Changes to the Distribution Revenue Requirement

-----Original Message-----
From: JBennett [mailto:JBennett@GMSSR.com]
Sent: Monday, October 22, 2001 8:33 AM
To: Jeff Dasovich (E-mail); Sue Mara (E-mail)
Cc: 'mpetroch@enron.com'; 'acomnes@enron.com'
Subject: Rehearing on PG&E's GRC


Almost two years after issuing a decision in PG&E's GRC, the Commission
issued it rehearing order on October 16th and, lo and behold, actually
granted TURN's rehearing request in part.  The overall result is to reduce
the capital revenue requirement by $24.8 million and expenses by $37.3
million.  In addition, some portion of PG&E' estimated $171 million in
electric distribution capital spending will be subject to rehearing.
Listed  below are the areas in which the Commission granted rehearing.

1.  Electric Distribution Capital Spending.    The Commission will, in
essence, reopen the record, and allow PG&E to put into evidence how much it
invested in its electric distribution plant in 1998.  PG&E had used a 1998
forecasted amt of capital expenditures to develop its test year forecast.
TURN argued that there was substantial evidence on the record that this
amount was never spent. PG&E argued that the record closed prior to the end
of 1998 so the best it could do was an estimate.  On rehearing, the
Commission agreed with TURN, that there was evidence that the forecasted
amount was never spent, so they are allowing PG&E to prove it.  The
rehearing order states that any rates that are raised based on the electric
distribution capital forecast adopted the GRC decision  may be subject to
refund.

2.  Emergency Response Work This work category under electric distribution
capital spending was reduced by $17.2 million.

3.  Vegetation Management. The Supplemental Tree Trimming Program was
reduced by $9.2 million.

4.  Meter Reading.  PG&E had primarily used accounting changes to justify
the large increase in this service.  On rehearing the Commission stated that
PG&E had failed to substantiate those changes and reduced the allowed amount
by $7.9 million.

5. Account Services.  On rehearing the commission stated that PG&E had
failed to show (a) why it cost so much more to provide services to CIA
customers  than residential customers ( $43.30 vs. $10.20); and (b) that
money was not going for marketing activities that the Commission had
disallowed in the previous GRC.  The result was that the commission
disallowed $20 million.

6.  Customer Information Systems.  The Commission disallowed $7.2 million as
funds which ratepayers had already expended for CIS  rewrites for which they
had not received any benefits.