HMD/ANG/hkr 10/17/2000
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Pacific Gas and Electric Company for
authority to establish post-transition Application 99-01-016
period electric ratemaking mechanisms. (Filed January 15, 1999)
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San Diego Gas & Electric Company
for authority to implement Post Rate Application 99-01-019
Freeze Ratemaking Mechanism. (Filed January 15, 1999)
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Southern California Edison Company (U 338-E)
to: (1) Propose a Method to Determine and
Implement the End of Rate Freeze; and Application 99-01-034
(2) Propose Ratemaking Which Should Be in Place (Filed January 15, 1999)
After the End of the Rate Freeze Periods.
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Application of SAN DIEGO GAS & ELECTRIC
COMPANY: (1) informing the Commission of
the Probable Timing of the End of its
Electric Rate Freeze, (2) for Authorization
to Change Electric Rates Through Implementation
of Interim Ratemaking Mechanisms Concurrent with Application 99-02-029
Termination of the Electric Rate Freeze, (Filed February 19, 1999)
and (3) for Authorization to Change
Electric Rates by Adding New, and Revising
or Terminating Existing, Rate and Revenue
Mechanisms and Rate Designs.
(U 902-E)
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<PAGE>
JOINT ASSIGNED COMMISSIONER'S AND
ADMINISTRATIVE LAW JUDGE'S RULING
REGARDING POTENTIAL REVIEW AND MODIFICATION
OF CERTAIN ACCOUNTING PROCEDURES
AND SCHEDULING A PREHEARING CONFERENCE
As parties are well aware, there has been a recent flurry of activity
in these proceedings. On October 4, 2000, Pacific Gas and Electric Company
(PG&E) and Southern California Edison Company (Edison) each filed and served an
Emergency Petition for Expedited Modification of Decision (D.) 99-10-057 and
D.00-03-058. On October 5, Edison filed an ex parte request for the immediate
suspension of the effective date of portions of D.99-10-057 and D.00-03-058. On
October 6, Edison and PG&E filed separate amendments to the emergency petitions
filed on October 4. Also on October 6, PG&E filed its support of Edison's
request for immediate suspension of the effective dates of the above-referenced
decisions.
On October 12, Edison filed an "Ex Parte Request to Assigned
Commissioner for Modification of the October 11, 2000 Ruling of ALJ Minkin." In
this filing, Edison requests that the date on which responses are due to
Edison's October 5 ex parte request for the immediate suspension of the
effective date of portions of D.99-10-057 and D.00-03-058 be changed. Edison
also requests that the Commission address its October 5 ex parte request at its
October 19 meeting. Finally, on October 16, The Utility Reform Network filed a
response in opposition to the request to shorten the time parties would have to
respond to the utility's earlier ex parte request to suspend key provisions of
the above-referenced decisions.
Due to higher-than-expected wholesale market prices for electricity,
Edison and PG&E began accruing large undercollections in their respective
Transition Revenue Accounts (TRA), beginning in June 2000. PG&E and Edison are
extremely concerned that Generally Accepted Accounting Principles will require
that this undercollection be written off against earnings. Now the utilities
insist that emergency action is required, pursuant to Rule 81, which allows the
Commission to address requests for relief based on extraordinary conditions in
which time is of the essence. Edison also states that time is of the essence
because quick action is required to avoid a write-off in its Third Quarter
Earnings Report. Edison asserts that "the Commission must take action which
will, at a minimum, send the right signal to the financial markets."
<PAGE>
We take official notice of wholesale market prices for electric power
published by the California Power Exchange on its website (www.calpx.com), and
electric loads and real time prices for ancillary services and imbalance energy
published by the California Independent System Operator on its website
(www.caiso.com). The Commission has previously determined that these prices
reflect the fact that the wholesale market is not workably competitive (see,
e.g., D.00-08-021).
We also note that these wholesale prices are being paid by the
utilities, and--but for the rate freeze--would be reflected in retail bills for
customers of Edison and PG&E pursuant to Schedule PX. Accelerating the end of
the rate freeze under these conditions would expose ratepayers to price
volatility and rate increases. We also recognize that preserving the shelter of
the rate freeze for ratepayers may impose costs on the utilities that may be
appropriate for recovery over time.
It is crucial that the Commission develop a complete evidentiary record
to consider Edison's and PG&E's requests and the implications for ratepayers.
(Pub. Util. Code Sections 451 and 454.) We want to ensure that a record is
developed to allow the Commission to consider lawful approaches that balance the
interests and the equities under the extraordinary circumstances presented by
the current wholesale market conditions.
The Commission has the authority to implement any necessary changes to
the electric restructuring accounting provisions and cost recovery consistent
with statutory requirements. Specifically, accounting provisions related to the
TRA and the Transition Cost Balancing Account (TCBA) have been developed by the
Commission to implement the cost recovery plans submitted in response to Pub.
Util. Code Section 368(a). The Commission has the authority to identify and
determine those costs eligible for transition cost recovery consistent with the
provisions of Section 367. Section 367(d), in particular, requires that
transition costs be adjusted throughout the period through March 31, 2002, to
track the accrual and recovery, including the manner and timing of recovery of
costs of service and costs of generation assets.
By this ruling, we put parties on notice that we will consider these
accounting mechanisms, as provided for in several Commission decisions, in the
above-docketed proceedings. The TCBA was developed in Application (A.) 96-08-001
et al. in D.97-06-060 (Phase 1 Transition Cost Decision), D.97-11-074 (Phase 2
Transition Cost Decision), and D.97-12-039. These accounting procedures have
been further refined in recent decisions in the above-captioned dockets, such as
D.99-10-057 (Phase 1 PTR Decision) and D.00-03-058 (Decision Denying Rehearing
of D.99-10-057). Finally, we have further refined the workings of the TCBA in
A.98-09-003 et al. in D.00-02-048 (Annual Transition Cost Proceeding Decision)
and D.00-06-004 (Decision Establishing Generation Asset Balancing Account). The
TRA was specifically developed, at the utilities' request, in Rulemaking
94-04-031 in D.97-10-057 (Streamlining Decision). This ruling shall be served on
the service lists of all affected proceedings.
<PAGE>
Finally, we schedule a prehearing conference (PHC) for October 27 at 9
a.m. At this time, we will develop a schedule for submitting testimony related
to potential changes to the TCBA, the TRA, and the interaction of these
accounting mechanisms, including, for example, such methods as applying
generation revenues to offset operating losses, or transferring the TRA
undercollection to the TCBA. We believe creative, equitable solutions can be
developed. We direct PG&E and Edison to file and serve PHC statements by October
25 that propose initial steps in modifying the accounting provisions to provide
interim relief, and a schedule that permits a decision on this matter by the end
of the year.
Therefore, IT IS RULED that:
1. This ruling shall be served on all parties to the above-captioned
proceedings and to those parties to the electric restructuring rulemaking
(R.94-04-031) and investigation (I.94-04-032), Application (A.) 96-08-001 et
al., and A.98-09-003 et al.
2. A prehearing conference (PHC) shall be held on October 27, 2000 at 9
a.m. in the Commission's Courtroom, State Office Building, 505 Van Ness Avenue,
San Francisco, California.
3. Pacific Gas and Electric Company and Southern California Edison Company
shall file and serve PHC statements by October 25 that propose initial steps in
modifying the accounting provisions to provide interim relief, and a schedule
that permits a decision on this matter by the end of the year.
Dated October 17, 2000, at San Francisco, California.
/s/ HENRY M. DUQUE /s/ ANGELA K. MINKIN
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Henry M. Duque Angela K. Minkin,
Assigned Commissioner Assist. Chief Administrative Law Judge
<PAGE>
A.99-01-016 et al. HMD/ANG/hkr
CERTIFICATE OF SERVICE
I certify that I have by mail this day served a true copy of the original
attached Joint Assigned Commissioner's and Administrative Law Judge's Ruling
Regarding Potential Review and Modification of Certain Accounting Procedures and
Scheduling a Prehearing Conference on all parties of record in these
proceedings, R.94-04-031/I.94-04-032, A.96-08-001 et al., and A.98-09-003 et
al., or their attorneys of record.
Dated October 17, 2000, at San Francisco, California.
/s/ KE HUANG
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Ke Huang
NOTICE
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Van Ness Avenue, Room 2000, San Francisco, CA 94102, of any change of
address to insure that they continue to receive documents. You must
indicate the proceeding number on the service list on which your name
appears.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * *
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