Report 2013-109 Recommendations and Responses in 2015-041

Report 2013-109: California Public Utilities Commission: Improved Monitoring of Balancing Accounts Would Better Ensure That Utility Rates Are Fair and Reasonable

Department Number of Years Reported As Not Fully Implemented Total Recommendations to Department Not Implemented After One Year Not Implemented as of 2014-041 Response Not Implemented as of Most Recent Response
Office of Ratepayer Advocates 1 6 2 N/A 2
Public Utilities Commission 1 7 1 N/A 1

Recommendation To: Public Utilities Commission

The commission should follow the requirement in state law to inspect and audit the accounting records of utilities it regulates within required time frames. If the commission chooses to continue to meet this requirement through the general rate case process, it should ensure that all utilities file a general rate case on a regular schedule so as to comply with the state law's audit requirement. However, the commission should follow alternate methods to comply with the audit requirement when a utility will not be filing for its general rate case in time to be audited within three or five years, depending on the timing of the required audit for that utility.

Response

All of the large energy utilities currently are on a 3 year GRC cycle and get audited as part of the general rate case (GRC) process. The smaller utilities have been on a longer than 3-year GRC cycle. The CPUC received budgetary authority for FY 15-16 to bring on additional auditing staff in an effort to comply with the audit requirements set forth in Public Utilities Code Section 314.5. We are in the process of filling these positions so that we will be able to comply with this recommendation, but until these incremental staff are online and fully trained, auditing of smaller utilities may still not meet the standards set forth in Section 314.5. We anticipate that full compliance may take five years once new staff are on board.

  • California State Auditor's Assessment of Status: Not Fully Implemented
  • Completion Date: 1/1/2021
  • Response Date: September 2015

Recommendation To: Ratepayer Advocates, Office of

To further its mission to obtain the lowest possible rates for reliable and safe utility service for ratepayers through its reviews of balancing accounts, Ratepayer Advocates should use the commission's list of balancing accounts to guide its selection of the number, size, and type of balancing accounts to review so that its review coverage is more proportional across all utilities.

Response

As described to the California State Auditor in our letter of February 11, 2014, ORA's process for reviewing balancing accounts is based on an assessment of the potential for finding disallowances. There is no requirement in state law that ORA audit monitor utility accounts. ORA performs audits to determine the potential for ORA to recommend disallowances and to help our overall litigation strategy. It would not be efficient for ORA to simply try to audit balancing accounts in a random or proportional basis. Since the task is not part of our mandate by state law, there is no ability for ORA to perform this recommendation or to request resources to carry out this recommendation. Targeted audit reviews, based on a potential for discovering disallowances that the commission will accept, is the reason ORA performs any audits. This is the approach ORA will continue to take when determining which accounts to review.

  • California State Auditor's Assessment of Status: Will Not Implement
  • Response Date: September 2015

Recommendation To: Ratepayer Advocates, Office of

To further its mission to obtain the lowest possible rates for reliable and safe utility service for ratepayers through its reviews of balancing accounts, Ratepayer Advocates should document the method used for its selection of balancing accounts to review.

Response

As described previously a Audit Guide was developed for use by ORA auditors based on the recommendation by the state auditor. I will be following this report with a letter describing implimentation history of the audit guide and enclose a copy of the guide for your review.

  • California State Auditor's Assessment of Status: Not Fully Implemented
  • Completion Date: August 2014
  • Response Date: September 2015

Current Status of Recommendations

All Recommendations in 2015-041