Message-ID: <30012764.1075843183719.JavaMail.evans@thyme> Date: Thu, 23 Sep 1999 16:40:00 -0700 (PDT) From: jbennett@gmssr.com To: jeff.dasovich@enron.com Subject: FW: Response to PG&E Request for Interim Relief Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: JMB X-To: Jeff Dasovich X-cc: X-bcc: X-Folder: \Jeff_Dasovich_Dec2000\Notes Folders\Pg&e pbr X-Origin: DASOVICH-J X-FileName: jdasovic.nsf > Jeff / Mona -- > > Thought both of you should look at Bob's e-mail. Jeff -- this is follow > up to the discussion we had yesterday as to opposing PG&E's request for > interim relief in the PBR. > > Jeanne > > -----Original Message----- > From: Bob Finkelstein [SMTP:bfinkelstein@turn.org] > Sent: Thursday, September 23, 1999 11:00 AM > To: 'jjz@cpuc.ca.gov'; 'bfinkelstein@TURN.org'; 'James Weil'; > 'KMILLS@CFBF.com'; 'JBENNETT@GMSSR.com'; 'Andrew Brown'; > Theresa_Mueller@ci.sf.ca.us; njfuruta@efawest.navfac.navy.mil; 'Marc > Joseph'; 'David Marcus'; gayatri@jbsenergy.com; bill@jbsenergy.com; > mcbyer@earthlink.net; dgrueneich@gralegal.com; phanschen@mofo.com; William > Booth > Subject: Response to PG&E Request for Interim Relief > > On September 15, PG&E filed a motion seeking a ruling on its request for > interim relief. They basically want treatment similar to that provided in > the GRC, so that whatever outcome is adopted in PBR be effective as of > January 1, 2000, regardless of when the final decision comes out (mid- to > late-2000 is my best guess). I'm beginning to draft a response opposed to > such treatment, and propose that it be a joint filing with other parties > that wish to oppose such treatment. I hope to have a draft out by the end > of Monday; the response is due on Thursday, September 30. > > There is a broad strategy call that has to be made at the outset to > determine whether we should oppose or support PG&E's request. > > As most of you will recall, PG&E requested approval of annual attrition > adjustments in its GRC. This request was opposed by a number of parties, > and I believe that PG&E won't get this part of its GRC request. They > don't > have attrition now, and the Commission denied Edison's request for > attrition in its 1995 test year GRC. > > If my prediction proves correct, such an outcome obviously strengthens our > hand in any PBR proceeding, since the comparison of any proposed PBR > annual > update mechanism of "CPI-X" will be to a revenue requirement that does not > have any such annual adjustment. Therefore ratepayers would be > demonstrably worse off with PBR then they are without it, and hopefully > the > Commission would either adopt a very high productivity factor ("X") or > make > appropriate adjustments somewhere else in the mechanism. > > However, there is always the risk that the Commission will give PG&E what > it asks for in the GRC. According to PG&E's 2/26/99 Amendment to > Application, citing its GRC brief, "PG&E presented its Attrition proposal > as an alternative to PBR in the event that PBR is not approved in a timely > manner. That is, if the Commission approves this request for PBR interim > relief, there will be no need to implement Attrition even if it is > approved > in the GRC decision on a contingency basis as requested." In other words, > agreeing to interim relief in the PBR would eliminate the possibility of > getting a GRC decision that revives the attrition mechanism, thereby > avoiding the possibility that we would have to argue that a "CPI-X" should > be compared to the automatic attrition increases adopted in the GRC. > > TURN would tend to err on the side of assuming that in the GRC the > Commission will continue to find that attrition adjustments no longer make > sense, and therefore oppose the proposal for interim relief in this > proceeding. However, because this does create some risk that we'll end up > in a worse litigation position in the PBR if the attrition adjustment is > adopted in the final GRC decision, I thought it important to bring this to > your attention as you decide whether your respective clients would want to > join us in our response to the motion. > > As for the response itself, I'm thinking along the following lines: > > -- This isn't a proceeding subject to the Rate Case Plan. PG&E has > no > reason to claim entitlement to a decision by 12/31/1999. > > -- This proceeding presents none of the dire circumstances that > might > befall the utility were a GRC to be delayed without any sort of interim > relief. In the GRC, PG&E could claim that it would be denied the ability > to recover costs of providing service in the absence of a GRC effective > 1/1/99. That's not the case here -- really it's a matter of what > incentive will be in place on 1/1/2000. > > -- The Commission has never felt constrained to get a PBR in place > by > 1/1/XX in any of the preceding PBRs. I need to check this one a bit more > carefully, but I'm pretty sure that at least some of the mechanisms (SDG&E > I, SDG&E II, So Cal Gas, and Edison) went into effect mid-year. And > Edison's case certainly demonstrates that there's been previous delays > between filing (12/93) and ultimate PBR decision (9/96) without the need > for interim relief. > > -- Finally, to the extent that a PBR is supposed to effect > management > decision making, it's hard to understand how an interim decision could > have > that effect. After all, management could start changing the way they make > decisions in response to the interim incentive, only to have to change > again if the final decision adopts a mechanism that is substantially > different than the interim mechanism. And in at least two of the prior > cases (So Cal Gas and Edison) the PBR mechanism ultimately adopted was > dramatically different as compared to the utility's original proposal. > > That's it for now. > > Bob > >