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ApplicationsExhibit NumberCommissionerALJWitnesses:::::A.06-12-009 / 010DRABohnLongVarious.DIVISION OF RATEPAYER ADVOCATESCALIFORNIA PUBLIC UTILITIES COMMISSIONReport on the Results of OperationsforSan Diego Gas & Electric CompanySouthern California Gas CompanyGeneral Rate CaseTest Year 2008Corrected / Revised Pages toExhibits DRA-11, DRA-17, DRA-18 and DRA-32San Francisco, CaliforniaAugust, 2007

NOTES1234Changes to Exhibit DRA-11 are due to updated numbers appearing in Exhibit5DRA-17.678Changes to Exhibit DRA-17 are due to corrections based on updated9information.101112Changes to Exhibit DRA-18 are due to consideration of information contained13in rebuttal exhibits SDG&E/SCG-202 and SDG&E/SCG-236.141516Changes to Exhibit DRA-32 are due to updated numbers appearing in Exhibit17DRA-17 and consideration of information contained in rebuttal exhibit SCG-18205.192021i

Exhibit DRA-11 (Revised August 8, 2007)16. DRA is recommending an uncollectible rate of 0.109% compared to2SDG&E’s proposed uncollectible rate of 0.207%.37. DRA is recommending capital expenditures of 3.759 4.257 million in42006, 4.285 4.295 million in 2007, and 5.307 million in 2008.5SDG&E is requesting capital expenditures of 4.972 million in 2006,6 6.412 million in 2007, and 8.782 million in 2008. DRA is7recommending that the capital projects that SDG&E have not8completed a business case should not receive funding.91011Table 11-1 compares DRA’s recommended with SDG&E’s proposed O&Mexpenses for Test Year 2008:121314Table 11-1Customer Service Operations O&M Expenses(In Thousands of 2005 Dollars)Account Description(a)DRARecommended(b)586-Electric Meter &Advanced MeteringOperations, Supervision597-Electric MeterMaintenance &Instrumentation878-Gas Meter & HouseRegulator Expense879-Customer ServiceField, CustomerInstallations902-Meter Reading &Measurement Data Ops.903-Customer Records,Accounts & Collections904-Uncollectible Rate905-Misc Customer AcctTotalProposed(c)1AmountSDG&E DRA(d c-b)PercentageSDG&E DRA(e d/b) 7,937 8,898 96112.1% 354 354 00% 3,289 4,358 1,06932.5% 8,037 9,489 1,45218.1% 10,021 10,448 4274.3% 30,183 30,876 6932.3%0.109% 123 59,9440.207% 123 64,546 0 4,6020%7.7%151SDG&EExhibit SDG&E-9, page EF-5411-2

Exhibit DRA-11 (Revised August 8, 2007)123Table 11-14FERC Account 904Uncollectible RateYearRecorded UncollectibleExpensesSales Revenue2001 9,350,181 2,385,283,4732002 5,679,927 1,936,232,1990.293%2003 1,447,988 2,111,336,3860.069%2004 3,024,937 2,092,976,6320.145%2005 2,801,345 2,249,879,5660.125%2006 2,419,363 55-year Average(2001-2005)4-year 09%DISCUSSION / ANALYSIS OF CAPITAL EXPENDITURESSDG&E is requesting Information Technology (IT) capital expenditures of576 4.972 million in 2006, 6.412 million in 2007, and 8.782 million in 2008,7total of 20.166 million over the 3-year period. DRA is recommending that the8Commission approve capital expenditures of 3.759 4.257million in 2006, 4.2859 4.295 million in 2007, and 5.307 million in 2008, for a total of 12.899 13.85910for amillion.11DRA recommends a total of 7.267 6.307 million in adjustments over the122006-2008 time frames based on the fact that SDG&E’s IT capital projects that do13not have completed business cases should be rejected. DRA’s discussion on14SDG&E’s process for IT capital projects is found in Exhibit DRA-17. The following15three tables present SDG&E’s and DRA’s forecasts for capital expenditures for the16CSO for each year of 2006 to 2008.57Exhibit SDG&E-9, page EF-73411-24

Exhibit DRA-11 (Revised August 8, 2007)12345Table 11-15Customer Service Operations582006 Capital Expenditures(In Thousands of 2005 Dollars)Project DescriptionDynamic Load Profiling/LoadResearchReplace TOU Meters (CLOCKS)CPP Advanced MeteringPaystationseServices Phase 2: Basic Online BillPay and My Account ServiceseServices Phase 3: Expanded OnlineBill Pay and My Account ServicesUpgrade non-supported telephonycomponentsUpgrade IVRMessage BoardsOutbound Dialer UpgradeMisc Server RefreshRemote Agent PilotHandheld ReplacementCustomer Service MDTsCISCO Controls EnhancementRate Schedule Engine TechnicalUpgradeCISCO Regression EnvironmentBill RedesignCustomer Service Field Radio Equip.Total Capital ARecommend2006BusinessCase 710 923 710Mandated259452 47686 841,2251,434358102106259452 47686 841,2251,434YesMandatedYes187 216600187 216Yes01500No00000561 5510268 28017590902520007730100000561 5510268 280NoNoNoNoNoYesYesYes08000Yes011247 3,759 4,25775000011247 3,759 4,257YesYesYes225 4,97265859Exhibit SDG&E-9, page EF-64 and Response to DRA-SDG&E-110, question 2Response to DRA-SDG&E-110, question 211-25Yes

Exhibit DRA-11 (Revised August 8, 2007)12345Table 11-16Customer Service Operations602007 Capital Expenditures(In Thousands of 2005 Dollars)SDG&E 2007ForecastDRARecommend2007BusinessCaseDynamic Load Profiling/Load Research 397 397MandatedReplace TOU Meters (CLOCKS)PaystationseServices Phase 3: Expanded Online Bill Pay and MyAccount ServiceseServices Phase 4: Expanded Online Service OptionsTelephony Automated Call Distributor ReplacementUpgrade IVROutbound Dialer UpgradeMiscellaneous Server RefreshRAMR Itron Unit ReplacementHandheld 0257100000061NoNoNoNoNoNoCustomer Service MDTsBill RedesignCSD Replacement ProjectTotal Capital Expenditures1541,241776Project Description879 6,412318 3281541,241776 4,285 4,295YesYesYesYes660Exhibit SDG&E-9, page EF-64 and Response to data request DRA-SDG&E-110, Q.261In Exhibit SDG&E-9, page EF-64, SDG&E is requesting 879,000 for the HandheldReplacement project. Recorded 2006 capital expenditures showed that 561,000 551,000was spent in 2006; therefore, DRA is recommending that the remainder of the request,equal to 318,000 328,000, be reflected in the 2007 estimate.11-26

Exhibit DRA-17Revised August 6, 20071implementation; the cumulative total from 2006-2008 for these projects is2 70.8 million ( 17.5 million in 2006, 23.7 million in 2007, and 29.63million in 2008). That the Commission adopt, in this proceeding, utility4management approval as a prerequisite to Commission review.55. That the Commission deny IT capital expenditures for Sempra’s capital6projects (in the IT business unit) that were deferred, totaling 3.0 million7for SDG&E and 10.4 million for SCG. These amounts are subsumed in8DRA’s recommended capital expenditure adjustments identified in item 4,9above.5106. That the Commission adopt DRA’s estimates for the Sempra utilities’ IT11capital expenditures, totaling 83.5 million for 2006-2008 ( 30.4 million in122006, 29.7 million in 2007, and 23.4 million in 2008).1314Table 17-1 shows a comparison of DRA expense recommendations to theSempra utilities’ request on a company-wide basis.15Table 17-1Sempra - Information Technology 2008 General Rate Case2008 Expenses by Department (SS and NSS)Expenses in 2005 constant dollars1617DRA RecommendationNSSSSTotal18Description19SDG&E Incurred Cost20SCG Incurred Cost2122Total ITSempra 7,066NSSSempra .34%-638%Sempra data source Exhibits SDG&E/SCG-16, p.JCB-5 and SCG/SDG&E-14, p.52324NSSTable 17-1a shows a comparison of DRA’s IT capital expenditurerecommendations to Sempra’s request by company for 2006-2008.56Exhibit DRA-7 also discusses and independently identifies deferred IT projects in theElectric Distribution business unit, totaling nearly 17 million in capital expenditures for2007-2008. These amounts are also subsumed in DRA’s recommended adjustments forprojects without business cases.6A more detailed breakdown comparing the differences in annual capital expendituresappears later in Table 17-6.17-3

Exhibit DRA-171Revised August 6, 200723Table 17-1aInformation Technology Capital Expenditures for 2006 - 2008(in Thousands of 2005 Dollars)45Description(a)6DRA Recommended Sempra Proposed(b)( c)Sempra DRA(d c - b)(e %SCG62,001,758104,938,11242,936,35469.3%Total ON / ANALYSIS OF O&M EXPENSES12A.Sempra Utilities Shared and Non-Shared Services13The Sempra utilities request a total of 97.1 million in shared and Non-Shared14services expenses for test year (TY) 2008. This request represents an 11.76%15(3.9% annually) or a 9.8 million increase in expenses over base year 2005.16request consists of SDG&E and SCG costs of 93.6 million and 3.4 million,17respectively.18191.207TheFactors Driving Sempra’s Requested Increase in O&MExpensesAccording to Sempra, much of its estimated O&M increase from 2005 to 200821is driven by estimated changes in the Infrastructure Engineering and Operations,22Network/Telecommunications Engineering and Operations, and Shared Software23Development Services departments.24influencing the proposed IT O&M expense increases of 9.8 million include:7898Sempra states that the three major factorsExhibit SCG/SDGE-14, pg. JCB-6Exhibit SCG/SDGE-14, pg. JCB-7 Ln. 11 - 17Exhibit SCG/SDG&E-14, pp. JCB-7 & 817-49

Exhibit DRA-17Revised August 6, 20071D.2According to SCG’s testimony, “IT currently does not have any Non-Shared3SCG Non-Shared Services ExpensesServices costs at SCG.”21Therefore, no issues exist for SCG’s NSS costs.4E.Proposed New Project-Related O&M Expenses5In Section IV of this report DRA provides a discussion and analysis of IT6capital expenditures. DRA identified a large number of projects which did not7receive Sempra management approval; in 2006 these projects were not8implemented. These projects also have no specified future implementation date.9Some projects in 2007 and 2008 also do not have Sempra management approved10business cases. Consequently, DRA recommends that Sempra be denied ratepayer11funding for them. Concurrently, DRA recommends that Sempra also be denied12ratepayer funding for any test year O&M expenses associated with those projects.13DRA believes these adjustments are reflected in its expense estimates.1415IV.16DISCUSSION / ANALYSIS OF CAPITAL EXPENDITURESSDG&E requests a total of 49.4 million for NSS projects and 681,618 for17SS projects from 2006-2008. SCG requests a total of 104.9 million for NSS18projects and 4.6 million for SS projects from 2006-2008. Table 17-5 shows the19total amount of 154.3 million, of which 5.3 million is for SS projects.2021DRA reviewed SDG&E’s and SCG’s requests for new capital projects and22recommends a total of 21.5 million for SDG&E and 62.0 million for SCG’s23projects, for a total of 83.5 million for 2006-2008. Of the 21.5 million for SDG&E,24 90,404 is for SS projects and approximately 21.4 million is for NSS projects.25Similarly, of the 62.0 million for SCG, 3.7 million is for SS projects and 58.326million is for NSS projects.21Exhibit SCG-12, p. JCB-117-10

CG Sub TotalTotal SCG SubmittalTotal 2,578,264Bus.Case8,662,632SCG Shared Services Sub TotalProject NameSCGCustomer Service Sub TotalUtility Operations Sub TotalIT Infrastructure Sub TotalNetwork and Telecommunications Sub TotalTotal SDG&E Submittal8,664,389(1,757)SDG&E Sub TotalShared Services Sub er Service Sub TotalUtility Operations Sub TotalIT Infrastructure, Network and Telecommunication SubtotalProject NameSDG&ERevised August 6, 8616,784,32916,784,329-DRA 6,092,15292,161715,4002,779,2392,597,513DRA 667Table 17 - 5Sempra Information Technology Capital Projects2006 through 2008 by DepartmentExhibit 72135,010,00035,010,000-Sempra's Application pra's Appl. %26.2%Sempra ,192590,9142,271,0915,995,22419,041,877Sempra DRADifferencePercentage