Report 2013-109 Recommendation 2 Responses

Report 2013-109: California Public Utilities Commission: Improved Monitoring of Balancing Accounts Would Better Ensure That Utility Rates Are Fair and Reasonable (Release Date: March 2014)

Recommendation #2 To: Public Utilities Commission

To ensure that it has the necessary information to provide appropriate oversight of the balancing accounts, the commission should maintain accurate and timely information on utility balancing accounts. Specifically, it should review the accuracy and completeness of the data it has obtained from utilities to ensure that it has a complete list of balancing accounts.

1-Year Agency Response

Since April 30, 2013, the Commission's Energy Division requires the utilities to file updated lists of balancing accounts and balances in each balancing account every quarter. The quarterly updates ensure that the Commission will have timely information on utility balancing accounts. Energy Division now tracks balancing accounts added/closed by the Commission in various cost recovery decisions for electric and gas. For the balancing accounts established before this tracking, Energy Division staff did the accuracy verification for each of the large energy utilities through a review of two past general rate case decisions and two past Energy Resource Recovery Account (ERRA) decisions as most of the balancing accounts get added/deleted through these proceedings. Each reviewer made a list of balancing accounts added/closed by each decision and checked the utilities' most recent quarterly balancing account update against this list. Any discrepancies were resolved by follow up with the utility. This verification ensures that no active balancing accounts are missing from the list and the list contains only those balancing accounts that are duly authorized by the Commission.

The Division of Water and Audits now receives semi-annual reports of all balancing account balances as of June 30th and December 31st each year along with amended reports within 45 days of the Commission either establishing a new balancing account or closing a current balancing account. Division of Water and Audits staff verifies that each utility's report is complete and accurate to ensure the Division has a complete list of balancing accounts. In addition, staff verifies that the balancing accounts reported match those contained in the utility's official tariffs kept on file.

  • Completion Date: March 2015
  • Response Date: March 2015

California State Auditor's Assessment of 1-Year Status: Fully Implemented


6-Month Agency Response

Since April 30, 2013, the Commission's Energy Division requires the utilities to file updated lists of balancing accounts and balances in each balancing account every quarter. The quarterly updates ensure that the Commission will have timely information on utility balancing accounts. Energy Division is developing a practice of having staff confirm that each utility's report is complete and accurate to ensure that no active balancing accounts are missing from the list and the list contains only those balancing accounts that are duly authorized by the Commission.

The Division of Water and Audits has begun receiving semi-annual reports of all balancing account balances as of June 30th and December 31st each year along with amended reports within 45 days of the Commission either establishing a new balancing account or closing a current balancing account. Because of operational constraints faced by the utilities, the Division of Water and Audits granted an additional 30 days from the original deadline for reporting balances, and an additional 15 days for notification of establishing new balancing accounts or closing a current balancing account. The first reports were due August 15, 2014. Division of Water and Audits staff is now confirming that each utility's report is complete and accurate to ensure the Division has a complete list of balancing accounts.

  • Completion Date: April 2013
  • Response Date: September 2014

California State Auditor's Assessment of 6-Month Status: Pending

Although the commission's energy division provided documentation to demonstrate that it requires utilities to provide updates on balancing accounts and related balances, it did not provide any documentation to support that it verified the accuracy and completeness of the information the utilities provided. Further, as the commission's water division indicates in its response, it is only now in the process of confirming the accuracy and completeness of the utility's reports.

  • Auditee did not substantiate its claim of full implementation

60-Day Agency Response

Since April 30, 2013, the Commissions Energy Division requires the utilities to file updated lists of balancing accounts and balances in each balancing account every quarter. The quarterly updates ensure that the Commission will have timely information on utility balancing accounts. Energy Division is developing a practice of having staff confirm that each utilitys report is complete and accurate to ensure that no active balancing accounts are missing from the list and the list contains only those balancing accounts that are duly authorized by the Commission.

The Commissions Division of Water and Audits has sent a letter to all Class A and B water and sewer utilities requesting semi-annual reporting of all balancing account balances as of June 30th and December 31st each year along with amended reports within 30 days of the Commission either establishing a new balancing account or closing a current balancing account. The first reports are due July 15, 2014 reporting on balancing account balances as of June 30, 2014. Division of Water and Audits staff will confirm that each utilitys report is complete and accurate to ensure the Division has a complete list of balancing accounts. See April 15, 2014 letter from Bruce DeBerry to all Class A and B water and sewer utilities.

  • Estimated Completion Date: On going
  • Response Date: April 2014

California State Auditor's Assessment of 60-Day Status: Pending


All Recommendations in 2013-109

Agency responses received are posted verbatim.


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