From: jbennett@gmssr.com
To: jeff.dasovich@enron.com
Date: 1999-09-23 23:40:00+00:00
Subject: FW: Response to PG&E Request for Interim Relief

> 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
>
>