Minutes of 1/7/97 Ratesetting Working Group (RWG)

1. The agenda and minutes, which were distributed in advance electronically, were approved without comment. The Facilitator requested that parties take greater advantage of the Working Group's Web Site (http://162.15.5.2/wk-group/ ) for posting future comments and announcements.

2. A new Roadmap Decision (D.96-12-088) was issued on 12/20/96. Sections IV. A and B of this decision identify the current schedules for the Unbundling and Revenue Cycle Unbundling issues respectively. On 12/23, ALJ Weissman issued a ruling setting hearings in both areas. A pre-hearing conference in the afternoon of 1/14/97 will address the scope and schedule of hearings to be held in the Unbundling Case in February, pursuant to the parties' 12/6 filings. An evidentiary hearing on 1/15 will address Revenue Cycle Unbundling issues and the parties' 12/20 filings, with the opportunity for parties to file written comments by 1/17.

3. The CEC expressed concern that the utilities would have to file non-generation PBR before a final decision in the Revenue Cycle Unbundling proceeding on which functions to include/exclude. ORA suggested that this issue could be raised at the upcoming scoping workshops on PBR.

4. Discussion of Issues in the Parties' 12/6/96 and 12/20/96 Filings

Co-Mingling of Unbundling Tracks

The CEC expressed concern that, because revenue cycle costs had not been separately identified in the parties' 12/6 filings, it would be difficult to preclude the continued co-mingling of 12/20 and 12/6 issues.

Rate Design

Concerns were expressed over the following aspects of IOU rate design proposals:

- SCE's baseline differential is placed wholly in CTC and not in distribution charges

- all fixed costs for transmission and distribution are allocated to demand and customer charges

- FERC determination of transmission revenue requirement will only affect the shares of revenue for T versus D, as the CPUC determines the total level of T&D through non-generation PBR

- nuclear decomissioning costs are allocated to non-generation

Virtual Direct Access

During the rate freeze, customers electing VDA would not be able to receive any benefits of more detailed hourly pricing signals. In order to benefit from more time-differentiated pricing during the freeze period, they would either have to switch to one of the IOUs' existing TOU schedules and/or participate in direct access.

Metering Costs

Edison explained that its AMR proposal would recover any meter capital costs, net of O&M savings, through a post-rate freeze distribution charge.

Settlement Imbalances

SCE's proposed method for truing up billing to reflect final adjusted after-the-fact PX settlements of imbalances uses current month billing determinants in calculating the charge to customers. This method is a simplification, which assumes that differences in settlement amounts from month-to-month are small and random in nature.

A related issue arose with regard to the settlement of imbalances due specifically to load profile estimated loads and whether interval metered customers would have to pay for settlement imbalances due solely to load profile estimation error. The parties agreed to a subteam meeting on 1/22 to specifically address settlement issues and the allocation of final settlement imbalances.

Allocation of A&G and Common Costs

Concern was expressed over the allocation of irreducible common costs only to non-generation functions. PG&E stated that this reflected a policy to allocate irreducible common costs only to the "going concern," because incremental divestiture of generation assets would not reduce the need to incur these costs.

4 The RWG discussed the upcoming PHC on the 12/6 applications, including the questions laid out in the ALJ's 12/23 Ruling. The parties expressed no concerns about consolidated treatment of all three utilities in the Unbundling Case. PG&E requested that parties assemble a list of issues from the 12/6 applications that lend themselves to possible settlement, so that substantive discussion can be undertaken at the 1/23 meeting.

5. In its June 21 ACR recognizing the RWG, the Commission requested that the RWG provide a report on the rate case plans of the utilities. The IOUs had summaries in their 12/6 applications, which they agreed to update for the 1/23 meeting.

6. Parties are invited to post to the Web site lists of specific issues in the utilities' 12/6 applications that they wish to discuss on 1/23. The 1/22 subteam meeting will be used to discuss the treatment of settlement imbalances and load profile errors. Parties are urged to invite the appropriate personnel. The analysis subteam on transmission pricing will decide later whether or not it needs to meet on 1/22.