CPUC Postpones Permanent DWR Cost Allocation

The California Public Utilities Commission this week unanimously approved a $245 million reduction in Department of Water Resources 2004 power contract costs, from $4.52 billion to $4.32 billion. However, during their August 19 meeting, regulators put off the thornier matter of which method to use to permanently carve up costs for the pricey contracts signed at the height of the energy crisis, saying more time is needed to craft a different approach. ?I don?t want to see anyone either subsidized or screwed,? said commission president Mike Peevey. He added that he thinks a better plan exists than the one on the table, which will be fairer to everyone and ironically ?will undoubtedly please no one.? On the short-term plan, commissioner Loretta Lynch called for an additional $290 million reduction, saying DWR has inflated its 2004 cost request. She noted that the agency in June received most of its share of the $160 million from the state?s settlement with El Paso over price manipulation allegations. DWR has been ?sitting on? those funds along with $133 million in extra costs the agency says it needs this year in anticipation of rate increases down the road, Lynch said. There ?needs to be a way of dislodging some of this significant amount of money from DWR?s coffers that belongs in ratepayers? pockets,? agreed Peevey. However, the CPUC?s hands are essentially tied as far as ratepayer distribution goes because the water agency makes the call on its revenue requirement. DWR power cost allocation has been divisive. San Diego Gas & Electric argues that the draft permanent allocation plan would shift close to a billion dollars in costs to its ratepayers. Southern California Edison and Pacific Gas & Electric argue SDG&E should shoulder more of the cost, in part because SDG&E leans more heavily on the contracts than the other two private utilities. Along with The Utility Reform Network, the utilities back a settlement that SDG&E maintains would also place a heavy burden on its customers. Edison weighed in on DWR 2004 cost reduction as a way to pitch its joint settlement on permanent cost allocation. The pact, which Edison notes has the backing of the Office of Ratepayer Advocates, ?represents a fair and efficient approach to allocating the burden of the CDWR contract costs among investor-owned utility customers,? said the utility in a statement. In other news, Peevey announced that Richard Smith is the interim ORA executive director. He replaced Regina Birdsell. A permanent director is to be announced in several weeks, Peevey noted. Smith currently serves as the advocacy division?s deputy director, focusing on telecommunications matters. According to Denise Mann, veteran ORA program manager, everybody in the division?including Birdsell?thought it likely she would be replaced; the only question was when it would happen. ORA staff are aware that the director position is a political appointment and that the governor?s appointment of new commission players is part of his agenda for change, said Mann.

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CPUC Postpones Permanent DWR Cost Allocation

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