500 million. This lower estimate is reasonable.
107. The Sustainable Community Energy Systems program is intended to incorporate energy efficiency, conservation and renewable energy technologies and practice into new construction projects. The goal is to install solar photovoltaic devices, fuel cells and other technology and advanced metering, control, and other related systems.
108. Despite UCAN's concern that SDG&E's program would effectively preempt any other entity from assuming a leadership role regarding Sustainable Community Energy Systems. SDG&E's program does not preclude the San Diego Association of Governments from having a program of its own. This program is reasonable.
109. The Settlement Agreement has a substantially lower forecast for Capital Projects Other Than Blanket & Information Technology than either SDG&E's request or even ORA's litigation position. It is reduced by $5.7 million for the Sustainable Community project, and the balance of the reductions in the partial settlement is the result of deferring past the Test Year, six specific additional projects in 2003 and five more projects in 2004.
110. None of the 11 projects used to calculate the partial settlement's reduction were tested or analyzed in the written or oral testimony of any witness and seven of the 11 purport to resolve significant overload conditions. Projects deferred into years following the test year may be included in later rate base estimates thus making the Settlement look better for ratepayers than it really would be.
111. We cannot reasonably use the litigation positions so we adopt for ratemaking purposes the partial settlement's capital additions of $27.730 million in 2003 and $18.184 million for 2004, inclusive of escalation errors. Deferred projects will be reviewed in subsequent rate proceedings.
112. SDG&E has a program of investments in information technology projects that include replacement of obsolete software and hardware systems, and the development of new systems and enhancements to existing systems.
113. The 2004 forecast of $5.3 million for the Geographic Information System project is likely to occur but there was no contract in place for the $5.2 million 2003 estimate. SDG&E agreed to reduce this forecast.
114. SDG&E justified the 2003 expenditures as recoverable in-house costs.
115. SDG&E agreed to an adjustment of $1.715 million in 2003 estimates for project 99821, Outage Management System II and ORA agreed to the 2004 expenditures.
116. The Hourly Billing System will upgrade SDG&E's ability to handling billing for customers with interval meters. The system will not be used and useful within the test year and SDG&E agreed to a reduction of $1.1 million in the 2004 expenditures. SDG&E should recover the remaining $0.3 million for 2003 and the remainder of $0.9 million for 2004.
117. The remaining IT forecast is reasonable.
118. SDG&E owns a 20% minority-interest of SONGS. The O&M and Capital expenditures that are billed by Edison to SDG&E are litigated in the Edison rate proceedings for consistency and to avoid duplicate litigation. SDG&E will recover most of its costs for SONGS based upon the Commission's D.04-07-022 in Edison's A.02-05-004.
119. In D.04-07-022, the Commission identified the reasonable 2004 capital expenditures and operating and maintenance expenses for SDG&E, which includes $7.597 million for 2004 capital expenditures and $41.144 million for 2004 operating expenses.
120. SDG&E will also incur capital expenditures forecast to be $14.469 million, and $0.76 million of forecast O&M expenses as its 20% share of total costs for specific new requirements, i.e., incremental requirements, imposed by the Nuclear Regulatory Commission's April 29, 2003 order that are not included in Edison's proceeding. Edison chose not to seek recovery in A.02-05-004.
121. SDG&E sought recovery of new security costs as known changes due to governmental action such as changes in tax rates, postage rates, or assessed valuation permitted by the rate case processing plan.
122. SDG&E's forecast of increased security costs are not a ministerial up-date, and A.02-12-028 is not subject to the provisions of the rate case processing plan, D.89-01-040.
123. The Commission has an obligation to provide adequate rates for SDG&E to provide safe and reliable service. ORA supports recovery of the new security costs. A rushed review in this application would not serve the public interest.
124. A balancing account, subject to refund, for incremental new security costs will allow SDG&E to recover its reasonable costs and allow ORA and others to perform a reasonableness review.
125. SDG&E is liable for its $1.2 million share of the Department of Energy's decontamination and decommissioning of uranium enrichment plants mandated by Title XI of the Energy Policy Act of 1992.
126. SDG&E's share of the cost to store spent fuel (used and no longer useful) from SONGS Unit 1 is $0.800 million. UCAN incorrectly identified the fuel storage cost as included in the Decommissioning costs for SONGS 1 included in A.02-05-004.
127. SDG&E's share for the annual payment to the Department of the Navy for its share for SONGS' site easement on Camp Pendleton, is $0.020 million.
128. SDG&E is not out of compliance with its line extension rules.
129. Working cash is an allowance added to rate base that represents the funds provided by investors that are needed to pay for current operating expenses and provide a financial cushion. ORA misinterpreted 2002 tax payment data in its analysis of working cash lead/lag days. SoCalGas and SDG&E reasonably forecast the lead/lag days for tax payments for the working cash allowance.
130. TURN and UCAN believe that SoCalGas and SDG&E should synchronize municipal tax calculations to the gas commodity prices. SoCalGas and SDG&E correctly use total revenue not commodity prices. SoCalGas and SDG&E correctly calculated lag-days.
131. TURN and UCAN adjusted the estimate for accrued vacation and withholding by using the adopted labor escalation rate. New employees accrue less vacation than older promoted workers who accrue more. SoCalGas and SDG&E reasonably calculated accrued vacation and withholding.
132. Many customers make deposits as a part of establishing credit with SoCalGas and SDG&E. As customer deposits are repaid to some customers, other customers submit new deposits; and while there is continuous turnover, the average total daily and monthly customer deposit balances stay relatively constant. Between 1997 and 2001, SoCalGas had average deposit balances of $35.088 million and SDG&E had balances between $22 million and $24 million.
133. The Commission has adopted deviations from U-16 in utility-specific rate cases including the recent D.04-07-022, in A.02-05-004.
134. The circumstances surrounding ratemaking treatment for the SoCalGas and SDG&E working gas inventories are not equivalent to the circumstances attendant to TURN and UCAN's proposals for customer deposits.
135. SoCalGas and SDG&E reasonably prepared detailed remaining life studies for depreciation purposes using Standard Practice U-4. All parties accepted the studies that generally increased remaining life and reduced depreciation expense.
136. The net salvage estimates declined as calculated by SoCalGas and SDG&E when using Standard Practice U-4. ORA incorrectly used old net salvage rates results in order to achieve a higher salvage estimate than supported by the study.
137. SoCalGas and SDG&E have previously been allowed to amortize a land right, which reduces their value in rate base over time. ORA would unfairly exclude land rights amortization in rates without providing for recovery elsewhere.
138. The uncontested 2004 customer forecast by class is reasonable.
139. ORA did not justify its adjustment to SDG&E's Account 163 - Purchasing and Warehousing by linking the adjustment to likely test year expense and activity. SDG&E reasonably forecast Account 163.
140. The SoCalGas estimate for Account 184.2 - Business Solutions, as adjusted by TURN for interest, fuel and fleet vehicles, is a reasonable estimate for vehicles.
141. ORA made an adjustment to SDG&E's Account 184.2 - Fleet based on a 2002 decline, without linking the decline to any change to the test year forecast.
142. UCAN made a comparable and consistent adjustment to TURN's SoCalGas adjustment for SDG&E's Account 184.2 - Fleet expenses. With this adjustment, the forecast is reasonable.
143. Tool repair costs for SoCalGas should be escalated at the standard non-labor rate.
144. The SoCalGas Account 184.6 - Tools and Uniforms costs of small tools, repairs, uniforms and coveralls for employees charged to Account 879 for SoCalGas is consistent with the workload in Account 879. TURN's capitalization adjustment was rejected elsewhere and does not reasonably apply here.
145. TURN showed that new tool purchases are not necessary for any replacement employees as the result of new hires.
146. TURN's uniform adjustment is unreasonable because the final number of employees is not certain.
147. The Commission adopted a Comprehensive Settlement Agreement that modified the market and regulatory framework for regulating the transportation and storage of natural gas on SoCalGas' system. D.04-04-015 was stayed pending the issuance of a decision in Phase I of Order Instituting Rulemaking 04-01-025. The company needs an adopted revenue requirement until the Settlement is implemented.
148. There is an existing memorandum account for gas storage operations adopted by D.03-12-057. The forecasts for gas storage O&M expenses for Test Year 2004 are reasonable.
149. The parties agreed that Account 807 should be reduced by $186,000 associated with upgrading technology for the Gas Acquisition Group; these costs should have been capitalized.
150. SoCalGas reasonably forecast a large increase in Account 814 - Engineering and Supervision. An average, as used by ORA, ignores the upward trend in the most recent years and all specific detailed forecast changes in costs.
151. Local 483 did not support its proposal in Account 814 that all stations - compressor and storage - should have two-person crews at all times for both safety and site security reasons. Increased expert security, not utility workers, provide better protection for terror threats and emergencies including fires and leaks.
152. Local 483 was unable to demonstrate that SoCalGas was operating in an unsafe manner or that automation had any adverse effects on operations. Local 483 did not demonstrate that SoCalGas violated its contracting policies and practices.
153. Local 483 did not identify any costs forecast in the test year for fines or penalties for spills of hazardous materials or other violations of rules.
154. ORA's proposed three-year average for Account 824 - Other Expenses, does not adequately address known changes for enhanced security, a change in capitalization and environmental monitoring. SoCalGas made a reasonable forecast of Account 824.
155. The 2004 forecast for Account 832 Maintenance of Reservoirs and Wells increased by 23% over the 2001 Base Year. SoCalGas did not adequately explain this increase.
156. TURN's proposed 50% reduction to the non-labor costs is reasonable.
157. ORA proposed a three-year average for Accounts 851, 856, 860 and 865. For an average to be a relevant forecast tool, it would be necessary to show that activities were essentially constant in nature.
158. SoCalGas testimony (Ex. 4) provided descriptions of programs and changes. In Ex. 94, SoCalGas provided further explanations and showed that it had answered detailed data requests by ORA. ORA did not explain why we cannot rely on the estimates as proposed by SoCalGas.
159. Account 850 - Engineering and Supervision and Account 859 - Other Expense were corrected and changed in SoCalGas' errata, Ex. 4E and Ex. 6E. The corrected forecast is reasonable.
160. SoCalGas forecasts $1.345 million in expense to operate the Sylmar compressor station but it concedes that these costs could be recovered in the BCAP and these are new costs not already recoverable through prior orders of the Commission. To delay authority to the BCAP decision would be to deny recovery of costs until that time even though the station operates now. The SoCalGas estimate for Account 855, Electric Fuel, is reasonable.
161. The costs for maintaining additional equipment at Kramer Junction and North Needles (Account 857) is recoverable regardless of whether it is done by new employees or with overtime. The TLCBA will capture any unexpended labor costs.
162. Department of Transportation fees and operating permit costs (Account 859 - Other Expenses) have been rising at the rate of inflation. The 2004 forecast is reasonable.
163. Local 483 opposed SoCalGas' incentive compensation programs, issues that were rejected by Local 483 as a part of its collective bargaining with SoCalGas. Local 483 offered no other fact or analysis in opposition.
164. Local 483 did not show that Test Year 2004 forecast contains an allowance for amortizing past fines or for anticipated fines.
165. Local 483 did not support its proposal that all hazardous spills should be reported to the Commission's staff.
166. Local 483 did not support its contention that two employees at all compressor stations and storage fields at all times could be a terrorist deterrent.
167. While Local 483 asked for an independent study of SoCalGas' contracting practices, this is a collective bargaining issue. We rely upon ORA to perform an exhaustive review of SoCalGas' business practices as a part of its review of test year forecasts.
168. We do not adopt Local 483's proposal that management and non-represented employees who smoke should make higher employee contributions to medical plan costs, because no evidence was offered that this was practicable or subject to any quantification.
169. Local 483 did not justify its proposal that a formal utilization plan should be prepared for storage fields and compressor stations.
170. SoCalGas is already required to operate its system safely and reliably and comport with all applicable Commission General Orders. SoCalGas is also already required, at all times ensure that the proper design, construction and maintenance practices are used and that all necessary permits shall be obtained.
171. ORA proposed fractional adjustments in Account 870.0 - Operation Supervision and Engineering - Distribution, of a few thousand dollars that represent less than a single employee; these adjustments are `forced fits' taking a seemingly reasonable estimation change and applying it to numerous related accounts without consideration of whether such an adjustment is feasible.
172. ORA did not link its Account 870.0 disallowance of two positions for Computer Aided Drafting as directly proportional to capital construction and to its other recommendations to reduce capital expenditures.
173. ORA proposed a $108,000 disallowance for a new maintenance and inspection system, a part of federally mandated Pipeline Integrity Program, by assuming a direct correlation to capital projects. ORA would eliminate 69% of five positions and 23% of two support positions as a generic "Support Labor" adjustment. ORA did not explain how we can credibly reduce the test year by fractions of employees.
174. ORA's proposed reduction for one Meter Records Clerk in Account 878 - Meter and House Regulator Expense, is linked to its reduction of meter replacements.
175. We cannot predict which tin meters and Rockwell meters will leak or fail so SoCalGas must replace them all.
176. ORA would reduce the number of company generated work requests erroneously believing them to be discretionary. Any discretionary labor savings will be captured in the TLCBA.
177. Nothing in the language in D.01-11-068 limits its scope to initial inspections of earthquake shutoff valves. In D.01-11-068, the Commission found it to be unfair to charge other customers for the costs of earthquake shutoff valve inspections.
178. The turn-off/turn-on of gas service prior to home fumigation is safety-related as defined in § 328(b). A one-way balancing account with an upper limit is unfair to applicants who must respond to all requests.
179. Resolution G-3344, allowed SoCalGas and SDG&E to temporarily apply Z-Factor treatment to recover the cost of fumigation turn-off/turn-on of service.
180. Customers will not decide to fumigate a house simply because there is no separate turn-off/turn-on charge. A separate fee to fumigators or customers could provide an inappropriate incentive for them to perform the turn-off/ turn-on service themselves. The applicants forecasts are reasonable.
181. All homes that need testing should be tested for CO. SoCalGas and SDG&E have agreed with TURN and UCAN to record the costs for 100% of CO testing of weatherized homes in a memorandum account.
182. SoCalGas and ORA agreed to a $0.194 million reduction in Dispatch Operations. TURN's reduction was predicated on ORA's forecast of field service work orders.
183. Account 880.4 - Other Expenses - Distribution Field, should be adjusted to eliminate the proposed maturing workforce forecast component.
184. "Off production time" for Other Capital Replacement costs is not in Account 880.4, therefore, no adjustment is needed.
185. Technical and field administrative support for pipeline records is related to the capital expenditures. The vast majority of capital expenditures are adopted as reasonable. Only the disallowance, for the forecast of maturing workforce costs, is reasonable.
186. Except for the maturing workforce forecast component, the test year Account 880.5 - Safety & Emergency Services is reasonable.
187. ORA's adjustment to Account 880.5 was based on one data point in 2002 and did not consider the expected test year's scope of work.
188. For a Special Leak Survey included in Account 887, ORA relied on a seven-year average, which it also proposed for capital expenditures for Routine Main Replacement that does not consider the age of the system. The average is not reasonable when compared to the expected workload.
189. ORA linked Account 887 Franchise Main Maintenance expense to capital expenditures. Actions by local government and CalTrans affect SoCalGas' expense, not capital expenditures. The recommendation is not reasonable.
190. Cathodic protection expenses should be forecast related to the whole system and not the test year construction forecasts as proposed by ORA. Only the disallowance for forecast maturing work force costs in Account 887 is reasonable.
191. ORA's adjustment for leaks recheck costs was linked to its capital expenditure forecast, but the ORA capital expenditure reduction was not reasonable. Therefore, the leaks recheck forecast should not be reduced.
192. TURN linked the increase in Account 887 costs to reduce the backlog in gas main leaks to under-spending by SoCalGas compared to the last authorized allowance. The current backlog is the result of new and more leaks in old pipelines. During this time the backlog grew from 4,709 to 8,246. SoCalGas admitted that it consistently under-spent on repairs, which led to the backlog growth.
193. The leaks must be repaired by SoCalGas within the adopted forecast for Account 887.
194. Account 892, Distribution Service Maintenance, should be adjusted by $0.417 million for unreasonable maturing workforce cost estimates.
195. ORA incorrectly links maintenance in Account 892 for existing plant to new capital expenditures. If the funding is reduced for the maintenance of the curb meter boxes to inspect, rebuild, and repaint curb meter box sets along coastal areas that have been experiencing high levels of corrosion, then the need for future capital expenditures will rise. The SoCalGas forecast is reasonable.
196. Tin meters that leak are a safety hazard and do not need to be tested after removal for rebilling customers. This saves ratepayers $0.237 million in 2004 in Account 893.2.
197. ORA's removal of all "one-time" expenses would leave SoCalGas without a margin for other one-time, atypical, expenses for Information Technology Expense - Accounts 880, 903, and 923, in the test year and beyond. SoCalGas correctly estimates Information Technology Expense.
198. SoCalGas will undoubtedly have different one-time expenses until its next rate case and a 2% factor annually is a small allowance for subsequent year's one-time events. ORA's proposed removal of all "one-time" expenses would leave SoCalGas without a margin for other one-time, atypical, expenses for Information Technology Expense Accounts 588, 880, 903, 920, 921 and 935.
199. SDG&E will undoubtedly have different one-time expenses until its next rate case in Information Technology Expense - Accounts 588, 880, 903, 920, 921 and 935. ORA's proposed removal of all "one-time" expenses would leave SDG&E without a margin for other one-time, atypical, expenses. SDG&E correctly estimates Information Technology Expense.
200. A number of new customer service information systems that are needed to improve service require personnel to operate them, even if the goal of the systems is to allow other personnel's field work to be better planned and coordinated. ORA's proposed disallowance would incorrectly remove the personnel to operate these systems. SoCalGas reasonably forecast this cost.
201. In Account 902, SoCalGas records the cost for reading about 5.44 million gas meters monthly, and about 125,000 electric meters in Orange County for SDG&E, in conformance with the affiliate transaction rules.
202. ORA's proposal to normalize the global positioning system costs for SoCalGas unfairly removes any one-time event component from Account 902 - Meter Reading Expense for other one-time events in subsequent years during the rate cycle.
203. ORA did not quantify its objection for more full-time positions that would train part-time meter readers.
204. Group and individual incentive safety programs are reasonable expenses to engender morale and a useful tool for encouraging worker safety.
205. TURN would incorrectly forecast the SoCalGas test year meter reading expense on a single base year 2002.
206. UCAN and SDG&E dispute each other's employee count for meter readers in Account 902.
207. The reliability of meter reading labor forecasts, and the likelihood of filling the vacant and new positions are significant concerns that can be mitigated with the TLCBA.
208. Costs for safety training and equipment are likely recurring costs.
209. SDG&E must support the installation of real-time meters funded by the California Energy Commission. This proceeding should not revisit Rulemaking (R.) 00-10-002, Interruptible Load Programs or R. 02-06-006, Advanced Metering, Dynamic Pricing and Demand Response.
210. ORA's end of litigation position on SoCalGas Account 903 - Customer Records and Collection Expenses - failed to reconcile internally and failed to capture the effects of SoCalGas' errata.
211. ORA inconsistently forecast the Customer Service accounts. For Account 903, ORA eliminated 1997 and 1998, the two highest years and only averaged 1999 through 2001. ORA used 1999 through 2002 for Account 908 and used 1997 through 2001 for Account 909. ORA's forecasts appear to be more results-selective than they are methodologically rigorous.
212. As gas prices sharply rose, so did Account 903 customer call volume. TURN would improperly recalibrate the call volume forecast on 2002 data. The critical element for handling calls is labor - a voice at the end of the phone line to assist customers. If test year call volumes are low, costs should be lower too and most savings will be captured in the TLCBA.
213. In the highly diverse service territory served by SoCalGas it would be a disservice to cut corners on 24/7 Non-English language customer assistance. The public benefit outweighs the risk of over-budgeting.
214. Normalizing a five-year software site license contract of $25,000 is too granular and eliminates any one-time expense component. But it is appropriate to remove known cancelled contracts.
215. SoCalGas' Quality Assurance team forecast is consistent with accepting SoCalGas' call volume forecast. SoCalGas' forecast will tend to reduce subordinate to supervisor ratios of 24:1 to 20:1.
216. Normalizing SoCalGas' cost of Pay Station technology was unopposed. UCAN did not show its derivation of costs savings from Pay Stations.
217. ORA's adjustment in Account 903 for Paper Orders and Processing is unnecessary because it is dependent on ORA's rejected proposals for meter replacements and fumigation.
218. SoCalGas and SDG&E need an expanded credit analysis unit.
219. Meter reading has a high turnover rate because it is a transitional entryway into the company and because some part-time employees leave for work elsewhere. Full-time meter readers do not reduce the need for training due to high turnover.
220. The SoCalGas meter reading staff-to-supervisor ratio is extremely high, 43:1, which would justify an additional supervisor.
221. ORA's adjustment for communications expense is linked to the rejected adjustment for call volume. SoCalGas' call volume is a reasonable forecast.
222. ORA overstated the total of Account 903 in the 2001 Base Year because it did not update its results of operations calculations for changes in SoCalGas Ex. 7-E.
223. SoCalGas made a reasonable estimate for fumigation calls.
224. ORA could not substantiate the claim that SDG&E's forecast RD&D expenses were funding a corporate position in a competitive market.
225. Funding expenses for labor will allow customer contact and reducing non-labor expenses by 50% will avoid image-enhancing sponsorships of events in Account 903.1.
226. ORA adjustments to SDG&E's Account 903.1 - Customer Records & Collections that are based on its customer growth forecast are not necessary because we adopt SDG&E's customer growth forecast.
227. SDG&E has a duty to provide customer outreach and information at a reasonable cost; it is not a discretionary expense. ORA could not substantiate the claim that SDG&E's historical levels of customer information costs would be reasonable for Test Year 2004.
228. Four positions to provide information on the SDG&E CARE program and energy efficiency programs as special services staff are reasonable and should be included in test year base rates. The energy efficiency program budgets are intended to provide funding for actual program costs. Base rates should provide basic informational services.
229. SDG&E's Account 903.1 Non-labor cost for token gifts to customers for load reductions are not includable in test year costs.
230. UCAN would disallow 50% of the Account 903.1 programming costs for the inactive 20/20 rebate program, but reasonably allows 50% of the forecast for other unforeseen activities.
231. Costs for CO testing are not already recoverable in SDG&E's demand side management programs funded by the public goods charge. They are includable in test year costs. Any labor saved if SDG&E tests fewer homes than it forecasts will accrue in the TLCBA.
232. SDG&E did not duplicate its request for employees in Accounts 903 and 920 to work with federal agency customers.
233. UCAN did not substantiate its claim that SDG&E double-counted escalation for newspaper advertising costs.
234. UCAN's reduction to staff for outage notification is related to its reduction of underground cable replacement capital expenditures that was rejected.
235. UCAN's adjustment for SDG&E's 2002 computer purchases is unnecessary.
236. Dynamic tariff & demand reduction program costs are recoverable in costs of service pursuant to D.02-04-060.
237. SDG&E has filled the positions that perform manual billing for net-metering. UCAN did not substantiate its claim of double billing.
238. SDG&E is obliged to develop and implement time-of-use billing in conjunction with installing appropriate meters and R.02-06-006.
239. UCAN's objections to various SDG&E metering expenses and capital expenditures are not properly identified by account and project.
240. Postage expense is not an issue based on the SDG&E Joint Comparison Exhibit.
241. ORA's estimate in Account 904 using a three-year rate of 0.322% for uncollectable revenues results in a $1.107 million reduction. A balancing account is not needed because SoCalGas is fully funded for credit analysis.
242. TURN's estimate, which causes a $1.218 million reduction to uncollectable revenues, also includes the effect of increased deposits as well as the fully funding of credit analysis over TURN's objections.
243. ORA failed to substantiate the claim that SoCalGas' increased estimate in Account 908 for outreach is promotional and marketing in nature.
244. ORA calculated a four-year recorded average of $12.5 million and added a further $0.881 million for eServices.
245. SoCalGas failed to substantiate its claim that its changing customer demographics demonstrate sufficient change to warrant the requested increase in Account 908 - Customer Assistance.
246. The SoCalGas partial settlement included $15.703 million - $7.376 million in labor, $7.329 million in non-labor, and $0.998 million in non-standard components. The settling parties reduced the Account 908 request by $7.655 million compared to ORA's $9.113 million and TURN's even larger litigation disallowance.
247. The scope and scale of the increase in Account 908 is unlikely to occur, and was not shown as necessary, in the test year as proposed by SoCalGas. Absent an appropriate litigation showing, we can accept the partial settlement Test Year 2004 $15.703 million - $7.376 million in labor, $7.329 million in non-labor, and $0.998 million in non-standard components.
248. TURN identified $0.100 million for measurement and evaluation studies that SoCalGas should not shift from the GCSF to base rate recovery in Account 910.
249. There is definite consumer benefit and value to enhancing online service options including bill payment, and application for CARE, Medical Baseline and all other customer-benefit services.
250. As a component of the adopted Account 908 estimate, ORA's recommendation of a minimum expenditure of $0.881 million will ensure that SoCalGas pursues development of eServices.
251. Adopting the SoCalGas partial settlement estimate for Account 908 makes moot the discrepancies in ORA's litigation estimates shown in the Comparison Exhibit.
252. We cannot quantify a specific permanent reduction to SDG&E employees that would allow us to reduce the necessary number of vehicles or fleet services in Account 908 with any certainty.
253. SoCalGas and SDG&E have already accepted and included in revenue requirements corrected adjustments in Account 908 for a joint TURN and UCAN proposal to include $0.030 million for operating savings as a result of installing the Strategen Real Estate Software.
254. SoCalGas failed to justify an increase over the base year for Account 909 Customer Information/Instruction.
255. TURN would improperly recalibrate the forecast on 2002 data.
256. SoCalGas proposed $381,000 in Account 920 for six accounting positions and SDG&E proposed $298,000 in Account 920 for five positions for the expected increase in workload due to Sarbanes-Oxley Act requirements.
257. Sarbanes-Oxley clearly added to the internal control requirements and reporting obligations of companies like SoCalGas and SDG&E - and Sempra, its parent. The partial settlements for both SoCalGas and SDG&E failed to identify specific treatment of incremental Sarbanes-Oxley workload.
258. Better and more detailed financial review protects shareholders and also benefits ratepayers through reduced risk of financial irregularities and faster financial reporting. Training expenses in Account 921, related to Sarbanes-Oxley, are necessary.
259. SoCalGas and SDG&E need more positions to adequately account for capital expenditures.
260. SDG&E needs more positions for adequate accounting review and asset monitoring.
261. SoCalGas needs two positions to continue to refine and enhance the results of operations model spreadsheets used for cost of service ratemaking, to implement the decision in this proceeding, and prepare for the next rate proceedings for SoCalGas and SDG&E. This is consistent with § 1821 and § 1822. SoCalGas and SDG&E will file a NOI as a part of the next base margin ratemaking proceeding.
262. In Accounts 920 & 921, Administrative and General - Salaries and Expenses for Regional Public Affairs, SoCalGas did not justify or quantify any changes in the costs for its staff from the 2001 Base Year to the test year 2004 levels. The described work tasks are existing duties.
263. ORA did not justify its proposed disallowance of SoCalGas Regional Public Affairs costs as lobbying expenses.
264. SDG&E did not justify or quantify any changes in the costs for its staff from the 2001 Base Year to the Test Year 2004 levels. The described work tasks are existing duties.
265. ORA did not justify its proposed disallowance of SDG&E Regional Public Affairs costs as lobbying expenses.
266. The partial settlements provided no information on a compromise on duties or expectations that could be relied upon to adopt a reasonable estimate.
267. ORA could not justify its disallowance in Account 920.2 of 1.2 positions in the SoCalGas Human Resources Department. ORA failed to identify any deficiency in SoCalGas' request. SoCalGas justified the need to continually update its training programs.
268. SDG&E's Human Resources Department does not need more employees because we reject the maturing workforce and increased hiring argument.
269. ORA has not shown any analysis of actual (historical) severance payments compared to salary savings that would show any ratemaking adjustment is applicable to either SoCalGas or SDG&E.
270. SDG&E and ORA agreed to a $113,000 reduction reflected in both SDG&E's and ORA's end of litigation position to resolve an unidentified issue related to ORA's audit of 2001 recorded information and an unreconciled difference between their results of operations spreadsheets.
271. SoCalGas' forecast of Test Year 2004 labor costs of $29.915 million in Account 920.0 and $2.015 million in Account 920.2 are reasonable administrative and general costs.
272. SDG&E Test Year 2004 labor costs of $1.080 million in Account 920 "A" and $9.801 million in Account 920 "O" are reasonable administrative and general costs.
273. SDG&E Account 920 "B" Incentive Compensation Plan and Spot Cash Awards are reasonable incentives and ORA's generic 50% disallowance of incentive compensation is not reasonable.
274. Test Year 2004 SDG&E environmental services costs of $1.133 million in Account 920 "C" are a reasonable forecast. It is not reasonable to adjust the forecast based solely on 2002 data.
275. ORA identified $0.110 million in unreasonable costs for membership dues, donations and contributions as defined by D.96-01-011 in SoCalGas Account 921, Administrative and General Non-Labor Expense. These costs should be disallowed.
276. SoCalGas did not justify the need for $0.298 million cost for temporary help in Account 921 that can be funded with savings from vacant positions.
277. Minor costs in Account 921 for employee recognition activities are reasonable.
278. SoCalGas fails to meet its burden of proof to explain the "legal settlement" costs of $0.253 million included in Account 921. It is reasonable to disallow the unjustified component in Account 921.
279. The forecast in SoCalGas' Account 921.6 for electricity costs from Edison should be reduced by $0.635 million based upon Edison's August 2003 rate reduction.
280. ORA did not justify its reduction to SDG&E's forecast in Account 921.6 for Sarbanes-Oxley costs in the Controller's Department. Training and consultant costs are necessary to employee performance.
281. It is not necessary to increase SDG&E's relocation and search fees by $0.800 million or background checks by $87,169, because we doubt the level of hiring proposed by the applicants will necessarily occur because we reject the maturing work force argument.
282. ORA did not justify a disallowance of retained expenses for labor relations. SDG&E justified the need for these expenses.
283. ORA did not justify disallowing consulting costs for SDG&E strategic planning. SDG&E justified the need for ongoing studies and modeling.
284. We reject the incentive compensation disallowance proposed for Account 921 consistent with rejecting ORA's overall recommendation.
285. An adjustment based on 2002 costs for SDG&E Account 921 "C" Office Supplies & Expenses - Supplies Management, was not shown to be relevant to the 2004 forecast.
286. SoCalGas and SDG&E are allowed to perform Shared Services for each other under the terms of the Sempra merger decision, D.98-03-073.
287. ORA overly focused its analysis on shared services cost allocation between accounts rather than the need for the services.
288. An annual independent audit of affiliate transactions required by D.98-08-035 excludes transactions between SoCalGas and SDG&E.
289. The allocation of shared services to numerous FERC accounts is relatively unimportant to ratemaking. The objective for ratemaking is establishing the reasonableness of costs recoverable in rates that are incurred as shared services to provide safe and reliable service.
290. The parties should plan, schedule and conduct workshops on the presentation of Shared Services data prior to the next application so that we may have a more meaningful discussion in the next rate proceedings for SoCalGas and SDG&E.
291. The Joint Comparison Exhibit, Ex. 150, identified $0.809 million, where SDG&E either offered no rebuttal or otherwise accepted ORA's adjustments to Account 921 "E1" and "E2" Sempra Energy Corporate Center (Administrative & General Costs). These adjustments are reasonable.
292. ORA identified $0.115 million as the costs for the External Affairs & Communications department that promote employee volunteer opportunities. These are costs associated with philanthropic activities that are not recoverable from ratepayers and should be disallowed.
293. ORA's objection to SDG&E's request for positions for tax accounting was not quantified or justified.
294. Leadership training and development costs, including teambuilding costs, are necessary for SoCalGas and SDG&E management to work together well in order to better serve ratepayers.
295. ORA did not address any issues relating to SDG&E's or SoCalGas' workforce diversity. Applicants' earning the U.S. Department of Labor's Secretary's Award is a demonstration of the commitment to diversity by SoCalGas and SDG&E, and it contributes to recruiting qualified female and minority candidates.
296. The costs of the corporate General Counsel are correctly allocated consistent with other legal costs.
297. Minor costs for publications, transportation and other contributions are costs traditionally incurred by a top executive in the normal course of business.
298. ORA did not quantify or justify a proposed adjustment to Shared Assets.
299. There is $0.284 million that does not reconcile in ORA's spreadsheets for SDG&E's revenue requirement. We can rely on SDG&E's spreadsheets to calculate the adopted revenue requirement.
300. SDG&E conceded that allocation of External Affairs Senior Vice President shared services should be increased to the retained costs at Corporate Center for departments not allocated to the utilities.
301. UCAN's recommendation to disallow $144,000 in governmental and regulatory consulting costs that it claimed were not adequately justified cannot be reconciled with the new allocation of shared services.
302. UCAN did not provide adequate detail of a proposed allocation change for $0.935 million of Legislative Governmental costs.
303. UCAN misused the "directly and primarily benefit ratepayers" criteria when the correct issue is whether SoCalGas and SDG&E receive from the Corporate Center's shared costs adequate services that are necessary to safely and reliably operate the companies.
304. UCAN provided no explanation for its assertion that it is unlikely that customers would benefit from Corporate Center activities. UCAN provided no analysis of the activities and no demonstration of anti-ratepayer-interest legislative advocacy by the Corporate Center.
305. Affiliate compliance work is performed to benefit Sempra and the other companies, and the Sempra desire to own two utilities. It is only necessary because of the holding company structure. It is reasonable to disallow this cost.
306. UCAN showed that ORA did not identify all of the costs for Community Affairs related to SoCalGas and SDG&E philanthropy. It is reasonable to disallow the additional $187,000.
307. UCAN did not demonstrate that the Communications Department costs included one-time 2001 energy crisis related costs in the test year.
308. Management position costs should be allocated consistently with the programs and services under their direction and control. The four-factor method is not appropriate for the Holding Company Chief Financial Officer. It is reasonable to reallocate the costs consistent with the allocation of the subordinate departments.
309. UCAN did not justify a disallowance of incremental non-labor costs for travel and incremental office expenses for Investor & Shareholder Relations.
310. The primary cost allocation method should always be as direct to the cost-causing entity or principal beneficiary as possible. The multi-factor method is a conventional default method when there is no more appropriate direct method. UCAN's 50-50 method for Investor & Shareholder Relations costs is arbitrary.
311. Applicant does not appear to have duplicated positions, but if there are unfilled positions, any cost savings from the up-graded treasury positions will be captured in the TLCBA.
312. UCAN's proposed disallowance of payroll costs for the Corporate Center ignores the fact that the Corporate Center incurs costs that the two utilities would otherwise incur themselves.
313. UCAN's proposed accounting adjustments relitigate the purpose of the holding company, which is outside the scope of this proceeding.
314. Corporate Center functions for corporate planning do not duplicate functions within the utilities. UCAN did not show that the ratepayers do not receive direct and primary benefit from shared Corporate Center services.
315. UCAN's proposed labor adjustment for Corporate IT costs did not reflect the new higher threshold for capitalizing costs. The applicants showed that new systems are required by Sarbanes-Oxley and not for productivity improvements as asserted by UCAN.
316. That data was not available to support a labor tracking-based allocation of Corporate IT costs is uncontested. The default four-factor method proposed by UCAN is appropriate without better data. It is reasonable to reduce Corporate Information Technology costs by $1.950 million
317. Fees for a syndicate of banks to offer lines of credit to SoCalGas and SDG&E should only be recovered one time in rates, in this proceeding, and not in a cost of capital related proceeding.
318. SoCalGas and SDG&E have adjusted the revenue requirements for some financing costs recovered elsewhere. SoCalGas and SDG&E implicitly accept the forecast risks until the next proceeding to set a new test year revenue requirement.
319. For the foreseeable future, Applicants have shown that rating agency costs have risen and will stay higher than the base year.
320. SoCalGas and SDG&E have shown that increased travel costs are necessary for existing treasury employees.
321. SoCalGas and SDG&E do not need to adjust non-labor costs for risk-management even though they reduced their request by one position. UCAN's proposal did not distinguish between labor and non-labor.
322. SoCalGas and SDG&E did not support a continuous turnover of employees in the tax department or the continued need for relocation expenses. Recruiting and relocation costs forecast by SoCalGas and SDG&E are too high. It is reasonable to disallow $305,000 for relocation costs.
323. UCAN's computer adjustment is inconsistent with the capitalization policy adopted in this decision.
324. SoCalGas and SDG&E reasonably allocate tax services on the number of employees.
325. UCAN did not add any new facts that would support ORA's proposed disallowance for leadership training and development.
326. The Corporate Center performs necessary functions for the utilities and non-utility and for the common "parent," therefore it is reasonable to allocate to SoCalGas and SDG&E the fair share of costs of the Corporate Center in lieu of SoCalGas and SDG&E performing these tasks themselves.
327. There is no need to reallocate costs for Diversity Affairs because we did not adopt most of UCAN's labor adjustments. There are continuous costs for training and education to remain proficient and effective in recruiting and retaining a diverse workforce.
328. UCAN would unfairly disallow any position that was vacant at the time it performed its analysis but the labor components of Corporate Center costs are subject to the TLCBA. It has not otherwise been shown that the positions are not needed for the test year.
329. UCAN would disallow in the test year forecast consulting and training costs without allowing for other post-test year non-recurring costs.
330. Fleet Services does not duplicate Corporate Security's services for the executive fleet.
331. Corporate training for specific leadership competency-based training, people research, and executive development should not be viewed as a one-time expense. SoCalGas and SDG&E need continuing education that changes as their needs change.
332. UCAN did not show that it was reasonable to adjust the Sempra corporate secretary's costs based on a comparison of the PG&E corporate secretary's duties. The relevant allocation for Sempra's corporate secretary to SoCalGas and SDG&E should be the actual duties and the cost-responsibility of the department relative to all of the Sempra companies.
333. UCAN disputed the rate of hiring to fill vacancies within the Legal Department and not the size of the department. The TLCBA protects ratepayers if positions are unfilled.
334. The 2004 Test Year dispute between SDG&E and UCAN for nuclear insurance is over the likely 2004 refund in comparison to recent years' refunds. Based on credible information, the 2004 premiums will rise and the expected refunds will decline.
335. UCAN did not demonstrate that certain all-risk insurance policies included non-utility property coverage.
336. Directors and Officers' Insurance protects honest well-intentioned directors and officers while they perform their duties. Disallowing premiums provides no ratepayer protection from misconduct or malfeasance.
337. UCAN incorrectly calculated insurance premiums because there is a permanent timing difference in policy coverage and annual ratemaking revenue requirements. UCAN used incomplete declaration information whereas SoCalGas and SDG&E used credible information for the forecast.
338. UCAN incorrectly proposed a recorded cost rather than forecast test year for other liability insurance premiums. In a future test year rate regulation regime, we are obliged to make educated forecasts.
339. The costs for the Sempra Energy's Corporate Center were reviewed by ORA one time in Ex. 302 for SDG&E. None of the adopted adjustments apply to SoCalGas.
340. The SoCalGas Joint Comparison Exhibit and both the ORA and Sempra opening litigation briefs do not match for SoCalGas Account 923 Outside Services. Neither ORA, or SoCalGas and SDG&E, discussed Account 923 or Shared Services issues in their Litigation Reply Briefs.
341. There is no record to support the $155,000 difference in ORA's forecast for SDG&E Account 923 - Outside Services.
342. For SoCalGas and SDG&E Account 924 - Property Insurance, the only difference is that ORA's position does not reflect all errata changes. There is no basis for ORA's 50/50 split of SoCalGas and SDG&E Account 925 Directors and Officers Insurance costs. It is not evident that ORA considered the policy's deductible feature. The Sempra policy has a $10 million deductible before the insurance company pays any claim - and the applicants are not seeking an amortization of any assumed deductible, only the premium.
343. The PG&E allocation of directors and officers' insurance costs is not relevant to this proceeding.
344. The differences in Account 930.0 - Miscellaneous Expense are a discrepancy between the errata positions of parties and the end-of-litigation positions. Applicants were consistent in reflecting updates and errata and ORA was not.
345. In Account 930.2 - Research Development & Demonstration, ORA's results of operations spreadsheets and testimony has a $0.403 million discrepancy.
346. Power generation research development and demonstration is designed to improve the cost effectiveness, energy efficiency and emission levels of distributed generation products and related technologies. The purpose of funding this program is to ensure products are developed on an accelerated basis and deployed to improve air quality.
347. The integrated energy system controls are activities related to building automation and controls. ORA did not show there are commercially available systems. ORA's review of RD&D was too superficial to determine that funding should stop now.
348. ORA provided no explanation for its adjustment to administrative costs.
349. ORA proposed a $0.070 million adjustment to SDG&E Account 930 "C" Environmental Services; about 3%, for salaries and expenses for employees who maintain meter records, field operations, and other tasks. We have adopted most of SDG&E's capital expenditures and expense estimates for maintenance and it is consistent to include this expense.
350. SDG&E removed $1,110,000 in Account 930A base year 2001 administrative fees and expenses associated with Rate Reduction Bonds to the end-of-litigation results of operations for Test Year 2004.
351. The issue of maintenance costs in SoCalGas Account 935 for the Pico Rivera chiller was not briefed and the issue is withdrawn.
352. ORA and TURN resolved all issues about the correct method to compute the tax expense allowances for Test Year 2004 and UCAN supported the tax stipulation in its opening litigation brief.
353. It is reasonable to calculate all taxes based on the adjustments adopted in this decision on capital and expense items, by otherwise using the embedded calculations in SoCalGas and SDG&E's end of litigation summary of earnings spreadsheets.
354. SDG&E's allocation of shared costs for SONGS were litigated in total in the Edison general rate case, A.02-05-004, and adopted in D.04-07-022.
355. SDG&E identified in Account 556 - System Control & Load Dispatch new duties including the administration of the DWR electricity contracts that have been allocated to the company.
356. ORA did not examine whether SDG&E was adequately organized to plan for and meet future natural gas and electric resource procurement and distribution needs. ORA proposed only a generic cut without adequate justification to the staffing forecast in SDG&E's Account 557 - Purchase Power.
357. SDG&E's Performance Support project including the Electric Geographic Information System project in Account 580 has not been delayed. The program should be funded. ORA did not justify its disallowance by asserting a lack of an adequate justification by SDG&E.
358. The four New Business Construction Manager positions in Account 580 that would implement new Title 24 building standards, promulgated by the California Energy Commission, are not needed before the standards are effective in 2005. SDG&E has discretion within the TLCBA to shift funding if the positions are needed sooner.
359. ORA did not justify the disallowance of field supervisory personnel included in Account 580 that support electric distribution functions. SDG&E showed that these positions are necessary.
360. The load dispatch workload has increased as a result of GO 166, Standards for Operation, Reliability, and Safety During Emergencies and Disasters. ORA recognized the need for additional staff and training but did not explain why its estimate of six new positions in Account 581 was a better estimate than SDG&E's estimate of eight positions.
361. ORA's disallowance of $0.050 million in over time for Account 582 - Station Expense assumed without justification that remote monitoring would reduce overtime.
362. ORA proposed to use an uncompounded flat rate of 10% over base year 2001 for an increase in the inspection, testing, and other routine operations of underground lines. It did not demonstrate that SDG&E's use of an historical 4.26% was wrong and it offered no justification that the flat 10% was more reasonable.
363. ORA used an unexplained estimate of $500 cost per encroachment investigation and an unexplained forecast of 170 annual encroachments. SDG&E's estimate reflects recent historical costs and is therefore a better forecast.
364. In Account 580, SDG&E' forecast for training was adopted and the related non-labor costs in Account 588 Miscellaneous Distribution Expenses are therefore needed too. ORA proposed arbitrary adjustments to eliminate a training coordinator and to reduce per-student materials costs, which are not reasonable.
365. ORA proposed a "one-time" expense disallowance for information technology related expenses but failed to provide for other minor expenses in subsequent years. A miscellaneous account is expected to be an allowance for numerous items that are too numerous and too small to estimate in detail.
366. ORA proposed a $0.206 million reduction to training for Customer Project Planners in Account 590 by reducing the number of students, reducing the number of instructors and increasing class sizes. It claimed this reduction was consistent with customer growth, but this only serves to make training less effective.
367. D.98-12-038 (83 CPUC 2d, 363) established a one-way balancing account for tree-trimming costs. These costs remain volatile and uncertain as shown by Governor Davis' March 7, 2003 Emergency Proclamation to deal with the impacts of the pine bark beetle infestation.
368. We have no record on tree-trimming alternatives including tree replacement that could tend to reduce tree-trimming and other vegetation management expenses.
369. A tree-trimming vegetation management balancing account is still reasonable and necessary.
370. SDG&E lacks location mapping information on individual streetlights needed to inspect them in compliance with GO 165. The cost can be spread over three years because rates will be in effect at least that long and SDG&E has discretion over how quickly it performs the mapping. The costs are therefore reasonable for the test year.
371. ORA provided no justification to reduce the number of inspectors included in Account 593 - Maintenance of Overhead Lines. There are two other corrections or adjustments for $0.185 million accepted by SDG&E but not reflected in the Joint Comparison Exhibit, Ex. 150. It is reasonable to include them in the adopted revenue requirement.
372. The ORA proposal to disallow $1.6 million in Account 594 - Maintenance of Underground Lines is related to its recommendation on capital expenditures for the Sustainable Community Program. Because the capital expenditure recommendation is rejected there is no basis to make this expense adjustment. Much of the maintenance work is actually preparatory to beginning the Sustainable Community Program.
373. ORA proposed the same flat rate growth factor in Account 594 that it proposed for Account 584 and there is no basis to use that flat rate.
374. In Account 970, SDG&E could not document costs increases attributable to "stricter" environmental regulation by local jurisdictions.
375. Three new positions for New Business Managers are needed to comply with the Energy Commission's new energy efficiency requirements beginning in 2005, but SDG&E needs staff to be prepared in 2004 to deal with builders ahead of 2005 construction. The TLCBA will accrue any savings until these positions are filled.
376. ORA's proposed adjustment for a reduction to supervision due to estimate differences in fumigation turn-off/turn-on and customer growth is too granular; the TLCBA will capture any forecast error.
377. Because we adopted the ORA adjustment to gas distribution capital expenditures for the delay in the geographic information system, the related adjustment is needed for consistency in Account 880 - Other Expenses, for training expenses of $0.041 million and $0.083 million for contract services related to the geographic information system.
378. In Account 887, SDG&E could not document costs increases attributable to "stricter" permitting. Nor is SDG&E's maturing workforce proposal credible for cathodic protection electricians.
379. ORA's rate of system growth is not credible to adjust Account 887 - Mains.
380. In Account 892 - Services, SDG&E could not document costs increases attributable to "stricter" permitting.
381. In Account 586 - Electric Meter Testers, SDG&E was not credible that it needs a significant increase in apprentices to replace workers for the maturing workforce phenomena. ORA's proposal for the 2002 staffing level is reasonable with no other workload changes. This is a labor component reduction of $0.947 million.
382. In Account 586, SDG&E used the five-year average for 44 different order groups to develop an order per 1,000 active meters, and then used the 2004 meter forecast to ultimately project costs. Whereas ORA used the 2001 actual data for five categories where there was a declining trend. Clearly, ORA selected a method on outcome.
383. UCAN proposed a method whose sole aim appears to be to create a lower estimate. UCAN has also confused two projects in its recommendations.
384. Because we do not accept ORA's adjustment in Account 586 to the forecast of field orders there is no basis to consistently adjust Account 878 Relocation of Gas Meters and Regulators.
385. Because we do not accept ORA's adjustment in Account 586 to the forecast of field orders there is no basis to consistently adjust Account 879 - Gas Customer Installation Expenses.
386. There is no fair basis to impose a one-way balancing account for fumigation related work orders to shut-off and restart service.
387. SDG&E proposed and justified a significant expansion of information programs for consumers.
388. ORA's proposal to use a five-year average of 1997-2001 for Account 910 - Miscellaneous Customer Service and Informational Expenses ignores the effect of the trend in costs.
389. SDG&E accepted two differences in Account 910 cited in the Joint Comparison Exhibit that are reductions for communication expenses for the energy crisis discontinuing a survey. It is reasonable to include them in the adopted revenue requirement.
390. Neither UCAN nor ORA adequately quantified and justified an adjustment for expanded eServices included in Account 910. The proposed 50% disallowance is arbitrary.
391. ORA did not perform an audit of SoCalGas and SDG&E with the intention of expressing an opinion on the financial statements.
392. In 2001, SDG&E sold property for a before-tax gain of $22 million that at one time had been accounted for in Plant Held for Future Use. Some site-related costs were previously authorized to be amortized in rates and the balance was in rate base for future use until 1984 when a portion of the remaining balance was also amortized and a residual amount, $19.5 million, was removed from rate base.
393. ORA proposed to re-weight the allocation of 2001 gain by including past recovered costs to create an allocation based on what it termed "risk exposure." This method is in conflict with D.83-12-065 where the Commission allocated a subsequent gain on a shared basis of the time the property was included and then excluded from rate base.
394. SDG&E reasonably used the Transition Cost Balancing Account to return to ratepayers a share of the gain on sale.
395. ORA did not show that the allocation of audit fees to SoCalGas and SDG&E was based on the volume of the workpapers. ORA did not raise any discovery issues regarding access prior to serving testimony. The current allocation in the test year is reasonable.
396. ORA experienced some difficulty in reconciling the recorded results for the Base Year 2001 to the "Restated" Base Year 2001. SoCalGas and SDG&E reasonably shifted costs between accounts to reflect the Test Year 2004 organization of accounts and responsibility for those accounts. ORA focused on the historical allocation to the detriment of examining the forecast functions. We expect SoCalGas and SDG&E to follow the rate case processing plan and avoid the need to restate base year cost.
397. UCAN's examination of shared corporate services correctly focused on the function rather than the allocation.
398. An adequate explanation with detailed workpapers for any restatement of the next base year will be relevant to determine whether SoCalGas and SDG&E meet the burden of proof in the next rate proceeding.
399. On April 22, 2004, the Commission adopted D.04-04-042,507 a decision that approved a contested settlement agreement and resolved most of the disputed issues among SDG&E and all but one of the other active parties in SDG&E's 2003 Rate Design Window proceeding. That decision controls the allocation for the adopted electric department distribution test year revenue requirement based on an equal percentage of marginal cost methodology, using caps and floors designed to moderate increases that would otherwise disproportionately impact residential and street lighting customers.
1. The legal obligation of the Commission is to establish just and reasonable rates to enable SoCalGas and SDG&E to provide safe and reliable service for the convenience of the public, ratepayers, and employees, while earning for shareholders a fair return on the property the companies employ in providing service.
2. A.02-12-024 and A.02-12-028 are not subject to the rate case processing plan, D.89-01-040.
3. It is reasonable to require SoCalGas and SDG&E to file NOIs of their next rate applications and to file in conformance with the Commission's rate case processing plan.
4. It is reasonable to allow TURN and UCAN, in addition to ORA, to review the NOIs and provide SoCalGas and SDG&E with deficiencies in the applications.
5. For all uncontested issues not expressly addressed in this decision, SoCalGas and SDG&E made a prima facie showing that the requests were just and reasonable.
6. Only SoCalGas and SDG&E have an obligation to meet the burden of proof that the rate requests are reasonable.
7. The adopted revenue requirements of $1,550.0 million in natural gas distribution revenues for SoCalGas, and $836.3 million in electric distribution revenues and $221.2 million in natural gas distribution revenues for SDG&E in Test Year 2004 are reasonable and are supported by the record in the consolidated proceedings.
8. The partial settlements fail to establish adequate service and performance expectations so that the rates would be just and reasonable in exchange for that service.
9. The partial settlements do not meet the burden of proof for determining just and reasonable rates.
10. ORA's participation in the partial settlements is not an indicator that the partial settlements are reasonable and in the public interest.
11. The settlements between Greenlining and SoCalGas and SDG&E are outside the scope of these proceedings and are not necessary to establish just and reasonable rates.
12. The SoCalGas partial settlement improperly included funding for positions that are not supported in the record.
13. The SoCalGas and SDG&E litigation forecast method is reasonable.
14. The agreements on forecasts contained in the Joint Comparison Exhibits are reasonable and based on the record.
15. Market rate compensation by SoCalGas and SDG&E is reasonable.
16. It is not reasonable to disallow a portion of market rate compensation solely because of an incentive mechanism component.
17. It is not reasonable to fund in rates unfilled employee positions.
18. The TLCBA would allow SoCalGas and SDG&E to fully recover the actual costs of labor limited by the adopted forecast amount. The TLCBA is reasonable.
19. Memorandum accounts will reasonably allow SoCalGas and SDG&E to track and justify any shift of labor funding between programs based on actual need.
20. A pension expense balancing account would allow SoCalGas and SDG&E to fully recover the actual costs of pension contribution up to the adopted forecast amount. A pension expense balancing account is reasonable.
21. A Memorandum Account for Workers' Compensation expenses is reasonable.
22. It is reasonable to raise the requirement to capitalize expenditures from $500 for SoCalGas and $2,500 for SDG&E to $5,000 for both companies.
23. By adopting a test year forecast, it is reasonable to impose an expectation that SoCalGas and SDG&E will generally expend the money on the project or program as described.
24. The use of averages is more appropriate than a single year's data to estimate Test Year 2004 customer advances, therefore it is reasonable to adopt $35 million and $23 million as adjustments to working cash for SoCalGas and SDG&E.
25. It is reasonable to deviate from Standard Practice U-16 and offset working cash requirements by the available average customer deposits.
26. Any failure to follow through on adopted expenditures or program changes as adopted in the Test Year 2004 forecast is directly relevant to the credibility of SoCalGas and SDG&E in subsequent proceedings when considering the reasonableness of their forecasts and professional judgments during and subsequent to the test year.
27. It is in the public's interest for us to consider new security related costs for SONGS at this time. It is consistent with our obligation to provide SDG&E adequate rates to ensure safe and reliable service.
28. A SONGS Incremental Security Balancing account, subject to refund, is a reasonable consumer protection to avoid overpaying for incremental security costs at SONGS that have not yet been litigated.
29. UCAN's metering related proposals are beyond the scope of this proceeding and belong instead in other proceedings, including R.00-10-002, Interruptible Load Programs and R.02-06-006, Advanced Metering, Dynamic Pricing and Demand Response.
30. Energy efficiency and demand-side management costs currently recovered in the GCSF should remain in the GCSF and should not move to SoCalGas' Account 908.
31. Philanthropic giving by SoCalGas and SDG&E shareholders is not a reasonable cost to be borne by ratepayers.
32. The Sarbanes-Oxley Act (2002) is one of the most important new federal legislative actions and has significantly modified and expanded the reporting and control requirements and affecting corporate governance, financial disclosure and the practice of public accounting.
33. Ratepayers receive direct and primary benefit from shared Corporate Center costs that do not duplicate utility corporate functions.
34. UCAN misapplied the direct and primary benefit criteria in its challenge to shared services performed by the Corporate Center. It is reasonable to allocate to SoCalGas and SDG&E the fair share of costs of the Corporate Center in lieu of SoCalGas and SDG&E performing these tasks themselves.
35. It is reasonable to continue the tree trimming one-way balancing account for SDG&E for vegetation management costs.
36. SDG&E must accommodate the provisions of Assembly Bill 1X by applying the residential class revenue requirement allocation in a manner consistent with the Commission's determination in D.04-02-057.
IT IS ORDERED that:
1. Application (A.) 02-12-027 is granted to the extent set forth in this order. Southern California Gas Company (SoCalGas) is authorized to collect, through rates and through authorized ratemaking accounting mechanisms, the 2004 Test Year Base Margin set forth in Appendix F.
2. A.02-12-028 is granted to the extent set forth in this order. San Diego Gas & Electric Company (SDG&E) is authorized to collect, through rates and through authorized ratemaking accounting mechanisms, the 2004 Test Year Base Margin for Natural Gas Service as set forth in Appendix D.
3. A.02-12-028 is granted to the extent set forth in this order. SDG&E is authorized to collect, through rates and through authorized ratemaking accounting mechanisms, the 2004 Test Year Base Margin for Electric Service as set forth in Appendix E.
4. Within 14 days of the effective date of this order, SoCalGas and SDG&E shall file revised tariff sheets to implement the electric and gas revenue requirements set forth in Appendices D, E and F.
5. SDG&E shall allocate its 2004 electric distribution revenue requirement based on an equal percentage of marginal cost methodology, using caps and floors designed to moderate increases that would otherwise disproportionately impact residential and street lighting customers in conformance with D.04-04-042.
6. SoCalGas and SDG&E shall establish True Labor Cost Balancing Accounts to refund any unspent labor costs included in the Base Margins. SoCalGas and SDG&E shall maintain memorandum accounts to track any discretionary transfers of labor expense revenues between accounts.
7. SDG&E shall continue to maintain its one-way balancing account for tree trimming vegetation management costs.
8. SDG&E shall establish a balancing account, subject to refund, for new incremental security costs at the San Onofre Nuclear Generating Station (SONGS) as imposed by Nuclear Regulatory Commission and discussed in this decision.
9. SDG&E shall apply the residential class revenue requirement allocation in conformance with D.04-02-057.
10. SoCalGas and SDG&E shall refine and enhance the ratemaking model spreadsheets before the next rate proceeding and eliminate all instances of manual data transfers within the models and for the tables and reports generated by the models to support the results of operations, rate base and other ratemaking tools.
11. We direct the interested parties to plan, schedule and conduct workshops in the first quarter of 2005 to develop a better format for presenting Shared Services in SoCalGas and SDG&E's next base revenue ratemaking proceeding.
12. SoCalGas and SDG&E shall comply with the Commission's rate case processing plan, as modified herein, when they next file for any change in authorized base electric and gas revenue requirements.
13. Phase One of A.02-12-027 and A.02-12-028 is concluded. These consolidated proceedings and Investigation 03-03-016 remain open for Phase Two.
This order is effective today.
Dated , at San Francisco, California.
APPENDIX A
List of Appearances
The current service lists for these proceedings are available on the Commission's web site, at the following links:
1. http://www.cpuc.ca.gov/published/service_lists/A0212027_50027.htm
2. http://www.cpuc.ca.gov/published/service_lists/A0212028_50027.htm
Further assistance is available by contacting the Process Office at (415) 703-2021.
(END OF APPENDIX A)
APPENDIX B
List of Acronyms and Abbreviations
A. - Application
ACR - Assigned Commissioner's Ruling
AHE49NS - Average Hourly Earnings for workers in the Electric, Gas and Sanitary Sectors of the U.S. economy
ALJ - Administrative Law Judge
BCAP - Biennial Cost Allocation Proceeding
CAD - Computer Aided Drafting
CalTrans - California Department of Transportation
Coral - Coral Energy Resources, LP
COS - Cost of Service
CPS - Capital Project Summary
CSA - Comprehensive Settlement Agreement
CUE - California Utility Employees
D. - Decision
DOT - Department of Transportation
DRID - Defense Reform Initiated Directive
Edison - Southern California Edison Company
ERISA - Employee Retirement Income Security Act (of 1974)
FEA - Federal Executive Agency
GCSF - Gas Consumption Surcharge Fund
GEMS - Gas Energy Measurement Systems
GO - General Order
GRC - General Rate Case
Greenlining - Greenlining Institute
I. - Investigation
ICIP - Incremental Cost Incentive Proceeding
IRS - Internal Revenue Service
JCE - Joint Comparison Exhibit
JGTOTALMS - UCIS constructed Index
Local 483 - Local 483 UWUA
MPC - Margin Per Customer
NEIL - Nuclear Electric Insurance Ltd.
NGVA - Natural Gas Vehicle Account
NOI - Notice of Intent
NorthStar - NorthStar Consulting Group
NRC - Nuclear Regulatory Commission
O&M - Operating and Maintenance
OP - Ordering Paragraph
ORA - Office of Ratepayer Advocates
Otay Mesa - Otay Mesa Metering Station
PHC - Prehearing Conference
PG&E - Pacific Gas and Electric Company
PBR - Performance Based Ratemaking
R. - Rulemaking
RO - Results of Operations
Rules - Rules of Practice and Procedure
SANDAG - San Diego Association of Governments
SCGC - Southern California Generation Coalition
Sempra - Sempra Energy
SoCalGas - Southern California Gas Company
SONGS - San Onofre Nuclear Generating Station
SDG&E - San Diego Gas & Electric Company
SDG&E Settling Parties - Collectively are the following: SDG&E, ORA
Greenlining, Coral and CUE
Sustainable Community - Sustainable Community Energy Systems
TGN - Transportadora de Gas Natural
TLCBA - True Labor Cost Balancing Account
TURN - The Utility Reform Network
UCAN - Utility Consumers' Action Network
UWUA - Utility Workers Union of America
(END OF APPENDIX B)
507 A.03-03-029, filed March 17, 2003.
