SDG&E's Proposal to Lower Its CTC Revenue Requirement
SDG&E proposes to lower its annual CTC revenue requirement from $147 million to $115 million (as set forth in Exhibit 19, SDG&E's additional direct testimony dated April 27, 2000). We agree that SDG&E's proposal is reasonable and should be approved effective January 1, 2001.
By way of background, the Commission, in its final, or Phase 2, decision in the post-transition ratemaking (PTR) proceeding (D.00-06-034, Ordering Paragraph 16), ordered that:
Once the rate freeze ends, any credit balances in the Transition Cost Balancing Account (TCBA) for each utility, including the difference for the amount of competition transition charge (CTC) revenues authorized for collection and the amount actually collected, shall be refunded to customers. The funds will accrue interest at the 90-day commercial paper interest rate. The utilities shall propose a method to return the over collected CTC to ratepayers in the first Annual Transition Cost Proceeding (ATCP) following the end of the rate freeze. (Emphasis added.)
Because SDG&E ended its rate freeze on July 1, 1999, the pending application (A.99-09-011), filed September 1, 1999, is the "first Annual Transition Cost Proceeding (ATCP) following the end of [SDG&E's] rate freeze." Thus, the issue of over collected CTC is appropriately considered in this case.
Chapter I (particularly Attachment A) of Exhibit 19 shows the derivation of SDG&E's revised CTC annual revenue requirement, proposed to become effective on January 1, 2001. The revised amount of $115 million reflects the 12-month forecast of SDG&E's above-market transition costs for the calendar year 2001, including ongoing costs associated with QFs, Portland General Electric (PGE) and Public Service of New Mexico (PNM) purchase power contracts, and San Onofre Nuclear Generating Station (SONGS) 2 and 3 Incremental Cost Incentive Pricing (ICIP). The annual revenue requirement also reflects the 12-month amortization of the projected balance in the TCBA at December 31, 2000. Based on the calculation in Attachment A, SDG&E's proposed annual revenue requirement, effective January 1, 2001, is $115 million. This represents a decrease of $32 million from the $147 million annual revenue requirement that is currently in effect.
Chapter II of Exhibit 19 reflects a proposed allocation of SDG&E's revised CTC revenue requirement, but with the proviso (at p. 3) that "SDG&E plans to update this filing to comport with the Decision in Phase [2] of the Post Transition Ratemaking proceeding (A.99-01-019)." The final, as approved, Phase 2 PTR decision contains specific guidance as to how to allocate CTC over-collections. SDG&E states that it will be fully complying with this guidance in the PTR docket. In this ATCP (A.99-09-011), however, SDG&E seeks authorization only to revise its CTC revenue requirement.
We agree that SDG&E's proposal to lower its CTC revenue requirement from $147 million to $115 million is reasonable. We provided additional guidance regarding amortization of such overcollections in D.00-08-021 and D.00-08-037.
In D.00-08-021, we agreed with SDG&E's proposal to amortize approximately $100 million of over-collected CTC to offset summer wholesale energy price spikes. In D.00-08-037, we adopted a bill stabilization plan for SDG&E. We also provided that revenue shortfalls resulting from this plan be booked to the TCBA and offset by additional revenues arising from the sale of power by SDG&E's current generation assets (such as its share of the San Onofre Nuclear Generating Plant) and long-term contracts.
1. No party other than ORA protested, commented on, or submitted testimony addressing SDG&E's application.
2. ORA recommends that the Commission disallow $8,360 and $19,000 of SDG&E's requested employee-transition costs, and SDG&E did not contest these proposed disallowances. We agree with these recommendations.
3. No party contests SDG&E's proposal to lower its CTC revenue requirement. The increased amount represents a 12-month forecast of SDG&E's above market transition costs.
1. SDG&E's entries to its TCBA for the record period July 1, 1998 through June 30, 1999 (record period) are reasonable.
2. SDG&E's fossil generation and embedded debt costs for the record period are reasonable.
3. SDG&E's QF contract administration and costs during the record period are reasonable.
4. SDG&E's non-QF contract administration and costs for the record period are reasonable.
5. SDG&E's requested employee transition cost ($945,165), less ORA's proposed disallowances ($27,360), for a total of $917,805, plus appropriate interest, is reasonable and should be transferred to the TCBA.
6. SDG&E's proposal to lower its annual CTC revenue requirement from $145 million to $115 million is reasonable. Pursuant to D.00-08-037, CTC net revenues will be applied to any revenue shortfalls resulting from the bill stabilization plan adopted in that decision.
IT IS ORDERED that:
1. San Diego Gas & Electric Company's (SDG&E) entries to its Transition Cost Balancing Account for the record period July 1, 1998 through June 30, 1999 (record period) are adopted as set forth herein.
2. SDG&E's uncontested proposal to lower its annual Competition Transition Charge (CTC) revenue requirement and rate is adopted. This revised revenue requirement shall be allocated pursuant to the direction in Decision (D.) 00-06-034 and D.00-08-037. Within 30 days of the effective date of this decision, SDG&E shall file and serve a compliance advice letter implementing the revised CTC revenue requirement and rate.
3. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
APPENDIX A
List of Appearances
Applicant: Steven C. Nelson, Attorney at Law, and Tom Whelan, Sempra Energy, for San Diego Gas & Electric Company.
Interested Parties: Mark R. Huffman, Attorney at Law, for Pacific Gas & Electric
Company; and James P. Scott Shotwell, and Janet K. Lohmann, Attorneys at Law, for Southern California Edison Company; Ellison & Schneider, by Andrew Brown, Attorney at Law, for California Dept. of General Services; Bruno Gaillard, for Enron Corporation; Grueneich Resource Advocates, by Dian Grueneich; Attorney at Law, for City and County of San Francisco; Ellison & Schneider, by Douglas Kerner, Attorney at Law, for Independent Energy Producers; Ronald Liebert, Attorney at Law, for California Farm Bureau Federation; Sutherland, Asbill & Brennan, by Keith McCrea, Attorney at Law, for California Manufacturers Association; Adams, Broadwell, Joseph & Cardozo, by Katherine S. Poole, Attorney at Law, for Coalition of California Utilities; James Weil, for Aglet Consumer Alliance; Norman J. Furuta, Attorney at Law, for Federal Executive Agencies; and Goodin, MacBride, Squeri, Ritchie & Day, by James W. McTarnaghen, Attorney at Law, for himself.
Legal Division: Darwin Farrar, Attorney at Law.
Office of Ratepayer Advocates: Donna-Fay Bower.
Energy Division: Kayode Kajopaiye.
Public Advisor's Office: Rosalina White.
(END OF APPENDIX A)
