Office of Ratepayer Advocates

Phase 2 Supplemental Testimony on
Unbundling Pacific Gas and Electric’s
Revenue Cycle Components
for Electric Industry Restructuring
Witness:  Jim Price

This exhibit supplements the recommendations of the Commission’s Office of Ratepayer Advocates (ORA) in response to the March 9, 1998, revised testimony of Pacific Gas and Electric Company (PG&E) regarding its application (A.97-11-004) for the adoption of credits for revenue cycle services provided by energy service providers (ESPs).  On April 6, 1998, ORA distributed its Phase 2 testimony recommending ratemaking and accounting procedures related to these credits, specific credit amounts for Southern California Edison Company (SCE) and San Diego Gas and Electric Company (SDG&E), and a mechanism for future changes to the adopted credits.  As discussed at the Prehearing Conference of March 24, 1998, numerical results pertaining to PG&E were deferred to this exhibit, which follows the same principles stated in ORA’s April 6 exhibit.
The credits recommended in this exhibit correspond to those recommended in ORA’s previous testimony.  Table 1 in this exhibit corresponds to Table 2-A of ORA’s April 6 exhibit, and contains the values that pertain to PG&E.  Additional explanations that reflect ORA’s further analysis of PG&E’s workpapers are as follows.
For meter reading and meter data management, PG&E’s methodology treats costs such as vehicle use and hours of miscellaneous activities as labor cost loaders, and includes costs of customer inquiries, as recommended by ORA;  PG&E has not included supervision costs as recommended by ORA, and pending additional information to be requested from PG&E, ORA has inferred a supervision loader from its analysis of SDG&E’s credits, and included it in ORA’s recommended manual meter reading credits for PG&E.  An additional adjustment to PG&E’s proposed credits is de-averaging of time-of-use (TOU) versus non-TOU credits for residential, small and medium commercial, and small agricultural customers;  PG&E has averaged the credits for these schedules, but its workpapers provide de-averaged numbers that ORA has used to de-average ORA’s recommended credits.  Whereas ORA recommended simplifying the geographic basis for credits for SDG&E and SCE to consist of standard versus high-cost areas rather than five zones, ORA’s review of PG&E’s workpapers shows that the average walking and access time for PG&E’s Zone 1 is roughly comparable to that of SDG&E’s Zone 1, and that there is both a significant difference between the walking and access time for PG&E’s three zones and a significant number of customers in each of PG&E’s three zones.  Because these characteristics occur, ORA accepts PG&E’s three geographic zones.  ORA’s April 6 recommendation of using a single high cost zone defined as the most costly 10% of a utility’s customers would not be as meaningful given the geographic nature of PG&E’s service area as the consistency of definition between service areas that can result from defining zones based on ranges of walking and access times.  SDG&E’s definition of Zone 1 as an access time between premises of under 30 seconds is one that can be applied to all service areas, although the definition of comparable zones can only be approximate in this proceeding.
For the reasons described in ORA’s April 6 exhibit, PG&E’s proposed meter services and meter ownership credits should be adjusted by removing meter installation costs (i.e., processing costs) from the meter ownership cost calculation and placing them in the meter services credit as a cost of bundled service that is avoided when a competing ESP offers revenue cycle services.  For PG&E, ORA has estimated the meter installation component of the meter services credit by annualizing the processing costs that ORA has removed as an offset from the meter ownership credit, and adding the result to the meter services credit proposed by PG&E.  A further adjustment to PG&E’s meter ownership credit is a recommendation to assume that interval meters now being used by large commercial and industrial customers are capable of being reused, as SCE has assumed;  PG&E assumes that it will have no use for these returned meters, and if this were actually the case, it should be willing to sell or give these meters to customers or their ESPs.
ORA’s adjustment to PG&E’s proposed billing and payment services credit is made for the reasons described in ORA’s April 6 exhibit:  offsetting costs that are subtracted from revenue cycle credits should not include (1) costs that are recovered through service fees, (2) “set up” or infrastructure costs, and (3) costs that are more directly relevant to the ESP than to the customer.  ORA’s understanding from PG&E’s workpapers is that its offset costs amount to $0.15 per account per month, as reflected in Table 1.  In addition to the amounts shown in Table 1, PG&E’s billing and payment services credit should be adjusted for uncollectibles;  this issue is discussed in the recommendations presented by The Utility Reform Network (TURN).

Table 1
Recommended Credits for Revenue Cycle Services
Category and Segment	PG&E	SCE	SDG&E	
Meter Reading & Meter Data Management				
Rate Schedules:  Residential, non-TOU (E1, E8)				
Commodity:  Electric-only				
Zone 1	$0.47			
Zone 2	$0.59			
Zone 3	$0.89			
Commodity:  Combined electric/ gas	$0.21			
Rate Schedules:  Residential, TOU (E7)				
Commodity:  Electric-only				
Zone 1	$0.54			
Zone 2	$0.65			
Zone 3	$0.93			
Commodity:  Combined electric/ gas	$0.32			
Rate Schedules:  Small & Med. Commercial, non‑TOU (A1, A10)				
Commodity:  Electric-only				
Zone 1	$0.47			
Zone 2	$0.63			
Zone 3	$0.76			
Commodity:  Combined electric/ gas	$0.20			
Rate Schedules:  Small & Med. Comm. TOU (A6)				
Commodity:  Electric-only				
Zone 1	$0.57			
Zone 2	$0.70			
Zone 3	$0.82			
Commodity:  Combined electric/ gas	$0.38			

Table 1 (continued)
Recommended Credits for Revenue Cycle Services
Category and Segment	PG&E	SCE	SDG&E	
Meter Reading & Meter Data Management				
Rate Schedules: Large Comm & Ind, firm (E19&20)				
Commodity:  Electric-only				
Zone 1	$2.35			
Zone 2	$2.54			
Zone 3	$2.96			
Rate Schedules:  Large Comm. & Ind., non-firm	$34.30			
Rate Schedules:  Small Agricultural, non-TOU				
Commodity:  Electric-only				
Zone 1	$1.38			
Zone 2	$1.51			
Zone 3	$1.87			
Rate Schedules:  Small Agricultural, TOU				
Commodity:  Electric-only				
Zone 1	$1.42			
Zone 2	$1.55			
Zone 3	$1.91			
Rate Schedules:  Large Agricultural, TOU (AG5)				
Commodity:  Electric-only				
Zone 1	$2.62			
Zone 2	$2.93			
Zone 3	$3.85			
Rate Schedules:  Metered Lighting (LS3, TC1)				
Commodity:  Electric-only				
Zone 1	$0.44			
Zone 2	$0.56			
Zone 3	$0.84			
Commodity:  Combined electric/ gas	$0.21			

Table 1 (continued)
Recommended Credits for Revenue Cycle Services
Category and Segment	PG&E	SCE	SDG&E	
Meter Services				
Rate Schedules:  E1, E8	$0.21			
Rate Schedules:  E7	$1.74			
Rate Schedules:  A1, LS3, TC1	$0.17			
Rate Schedules:  A6	$1.70			
Rate Schedules:  A10, E19&20 firm	$1.01			
Rate Schedules:  E19 non-firm	$11.03			
Rate Schedules:  E-20 non-firm	$10.99			
Rate Schedules:  AG1A	$0.14			
Rate Schedules:  AG1B, AGRB, AGVB, AG4, AG5	$0.98			
Rate Schedules:  AGRA, AGVA	$1.66			
				
Meter Ownership				
Rate Schedules:  E1, E8, A1 (1-phase), LS3, TC1	$0.15			
Rate Schedules:  A1 (3-phase), AG1A	$0.94			
Rate Schedules:  E7, A6 (1-phase)	$1.28			
Rate Schedules:  A6 (3-phase), AGRA, AGVA	$2.60			
Rate Schedules:  A10, E19&20 firm, AG1B, AGRB, AGVB, AG4, AG5	$2.78			
Rate Schedules:  E19 & E20 non-firm	$5.41			
				
Partial Consolidated ESP Billing				
Rate Schedules:  Residential (E1, E7, E8)	$0.45			
Rate Schedules:  Small commercial (A1, A6)	$0.51			
Rate Schedules:  Other	$0.50