BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Pacific Gas and Electric Company for Authority to Establish the Wildfire Expense Memorandum Account. (U 39E) Application (Filed July 26, 2017) JOINT REPLY COMMENTS OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) AND SAN DIEGO GAS AND ELECTRIC COMPANY (U 902 E) ON THE PROPOSED DECISION AND ALTERNATE PROPOSED DECISION AUTHORIZING ESTABLISHMENT OF WILDFIRE EXPENSE MEMORANDUM ACCOUNT PATRICIA A. CIRUCCI CONNOR J. FLANIGAN Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: (626) Facsimile: (626) CHRISTOPHER M. LYONS Attorney for SAN DIEGO GAS & ELECTRIC COMPANY 8330 Century Park Court, #CP32D San Diego, California Telephone: (858) Facsimile: (619) Dated: June 11, 2018

2 JOINT REPLY COMMENTS OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) AND SAN DIEGO GAS AND ELECTRIC COMPANY (U 902 E) ON THE PROPOSED DECISION AND ALTERNATE PROPOSED DECISION AUTHORIZING ESTABLISHMENT OF WILDFIRE EXPENSE MEMORANDUM ACCOUNT Table of Contents Section Page I. INTRODUCTION...1 II. DISCUSSION...2 A. TURN Continues to Ignore the State s Increasing Wildfire Risk, and Seeks to Impose Unreasonable Barriers to Establishing a WEMA Covering Later Wildfire Events...2 B. TURN and ORA Provide No Legitimate Reason for Requiring the Utility to Absorb Substantial Incremental Costs Incurred Prior to a Final Decision Authorizing a WEMA...3 C. PG&E Should Not Be Required to File a Tier 2 Advice Letter Simply to Notice Recording Subsequent Wildfire Events in a WEMA...4 III. CONCLUSION...5 -i-

3 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Pacific Gas and Electric Company for Authority to Establish the Wildfire Expense Memorandum Account. (U 39E) Application (Filed July 26, 2017) JOINT REPLY COMMENTS OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) AND SAN DIEGO GAS AND ELECTRIC COMPANY (U 902 E) ON THE PROPOSED DECISION AND ALTERNATE PROPOSED DECISION AUTHORIZING ESTABLISHMENT OF WILDFIRE EXPENSE MEMORANDUM ACCOUNT Pursuant to Rule 14.3 of the California Public Utilities Commission s (Commission or CPUC) Rules of Practice and Procedure, Southern California Edison Company (SCE) and San Diego Gas and Electric Company (SDG&E) (together, the Joint Utilities) submit their joint reply comments on the Proposed Decision of the assigned Administrative Law Judge (ALJ) and the Alternate Proposed Decision (APD) of the assigned Commissioner, both dated May 16, I. INTRODUCTION The Commission should approve the APD and reject The Utility Reform Network s (TURN) and Office of Ratepayer Advocates (ORA) recommendations. Neither TURN nor ORA cite errors in the APD or provide other valid reasons for adopting the PD over the APD. TURN s claim that it is premature to authorize a Wildfire Expense Memorandum Account (WEMA) covering the 2017 wildfires is patently wrong, and ignores the multitude of lawsuits, as well as increasing insurance costs, that Pacific Gas and Electric Company (PG&E) and other utilities like SCE currently face. Similarly, TURN and ORA ignore the unjustified (and potentially significant) financial penalty that would be imposed on PG&E if it was forced to absorb all incremental costs incurred prior to a final decision authorizing a WEMA. Both ORA and TURN agree the Commission has the authority to make the WEMA effective as of the date PG&E filed its application and, notably, fail to address any of the APD s reasons for determining that this relief is warranted here. TURN and ORA, like the PD, instead incorrectly assert that 1

4 such relief is contrary to Commission policy. The Commission should approve the APD as it is consistent with the record, Commission precedent, and the law. II. DISCUSSION A. TURN Continues to Ignore the State s Increasing Wildfire Risk, and Seeks to Impose Unreasonable Barriers to Establishing a WEMA Covering Later Wildfire Events TURN erroneously asserts that it is premature to authorize a WEMA covering the 2017 wildfires and later wildfire events. TURN continues to ignore what the Governor, Commissioners, and other state officials all recognize: California faces a significant increase in wildfire risk materially different from the past. This has serious implications for the state s electric utilities, as evidenced by PG&E s WEMA application and, as ORA itself notes, SCE s WEMA application, A The unprecedented scope and magnitude of the 2017 wildfires were not something that PG&E, or any other utility, reasonably could have contemplated in prior general rate case forecasts, and TURN provides no contrary evidence. The PD and APD, however, both recognize this, and correctly determine that an ongoing WEMA provides an efficient means to track subsequent (and potentially substantial) wildfire costs. More troublingly, TURN improperly claims that a utility must first address factual questions about a wildfire s cause and the reasonableness and incremental nature of any incurred costs prior to requesting authorization to simply establish a WEMA. TURN asserts that the Commission should not authorize a memorandum account until specific facts are known, including which costs were incurred as a result of [utility] imprudence and which costs are incremental. 1 But as PG&E s experience with the Butte Fire makes clear, these factual questions often take several years to develop and are thus inappropriate for authorizing a memorandum account. The questions TURN identifies can be addressed when PG&E seeks to recover the costs recorded in the WEMA; they cannot and should not be resolved when the costs are recorded. TURN itself acknowledged this very point in its earlier comments, in which it agreed that the issue of whether or not recorded costs are incremental is a fact-intensive one that should be preserved for litigation if any cost recovery is requested. 2 Now, TURN apparently 1 TURN Comments, p TURN Opening Brief, p. 5. 2

5 wants to turn a utility s request for a memorandum account into a de facto reasonableness review of the proposed costs to be recorded in the account, including identifying specific incremental costs. 3 TURN s proposal is unworkable and contrary to the Commission s established approach to authorizing memorandum account relief. The PD and APD correctly reject this reasoning. B. TURN and ORA Provide No Legitimate Reason for Requiring the Utility to Absorb Substantial Incremental Costs Incurred Prior to a Final Decision Authorizing a WEMA TURN and ORA provide no legitimate reason for the Commission to make PG&E s WEMA effective as of a final decision in this proceeding, rather than that date the request was made. In fact, their arguments actually support the APD s determination that it is equitable and consistent with Commission precedent to make the account effective as of the date PG&E filed its application (July 26, 2017). 4 Both TURN and ORA agree that the Commission has authority to grant this relief, 5 and that PG&E faces significant and unprecedented 6 costs following the 2017 wildfires, including incurring additional insurance premiums of over $200 million above what is currently authorized in the utility s rates. These facts are key to the APD s logical conclusion that denying PG&E s request for an earlier effective date for a WEMA would impose a substantial financial penalty without justification. TURN and ORA ignore the serious financial implications of their argument, and instead attempt to impose a rigid policy barrier that would deny the utility s ability to seek recovery of these costs. This is unwarranted considering that the only relief requested is the establishment of a memorandum account. And, as the APD observes, it is also arbitrary and unreasonable 3 See TURN Comments, p. 2 (asserting that an ongoing WEMA will greatly increase the likelihood of costs incurred as a result of PG&E s imprudence being commingled with costs that were incurred otherwise ). 4 TURN states that it supports ORA s arguments on this issue. TURN Comments, p ORA Comments, p. 3 (noting that there have been limited exceptions wherein the effective date of the authorized memorandum account reverts back to the date a statute or program was implemented by the Legislature or Commission but arguing that for policy reasons the Commission should make a WEMA effective prospectively from the date of the decision). ORA does not mention other precedents authorizing memo accounts effective as of dates earlier than the decision approving the request. 6 ORA Comments, p. 2. The fact that TURN agrees with ORA that these costs are unprecedented undermines its prior suggestion that these costs may have been foreseeable and should have been included in PG&E s 2017 general rate case forecast. 3

6 considering the delays inherent in regulatory proceedings, which are often outside an applicant s control. If the Commission accepted TURN and ORA s position, it would place the state s utilities in an untenable situation of having to incur substantial wildfire-related costs until after the issuance of a fire agency report (which itself is not necessarily determinative) before filing a request to establish a WEMA, and then having to continue incurring and absorbing these costs until the Commission concludes its (potentially prolonged) review of the request to establish a memorandum account. The APD rightly rejects this inefficient and inequitable process. C. PG&E Should Not Be Required to File a Tier 2 Advice Letter Simply to Notice Recording Subsequent Wildfire Events in a WEMA TURN also errs in claiming that PG&E must file a Tier 2 advice letter submission for later wildfire events covered by the WEMA, instead of a Tier 1 advice letter. Here, the purpose of the Tier 1 advice letter is not to make a tariff change under General Order 96-B as TURN claims, but to provide notice that the utility is recording incremental wildfire liability costs to the WEMA associated with a new wildfire event. This notification via a Tier 1 advice letter is similar to the process established for informing the Commission s Executive Director of a utility recording incremental costs in the Catastrophic Event Memorandum Account (CEMA) for major events that are declared by the Governor as a State of Emergency, 7 and is therefore appropriate for an ongoing WEMA. Both the APD and PD agree on this point. TURN s argument should also be dismissed because it amounts to an improper attempt to re-litigate the WEMA tariff each and every time the utility simply notices a wildfire event. TURN signals it intends to protest any future advice letter filings to seek additions to the tariff to an approved WEMA, supposedly to prevent the utility from comingling costs associated with alleged imprudence with other costs more appropriate for recovery. 8 The Commission should not permit this, as it would frustrate the intended purpose of an ongoing WEMA, and render meaningless the Commission s approval of the tariff language in this proceeding. TURN already had the opportunity to review and comment on PG&E s proposed WEMA, and both the APD and PD adopt TURN s recommendation that PG&E modify its tariff to specify that all costs 7 Instead of filing a Tier 1 advice letter, if a Catastrophic Event occurs, SCE informs the Executive Director of the Energy Division by letter within 30 days after the Catastrophic Event, provided SCE has started booking costs into the CEMA. 8 TURN Comments, p. 3. 4

7 authorized to be recorded in the WEMA must be incremental. In all other respects, however, the PD and APD agree that PG&E s tariff is appropriate and TURN provides no legitimate reason for the Commission to revisit this determination. III. CONCLUSION For the reasons stated above, the Commission should not accept TURN s and ORA s recommendations, but instead should adopt the APD and make PG&E s WEMA effective as of the date PG&E filed its application: July 26, Respectfully submitted, PATRICIA A. CIRUCCI CONNOR J. FLANIGAN /s/ Connor J. Flanigan By: Connor J. Flanigan Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: (626) Facsimile: (626) Connor.Flanigan@sce.com June 11, 2018 /s/ Christopher M. Lyons By: Christopher M. Lyons Attorney for SAN DIEGO GAS & ELECTRIC COMPANY 8330 Century Park Court, #CP32D San Diego, California Telephone: (858) Connor.Flanigan@sce.com 5

8 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of Pacific Gas and Electric Company for Authority to Establish the Wildfire Expense Memorandum Account (U 39 E). Application (Filed July 26, 2017) CERTIFICATE OF SERVICE I hereby certify that, pursuant to the Commission s Rules of Practice and Procedure, I have this day served a true copy of the JOINT REPLY COMMENTS OF SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) AND SAN DIEGO GAS AND ELECTRIC COMPANY (U 902 E) ON THE PROPOSED DECISION AND ALTERNATE PROPOSED DECISION AUTHORIZING ESTABLISHMENT OF WILDFIRE EXPENSE MEMORANDUM ACCOUNT on all parties identified on the attached service list for A Service was effected by transmitting copies via to ALJ Peter V. Allen and all parties who have provided an address. Executed on June 11, 2018, at Rosemead, California. /s/ Olivia Gutierrez Olivia Gutierrez SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770

9 CPUC - Service Lists - A Page 1 of 4 6/11/2018 CPUC Home CALIFORNIA PUBLIC UTILITIES COMMISSION Service Lists PROCEEDING: A PG&E - FOR AUTHORITY FILER: PACIFIC GAS AND ELECTRIC COMPANY LIST NAME: LIST LAST CHANGED: JUNE 6, 2018 Download the Comma-delimited File About Comma-delimited Files Back to Service Lists Index Parties CONNOR J. FLANIGAN DAVID CHENG SR. ATTORNEY STAFF ATTORNEY SOUTHERN CALIFORNIA EDISON COMPANY THE UTILITY REFORM NETWORK 2244 WALNUT GROVE AVENUE / PO BOX TH AVENUE, SUITE 810 ROSEMEAD, CA SAN DIEGO, CA FOR: SOUTHERN CALIFORNIA EDISON COMPANY FOR: TURN CHRISTOPHER M. LYONS CHARLYN A. HOOK SR. COUNSEL SAN DIEGO GAS & ELECTRIC COMPANY LEGAL DIVISION 8330 CENTURY PARK CT., CP32D ROOM 5123 SAN DIEGO, CA VAN NESS AVENUE FOR: SAN DIEGO GAS & ELECTRIC COMPANY SAN FRANCISCO, CA (SDG&E) FOR: OFFICE OF RATEPAYER ADVOCATES (ORA) MICHAEL R. KLOTZ ATTORNEY PACIFIC GAS AND ELECTRIC COMPANY PO BOX 7442, MC B30A SAN FRANCISCO, CA FOR: PACIFIC GAS AND ELECTRIC COMPANY Information Only DAVID PAZ UTILITIES AND POWER RESEARCH WOLFE RESEARCH JOSEPH W. MITCHELL, PH.D. M-BAR TECHNOLOGIES AND CONSULTING, LLC ONLY

10 CPUC - Service Lists - A Page 2 of 4 6/11/2018 ONLY ONLY, CA ONLY, CA KAVYA BALARAMAN KEVIN FALLON REPORTER GLOBAL EQUITIES CALIFORNIA ENERGY MARKETS CITADEL ONLY ONLY ONLY, CA ONLY, NY MRW ASSOCIATES MRW & ASSOCIATES ONLY ONLY, CA SIMONE S. BRYAN PROGRAM / PRODUCT ANALYST II SOUTHERN CALIFORNIA EDISON COMPANY ONLY ONLY, CA DAVIS WRIGHT TREMAINE LLP ONLY ONLY, CA CAROLINE BONE DEUTSCHE BANK 60 WALL STREET NEW YORK, NY CONSTANTINE LEDNEV JONATHAN ARNOLD ASSOCIATE-US UTILITIES & POWER RESEARCH DEUTSCHE BANK SECURITIES INC. DEUTSCHE BANK SECURITIES INC. 60 WALL STREET 60 WALL STREET NEW YORK, NY NEW YORK CITY, NY EDWIN GUYANDI GREGORY REISS NEWTYN MANAGEMENT CENTENUS GLOBAL MANAGEMENT, LP 405 PARK AVENUE, SUITE MADISON AVENUE, SUITE 19B NEW YORK, NY NEW YORK, NY JAMIESON WARD CASE ADMINISTRATION CENTENUS GLOBAL MANAGEMENT, LP SOUTHERN CALIFORNIA EDISON COMPANY 437 MADISON AVENUE - SUITE 19B 8631 RUSH STREET NEW YORK, NY ROSEMEAD, CA FRANK A. MCNULTY MARGARITA GEVONDYAN DIR & MANAGING ATTORNEY SOUTHERN CALIFORNIA EDISON COMPANY SOUTHERN CALIFORNIA EDISON COMPANY 2244 WALNUT GROVE AVENUE 2244 WALNUT GROVE AVE., / PO BOX 800 ROSEMEAD, CA ROSEMEAD, CA PATRICIA CIRUCCI ERIN DICKSON SOUTHERN CALIFORNIA EDISON COMPANY TOSDAL LAW FIRM 8631 RUSH STREET 777 S. HIGHWAY 101, SUITE 215 ROSEMEAD, CA SOLANA, CA SHIVANI SIDHAR CENTRAL FILES REGULATORY CASE MGR. SAN DIEGO GAS & ELECTRIC COMPANY SAN DIEGO GAS & ELECTRIC COMPANY 8330 CENTURY PARK CT, CP31-E 8330 CENTURY PARK COURT, CP32F SAN DIEGO, CA SAN DIEGO, CA 92123

11 CPUC - Service Lists - A Page 3 of 4 6/11/2018 TIM LYONS CRAIG S. SIMON REGULATORY AFFAIRS ATTORNEY SAN DIEGO GAS & ELECTRIC COMPANY BERGER KAHN, A LAW CORPORATION 8330 CENTURY PARK CT, C32F 1 PARK PLAZA, SUITE 340 SAN DIEGO, CA IRVINE, CA LAURA GENAO JOANIE YUEN SOUTHERN CALIFORNIA EDISON COMPANY CASE MGR 601 VAN NESS AVE., STE PACIFIC GAS & ELECTRIC COMPANY SAN FRANCISCO, CA BEALE ST., MC B23A FOR: SOUTHERN CALIFORNIA EDISON SAN FRANCISCO, CA MAGGIE CHAN MATTHEW PLUMMER REGULATORY AFFAIRS PACIFIC GAS AND ELECTRIC COMPANY PACIFIC GAS AND ELECTRIC COMPANY 77 BEALE STREET, MC B23A 77 BEALE ST., MC B9A / PO BOX SAN FRANCISCO, CA SAN FRANCISCO, CA MEREDITH ALLEN TARA KAUSHIK SR. DIRECTOR, REGULATORY RELATIONS HOLLAND & KNIGHT LLP PACIFIC GAS AND ELECTRIC COMPANY 50 CALIFORNIA ST., 28TH FLOOR 77 BEALE STREET, B10C SAN FRANCISCO, CA SAN FRANCISCO, CA CASE COORDINATION LYNN HAUG PACIFIC GAS AND ELECTRIC COMPANY ATTORNEY PO BOX : MC B9A ELLISON SCHNEIDER HARRIS & DONLAN LLP SAN FRANCISCO, CA CAPITOL AVE., STE. 400 SACRAMENTO, CA JOY MASTACHE SR. ATTORNEY - OFF. OF GEN. COUNSEL SACRAMENTO MUNICIPAL UTILITY DISTRICT 6301 S STREET, MS A311 SACRAMENTO, CA State Service DAVID PECK ELAINE LAU PRESIDENT PICKER DIVISION OF ADMINISTRATIVE LAW JUDGES ROOM 4108 ROOM VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA SAN FRANCISCO, CA JOANNA GUBMAN NILS STANNIK COMMISSIONER RANDOLPH ENERGY SAFETY & INFRASTRUCTURE BRANCH AREA 4-A AREA 505 VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA SAN FRANCISCO, CA FOR: ORA

12 CPUC - Service Lists - A Page 4 of 4 6/11/2018 PETER V. ALLEN ROBERT M. POCTA DIVISION OF ADMINISTRATIVE LAW JUDGES ENERGY COST OF SERVICE & NATURAL GAS BRA ROOM 5017 ROOM VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA SAN FRANCISCO, CA FOR: OFFICE OF RATEPAYER ADVOCATES (ORA) SANDY GOLDBERG SARAH R. THOMAS COMMISSIONER RECHTSCHAFFEN LEGAL DIVISION ROOM 5202 ROOM VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA SAN FRANCISCO, CA JONATHAN WARDRIP LAURA MCWILLIAMS STATE SENATOR JERRY HILL MARKET STRUCTURE, COSTS AND NATURAL GAS STATE CAPITOL 300 Capitol Mall SACRAMENTO, CA Sacramento, CA TOP OF PAGE BACK TO INDEX OF SERVICE LISTS