BALANCING ACCOUNTS
PERFORMANCE AUDIT
San Diego Gas & Electric Company
January 1, 2018, through December 31, 2018
Utility Audits, Risk and Compliance Division
Utility Audits Branch
December 20, 2021
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Performance Audit Report: San Diego Gas & Electric Company's Balancing Accounts (2018), Lecture notes of Energy Efficiency
A performance audit report conducted by the California Public Utilities Commission (CPUC) Utility Audits Branch on San Diego Gas & Electric Company's (SDG&E) Balancing Accounts for the period of January 1, 2018, through December 31, 2018. The report evaluates the accuracy and compliance of SDG&E's balancing accounts and their associated transactions with CPUC directives, orders, rules, regulations, and the company's policies and procedures.
What you will learn
- What were the objectives and scope of the performance audit of San Diego Gas & Electric Company's Balancing Accounts?
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BALANCING ACCOUNTS
PERFORMANCE AUDIT
San Diego Gas & Electric Company
January 1, 2018 , through December 31, 2018
Utility Audits, Risk and Compliance Division
Utility Audits Branch
December 20 , 2021
MEMBERS OF THE TEAM
Angie Williams, Director
Masha Vorobyova, Assistant Director
Kevin Nakamura, Supervisor
Cory Carpenter, Lead
Jiai “Amy” Xu, Staff
Yosief Hailemichael, Staff
A digital copy of this report can be found at: Audit Reports by Industry (ca.gov) You can contact our office at: California Public Utilities Commission Utility Audits, Risk and Compliance Division 400 R Street, Suite 221 Sacramento, CA 95811
TABLE OF CONTENTS
- EXECUTIVE SUMMARY..............................................................................................................................
- AUDIT REPORT
- Background
- Audit Authority..............................................................................................................................................
- Objective and Scope
- Methodology
- Conclusion......................................................................................................................................................
- Follow-up on Prior Audit Finding(s)
- Views of Responsible Officials....................................................................................................................
EXECUTIVE SUMMARY The Utility Audits Branch (UAB) of the California Public Utilities Commission (CPUC) conducted a performance audit of the Balancing Accounts administered and reported by San Diego Gas & Electric Company (SDG&E) for the audit period of January 1, 2018 , through December 31, 2018. Our audit objectives were to determine whether 1) transactions recorded in SDG&E’s balancing accounts from January 1, 2018 , through December 31, 2018 , were for allowable purposes and supported by appropriate documentation; and 2) the balancing accounts were established and maintained as required by applicable Public Utilities (PU) Code sections, CPUC directives, orders, rules, regulations, and SDG&E’s policies and procedures. Based on our audit objectives, procedures performed, samples tested, and evidence gathered, we found that the transactions recorded in SDG&E’s balancing accounts from January 1, 2018 , through December 31, 2018, were for allowable purposes and supported by appropriate documentation and that its balancing accounts for the audit period were established and maintained in accordance with CPUC directives, orders, rules, regulations, and SDG&E’s policies and procedures.
Title of Balancing Accounts Reported Net (Over)/Under- Collected Balance as of Dec. 31, 2018 Gas: Biomethane Cost Incentive Program (BCIPBA) $ 13, California Alternate Rates for Energy (CARE-G) (3,726,520) Core Fixed Cost Account (CFCA) 50,957, Distribution Integrity Management Program Balancing Account (DIMPBA) (30,347) Gas Energy Efficiency (GEEBA) (9,356,097) Greenhouse Gas Balancing Account (GHGBS-G) 12,544, Integrated Transmission Balancing Account (ITBA) (2,431,070) Low Carbon Fuel Standard Gas Balancing Account (LCFSBA-G) (536,335) Master Meter Balancing Account (MMBA-G) 7,517, New Environment Regulation Balancing Account (NERBA-G) 114, Non-Core Fixed Cost Account (NFCA) (3,029,549) Natural Gas Leak Abatement Program (NGLAPBA) (229,643) On Bill Financing Balancing Account (OBFBA-G) (1,671,225) Pension Balancing Account (PBA-G) 6,683, PBOP Balancing Account (PBOPBA-G) (1,500,507) Post 2005 Gas Energy Efficiency (PGEEBA) (9,080,500) Post 2005 Gas Low Income Energy Efficiency (PGLIEEBA) (16,299,641) Research Development & Demonstration (RD&D) (16,037) Rewards & Penalties Balancing Account (RPBA-G) (517,130) Safety Enhancement Capital Cost (SECCBA) 63,881, Safety Enhancement Express (SEEBA) 4,284, Smart Meter Optout Balancing Account (SMOBA-G) 421, Transmission Integrity Management Program Balancing Account (TIMPBA) 1,652, Transition, Stabilization, and Organization - Gas (TSOBA) 290, Net (Over)/Under-Collected Balance - Gas $ 99,937, Electric: Baseline Balancing Account (BBA) $ 83, Common Area Balancing Account (CABA) 3,323, CARE Balancing Account 46,510, 21st Century Balancing Account (CES-21BA) (560,985) Cost of Financing Balancing Account (CFBA) 0 California Solar Initiative Balancing Account (CSIBA) (11,839,947) Clean Transportation Priority (CTPBA) 376, Demand Response Generation Balancing Account (DRGBA) 569, Distribution Resource Plan Demonstration (DRPDBA) 393, Electric Distribution Fixed Cost Account (EDFCA) 42,524,
Title of Balancing Accounts (continued) Reported Net (Over)/Under- Collected Balance as of Dec. 31, 2018 Electric Procurement Energy Efficiency (EPEEBA) 257, Electric Program Investment Charge BA (EPICBA) (27,347,539) Energy Resource Recovery Account (ERRA) 49,747, Food Bank Balancing Account (FBBA) 31, Family Electric Rate Assistance (FERABA) 477, Greenhouse Gas Revenue BA (GHGRBA) 3,734, Green Tariff Shared Renewables (GTSRBA) 125, Low Carbon Fuel Standard BA (LCFSBA) (3,190,529) Local Generating Balancing Account (LGBA) (70,264,738) Low Income Energy Efficiency Account (LIEE) (20,777,770) Master Meter Balancing Account (MMBA) 6,919, New Environment Regulation BA (NERBA) 255, Non-Fuel Generation Balancing Account (NGBA) 10,124, Nuclear Decommissioning Adjustment Mechanism (NDAM) (1,637,198) On Bill Financing Balancing Account (OBFBA) (7,491,832) Pension Balancing Account (PBA) 14,781, PBOP Balancing Account (PBOPBA) (3,781,442) Post-1997 Electric Energy Efficiency (22,867,812) Rate Design Settlement Component Account (RDSCA) 15,043, Rewards & Penalties Balancing Account (RPBA) 5,561, Solar Energy Project Balancing Account (SEPBA) 0 Solar On Multifamily Affordable Housing (SOMAHBA) (9,911,193) Smart Meter Optout Balancing Account (SMOBA) 724, SONGS O&M Balancing Account 0 Transition Cost Balancing Account (TCBA) (8,824,207) Transition, Stabilization, and Organizational (TSOBA) 540, Tree Trimming Balancing Account (TTBA) (2,590,263) Vehicle Grid Integration (VGIBA) (8,223,724) Net (Over)/Under-Collected Balance - Electric $ 2,795, Total Net (over)/Under-Collected Balance - 2018 $102,732,
Audit Authority
The UAB conducted this audit under the general authority outlined in PU Code sections 314.5, 314.6, 451, 581, 582, 584. Furthermore, PU Code section 792.5 requires the CPUC to review or audit all balancing accounts periodically to ensure that the transactions recorded in the balancing accounts are for allowable purposes and supported by appropriate documentation.
adjustment process, and assessed the design, implementation, and operating effectiveness of selected controls that were significant to the audit objectives by: o completing an internal control questionnaire; o reviewing SDG&E’s policies and procedures and interviewing key personnel; o performing walkthroughs of balancing account activities, customer billings, and rate changes; o verifying appropriate rates were charged on selected customer billings; and o assessing the reliability of billing and revenue data.
- Reviewed SDG&E’s customer billing system and policies, processes and procedures for recording and reporting revenues to its balancing accounts.
- Conducted a risk assessment to determine the nature, timing, and extent of substantive testing.
- Reconciled year-end balances recorded in the Balancing Account Monthly Tracking Statements to SDG&E’s Annual Report filed with the CPUC.
- Performed testing of revenues by judgmentally selecting a non-statistical sample of customer billing records for the months of May and December 2018 to ensure that: o Customer billing rates complied with CPUC directives and approved tariffs; and o Customer bills were accurately calculated with approved rate schedule.
- Performed testing of Operations & Maintenance (O&M) expenditures by judgmentally selecting a non-statistical sample of significant expenditure transactions for the following balancing accounts: Balancing Account Name Total O&M Expenditures Tested Total O&M Expenditures Recorded in 2018 California Alternative Rates for Energy $ 931,857 $ 5,927, Low Income Energy Efficiency Balancing Account 3,273,365 13,761, Energy Resource Recovery Account 181,336 334, Greenhouse Gas Balancing Account 11,988,815 20,807, Local Generation Balancing Account 458,790 625, Master Meter Balancing Account 30,638 431, Totals $16,864,801 $41,888, Note: For the selected samples, errors found, if any, were not projected to the intended total population.
- Performed testing of Capital Related costs by judgmentally selecting a non-statistical sample of significant expenditure transactions for the following balancing accounts: Balancing Account Name Total Capital Related Expenditures Tested Total Capital Related Expenditures Recorded in 2018 Local Generation Balancing Account $1,323,256^ $16,416, Master Meter Balancing Account 459,896^ 5,374, Pension - Electric 98,988^ 261, Pension - Gas 32,583^ 126, Safety Enhancement Capital Cost Balancing Account 6,107,103^ 35,456, Totals $8,021,826 $57,635, Note: For the selected samples, errors found, if any, were not projected to the intended total population.
- Tested sampled O&M and Capital Related expenditures recorded in SDG&E’s accounting records to determine whether transactions were accurate, allowable, supported by appropriate source documents, and maintained in compliance with applicable CPUC directives, orders, rules, regulations, and the SDG&E’s policies and procedures.
- Determined whether SDG&E properly reported and recorded monthly interest in its Balancing Account Monthly Tracking Statement by judgmentally selecting eight balancing accounts and recomputing the monthly interest amounts reported for each month in 201 8. We did not audit SDG&E’s financial statements. We limited our audit scope to planning and performing audit procedures necessary to obtain reasonable assurance that SDG&E reported, incurred, and maintained its balancing accounts in accordance with the applicable criteria. We considered SDG&E’s internal controls only to the extent necessary to plan the audit and achieve our audit objectives. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our conclusions based on our audit objectives.
Conclusion
Based on our audit objectives, procedures performed, samples tested, and evidence gathered, we found that the transactions recorded in SDG&E’s balancing accounts from January 1, 2018 , through December 31, 2018, were for allowable purposes and supported by appropriate documentation and that its balancing accounts for the audit period were established and maintained in accordance with CPUC directives, orders, rules, regulations, and SDG&E’s policies and procedures.
Follow-up on Prior Audit Finding
Our prior audit of SDG&E’s Public Purpose Program regulatory accounts for the period of January 1, 2015, through December 31, 2016, issued on December 15, 2017, disclosed no findings that required a follow-up on corrective actions.