In their motion, the Petitioners argue that the utility and affiliate operations should be functionally and operationally separate to prevent cross-subsidization of the marketing affiliate by utility ratepayers. They propose that utility and affiliate employees should function independently of each other; be employed by separate corporate entities; reside in separate offices; and utilize separate computer and information systems. They also propose the utility and affiliate maintain separate books of accounts and records. To the extent the affiliate uses utility assets, the Petitioners recommend the utility not be permitted to charge the affiliate less than the embedded cost of service for that use.
Though SCG generally agrees with the Petitioners’ proposed separation standards, it argues that employees of affiliates should be allowed access to the computer and other information systems of the utility. SCG states that the Federal Energy Regulatory Commission (FERC) has concluded that so long as adequate security measures are in place to ensure that confidential marketing information is not improperly conveyed from the utility to the marketing affiliate, the sharing of information systems is appropriate. SCG agrees that use by the affiliate of utility assets must be accompanied by reimbursement, but the cost it recommends be assigned is not the embedded cost of service. Rather, SCG recommends the affiliate reimburse the utility at a competitive rate or "fully loaded" cost of service.
Our existing rules governing transactions with affiliates include separations standards. R.97-04-011 should also.