SAN DIEGO GAS AND ELECTRIC COMPANYSOUTHERN CALIFORNIA GAS COMPANY

2013 TRIENNIAL COST ALLOCATION PROCEEDING (A.11-11-002)(DATA REQUEST DRA-PZS-01)

______________________________________________________________________

QUESTION DRA-PZS-1:

On page 3 of the exhibit reference, SoCalGas/SDG&E state: “The cost to be recovered through the PSEP Surcharge will be allocated to customer classes using the Equal Percent Authorized Margin method. The PSEP Surcharge will be a separate line item on customers’ bills. The illustrative surcharges at the end of Phase 1A are summarized in Table 2.”

a. If the Applicants considered other cost allocation methodologies aside from the Equal Percent of Authorized Margin (EPAM) for the PSEP costs, then please identify all the methodologies considered but not proposed in the TCAP by SoCalGas/SDG&E for the PSEP costs.

b. Please provide the spreadsheets in excel showing the results of analysis on PSEP cost allocation for each customer class performed by SoCalGas/SDG&E using these other cost allocation methodologies.

c. Please show the resulting PSEP rates for the different customer classes using these other cost allocation methodologies.

d. Please provide a comparative bill impact analysis using EPAM and the different cost allocation methodologies.

RESPONSE DRA-PZS-1-a:

Prior to filing we considered using current cost allocation methodology or allocating costs based on customer count rather than using EPAM cost allocation methodology. Post-filing, we also looked at allocating costs based on Average Year Throughput/Equal Cents Per Therm.

The results are as follows:

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SAN DIEGO GAS AND ELECTRIC COMPANYSOUTHERN CALIFORNIA GAS COMPANY

2013 TRIENNIAL COST ALLOCATION PROCEEDING (A.11-11-002)(DATA REQUEST DRA-PZS-01)

______________________________________________________________________

Current Class-Average

Rates $/th

PROPOSED EPAM

Allocation ($/month res, $/th non-res)

% Change

Customer Count

Allocation ($/month res, $/th non-res)

% Change

AYTP Allocation

($/month res, $/th non-res)

% Change

By Function/ Default Method

($/th)%

ChangeA B C D E F G H I

SoCalGas

Residential Average Res Bill Impact (38 therms) $/month $38.82 $2.91 7% $3.48 9% $1.02 3% $1.83 5% Average Res Bill Impact w/out G-CP $/month $22.40 $2.91 13% $3.48 16% $1.02 5% $1.83 8%

Core Commercial &Industrial $0.29905 $0.03272 11% $0.00841 3% $0.02802 9% $0.03624 12% Natural Gas Vehicles $0.06886 $0.00982 14% $0.00010 0% $0.02802 41% $0.02156 31%

Noncore C&I - Distribution Level Service $0.06810 $0.00688 10% $0.00003 0% $0.02802 41% $0.02616 38% Electric Generation - Distribution Level Service $0.02955 $0.00360 12% $0.00002 0% $0.02802 95% $0.02418 82% Transmission Level Service $0.01728 $0.00119 7% $0.00000 0% $0.02802 162% $0.01286 74%

SDG&E Gas

Residential Average Res Bill Impact (33 therms) $/month $35.70 $2.91 8% $3.48 10% $1.02 3% $2.50 7% Average Res Bill Impact w/out G-CP $/month $21.44 $2.91 14% $3.48 16% $1.02 5% $2.50 12%

Core Commercial & Industrial $0.19144 $0.03273 17% $0.00841 4% $0.02802 15% $0.04804 25% Natural Gas Vehicles $0.06597 $0.00986 15% $0.00010 0% $0.02813 43% $0.02182 33%

Noncore C&I - Distribution Level Service $0.12163 $0.00692 6% $0.00003 0% $0.02818 23% $0.01652 14% Electric Generation - Distribution Level Service $0.02908 $0.00362 12% $0.00002 0% $0.02818 97% $0.02443 84% Transmission Level Service $0.01720 $0.00119 7% $0.00000 0% $0.02818 164% $0.01286 75%

Notes: Column H, By Function/Default Method - These rate impacts derived from Table 1 of Supplemental Testimony of Mr. Lenart from December 2, 2012, Proposed Rates minus Current Rates. This method collects the PSEP costs through the transportation rate, the residential surcharge shown here is based on average use/customer. The amounts in Column H have not been updated for the 2013TCAP.

RESPONSE DRA-PZS-1-b:

Workpapers for the Customer Count and ECPT cost allocation methodologies considered by the Utilities are provided below.

The following is a brief description of this file. The tab “EPAM - Proposed” is similar to what was provided as a workpaper to Mr. Lenart’s June 1, 2012 Updated Testimony – PSEP Cost Allocation and calculates the surcharges as proposed. The tab “Customer Count” allocates costs to the classes using a customer count allocator and then calculates monthly surcharges for the residential customer class and volumetric surcharges for the non-residential customer classes. The “AYTP” tab allocates costs to the classes based on average-year throughput (or equal-cents per therm). It then calculates monthly surcharges for the residential customer class and volumetric surcharges for the non-residential customer classes. The 2015 results of these three tabs are summarized on the tab “Comparison Tables,” along with 2015 estimated

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SAN DIEGO GAS AND ELECTRIC COMPANYSOUTHERN CALIFORNIA GAS COMPANY

2013 TRIENNIAL COST ALLOCATION PROCEEDING (A.11-11-002)(DATA REQUEST DRA-PZS-01)

______________________________________________________________________average residential bills under these scenarios. For simplicity, PPPS impacts were not included in this study.

Regarding the Functional/Default allocation method, the Utilities provided rate models allocating costs utilizing what has come to be termed the “default” methodology in conjunction with Mr. Lenart’s December 2, 2011 Supplemental Testimony. This filing allocated transmission-related revenue requirement using cold-year peak month, while distribution-related revenue requirements were allocated using peak-month distribution throughput at SoCalGas and peak-day distribution throughput at SDG&E, consistent with authorized cost allocation method. The results of that study are included on the “Comparison Tables” tab. Attached are the workpapers to the December 2, 2011 Supplemental Testimony.

RESPONSE DRA-PZS-1-c:See attachment to response 1(a).

RESPONSE DRA-PZS-1-d:See attachment to response 1(a).

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SAN DIEGO GAS AND ELECTRIC COMPANYSOUTHERN CALIFORNIA GAS COMPANY

2013 TRIENNIAL COST ALLOCATION PROCEEDING (A.11-11-002)(DATA REQUEST DRA-PZS-01)

______________________________________________________________________

QUESTION DRA-PZS- 2:

On page 7 of the above exhibit reference, SoCalGas/SDG&E state its proposal to charge a flat monthly surcharge for residential customers and a volumetric surcharge for non-residential customers.

a. Did the Applicants attempt to examine the resulting PSEP rate for different customer classes and the bill impact if everyone were instead on volumetric rates? If so, please provide DRA with a copy of your comparative analysis that shows that residentials will be better off with a flat monthly surcharge versus a volumetric rate while non-residentials will be better off with a volumetric rate rather than a flat monthly surcharge.

b. Please provide excel spreadsheets for the analysis performed in item (a).

RESPONSE DRA-PZS-2-a:

Yes, such an analysis was conducted and the results are shown in the following table. These results show that there is very little difference for an average residential customer whether there is a volumetric or a fixed charge.

The average customer uses 38 therms/month and at the volumetric PSEP rate of $0.08001/therm this would be $3.04/month which is comparable to the proposed fixed charge of $2.91/month. However, for noncore customers, the fixed charge can result in very low and very high effective volumetric PSEP surcharges. For example, a noncore C&I-Distribution customer on Tier 4 would use a minimum of 167,000 therms/month. The fixed charge of $744.84/month would be an effective PSEP rate of $0.00447/therm; while a small customer using a minimum of 20,800 therms/month would have an effective PSEP rate of $0.03581/therm. For a large customer on the Transmission Level Service rate using 5 million therms/month with a $3,138.95/month fixed charge the effective PSEP rate would be $0.00063/therm.

In order to avoid this variance in the effective rates, SoCal/SDG&E have proposed that non-residential PSEP surcharge be a volumetric rate. Also, in order to avoid potential over/under collections resulting from these largely fixed costs associated with PSEP, and since the residential market does not have these large variances in the effective PSEP rate, a fixed PSEP charge was proposed for residential customers.

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SAN DIEGO GAS AND ELECTRIC COMPANYSOUTHERN CALIFORNIA GAS COMPANY

2013 TRIENNIAL COST ALLOCATION PROCEEDING (A.11-11-002)(DATA REQUEST DRA-PZS-01)

______________________________________________________________________

Current Class-Average Rates

$/th

Proposed Surcharges

($/month res, $/th non-res)

All Monthly Surcharges ($/month)

All Volumetric Surcharges

($/th)SoCalGas

Residential Rate $/therm $0.54427 $2.91 $2.91 $0.08001 Average Res Bill Impact (38 therms) $/month $38.82 $2.91 $2.91 $3.04 Average Res Bill Impact w/out G-CP $/month $22.40 $2.91 $2.91 $3.04

Core Commercial &Industrial $0.29905 $0.03272 $13.54 $0.03272 Natural Gas Vehicles $0.06886 $0.00982 $358.57 $0.00982

Noncore C&I - Distribution Level Service $0.06810 $0.00688 $740.59 $0.00688 Electric Generation - Distribution Level Service $0.02955 $0.00360 $685.43 $0.00360 Transmission Level Service $0.01728 $0.00119 $3,121.04 $0.00119

SDG&E Gas

Residential $0.59205 $2.91 $2.91 $0.08010 Average Res Bill Impact (33 therms) $/month $35.70 $2.91 $2.91 $2.64 Average Res Bill Impact w/out G-CP $/month $21.44 $2.91 $2.91 $2.64

Core Commercial & Industrial $0.19144 $0.03273 $13.54 $0.03273 Natural Gas Vehicles $0.06597 $0.00986 $359.91 $0.00986

Noncore C&I - Distribution Level Service $0.12163 $0.00692 $744.84 $0.00692 Electric Generation - Distribution Level Service $0.02908 $0.00362 $689.36 $0.00362 Transmission Level Service $0.01720 $0.00119 $3,138.95 $0.00119

RESPONSE DRA-PZS-2-b:

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