Gayatri Schilberg Economist/Consumer Advocate/Utility

461 Pages·2015·8.05 MB·English

Gayatri Schilberg
Economist/Consumer Advocate/Utility Slayer
Selected Documents and Decisions

Prepared testimony of
Gayatri Schilberg

JBS Energy, Inc.
311 D Street
West Sacramento
California, USA 95605
tel. [phone]

prepared for
Gayatri Schilberg

March 4, 2015
Gayatri Schilberg Selected Documents and Decisions 2
Executive Summary
Gayatri Schilberg had a unique career of service to consumers, to the environment and
to the public interest as a whole over a 27 year period.
She came to JBS Energy in 1987. Her first assignments were related to utility resource
planning, avoided costs of Hawaiian Island utilities, and electric demand forecasting.
She developed considerable expertise on the valuation of environmental externalities,
testifying at the California Energy Commission in several electricity reports and before
the Ontario Energy Board.
She was heavily involved, along with virtually all of JBS, in the most massive project JBS
ever did in its 30-year history – the review of Ontario Hydro’s Demand/Supply plan for
the Independent Power Producers’ Society of Ontario. She also was a member of teams
preparing two other major JBS reports with far-reaching consequences – the economic
analysis supporting the South Coast Air Quality Management District’s Rule 1135 on
powerplant emissions of nitrogen oxides, and the Photovoltaic Regulatory and Policy Issues
report prepared in 1995-96 for the National Association of State Utility Consumer
Advocates.
Her consumer advocacy work began with the Pacific Bell Late Payment Charge case for
TURN in 1992, where PacBell did not open mail, charged erroneous late charges, and
disconnected customers who had actually paid their bills. She developed better
estimates than Pacific Bell of the amount of erroneous charges and wound up being one
of the few people who ever caused a utility to bring in a new expert witness to rebut not
only Gayatri’s work but the entire direct case filed by the utility’s original expert.
From this start, she developed expertise in a number of critically important areas of
utility operation in the areas of distribution, customer service and information
technology.
Gayatri Schilberg Selected Documents and Decisions 3
She was involved in a number of projects related to the measurement and analysis of
customer service. She designed customer service programs and evaluated problems
related to several California utilities as well as Texas, Maryland, Nevada, and Alberta.
She adopted the position (originated in the UK) that paying individual customers was
the right remedy for many customer service errors. She also consistently claimed that
objective indicators of performance were better than subjective surveys. Her views in
this area were borne out when Southern California Edison committed fraud with
consumer surveys to increase its shareholder rewards under Performance-Based
Ratemaking, and Gayatri was there to figure out the extent of the fraud.
She also became expert in the arcane issues involved with the measurement of utility
reliability as used in shareholder incentive programs and as justification of capital
projects.
She also worked on customer service issues for one of JBS’ rare utility clients, preparing
a study for Scottish Power compiling service quality practices across the U.S. in support
of that company’s proposal for service guarantees offered to regulators as part of its
acquisition of Pacificorp.
She also was involved in Information Technology projects including a detailed review of
the PG&E Customer Information System (rebuilt three times from 1990-2003 – just like
Diablo Canyon). She developed the analytical concept of the “IT treadmill” where
utilities would incur ever-increasing expenses for short-lived computer systems if they
did not engage in prioritization, cost discipline, and buying more off-the-shelf products.
She became an expert in analyzing utility tree trimming practices, testifying in a number
of rate cases and in the 1998 trial leading to the conviction of PG&E in Nevada County
on charges including criminal negligence for a decade of inadequate tree trimming
spending.
She also was analyzed utility storm and emergency response and served on a working
group at the PUC to develop emergency standards and inspection and maintenance
standards for California electric utilities. She also represented consumers on a
committee of the California Independent System Operator on reliability issues.
Gayatri Schilberg Selected Documents and Decisions 4
Her testimony demonstrated that Southern California Edison’s deferred pole inspections
for more than a decade contributed to its need to replace large numbers of poles. While
the remedy that she proposed, was not adopted, the Commission found Edison at fault
for causing some of its pole replacements by not doing timely inspections.
Gayatri also testified on a number of other distribution operational issues including the
development of holistic and comprehensive estimates of underground cable
replacement needs, the assignment of greater amounts of pole replacement costs to
communications companies, and means of better quantify the costs that utilities would
actually require for pole replacement. Her last work before her retirement was a
comprehensive analysis of Southern California Edison’s multi-billion-dollar replacement
program for overloaded and high-wind area poles.
Gayatri left consumers and others with the legacy of an amazing body of work as a
consummate economist and systems analyst during her time with JBS.
Gayatri Schilberg Selected Documents and Decisions 5
Table of Contents

Year/ Case or Page Description
Decision
Client
3 Executive Summary
15 Gayatri Schilberg Qualifications
1987 16 Letter from Gayatri to Jim Helmich accepting JBS’s
job offer.
JBS
1988 17 Memo to JBS associates telling them how to use the
new Laser Printer.
JBS
20 JBS Pictures
1991 Rule 1135 28 JBS Energy, Inc. produced an analysis of the cost-
effectiveness of reducing NOx emissions at utility
South
steam plants in the South Coast Air Basin as part of
Coast
the District’s development of Rule 1135, a NOx
AQMD
control strategy for these plants. Gayatri was the
project manager for this report and conducted
large portions of the modeling of the SCE system.
Over the objections of the utilities, Rule 1135 was
adopted. When the SCAQMD governing board
became more conservative in 1994, Rule 1135 was
junked for political reasons and replaced with the
“market based” RECLAIM system. The
replacement rule contributed greatly to the price
gouging California energy crisis in 2000-2001,
demonstrating that the JBS approach originally
adopted by the District was sound.

Gayatri Schilberg Selected Documents and Decisions 6
Year/ Case or Page Description
Decision
Client
1993 CPUC Decisions 57 TURN filed complaint (3/1/1991) against Pacific
D.93-05-062 and Bell (telecommunications) before CPUC alleging
TURN
D.94-04-057 Pacific unlawfully imposed late payment charges
and disconnected customers between 1986 and
1991. TURN also alleged that Pacific’s management
was aware of the practice and consciously chose to
continue it, ignoring the Company’s tariffs, to the
a) benefit of its shareholders and the b) detriment
of its customers. TURN estimated the erroneous
charges amounted to $33 million. TURN also
sought a shareholder penalty of $50 million.
Gayatri filed testimony that estimated the
customer refund amount and providing evidence
of management complicity.
Pacific Bell admitted to some erroneous charges
but claimed it took immediate action to remedy the
situation when it first understood the situation.
Pacific estimated its erroneous charges amounted
to $3 million and it opposed any imposition of a
penalty.
The CPUC found Pacific guilty of all offenses and
ordered Pacific to refund $34.32 million in late
payment charges and imposed a $15 million
penalty on the Company’s shareholders.
1997 Nevada County 89 Nevada County District Attorney’s office filed
versus PG&E criminal charges against PG&E for negligence and
Nevada
causing a devastating wildfire in Sierra’s in 1994.
County
Gayatri submitted evidence that PG&E had
District
diverted about $77 million from customers
Attorney
between 1987 and 1994 that it told the CPUC was
needed to protect the public from the threat of
wildfires to its shareholders. Some of the most
damaging evidence produced by Gayatri came
from internal memorandum from PG&E’s
corporate headquarters praising field managers for
cutting tree trimming costs.

Gayatri Schilberg Selected Documents and Decisions 7
Year/ Case or Page Description
Decision
Client
1998 CPUC Decision 93 Electric Distribution Facility Standards. A. 94-12-
D.98-03-036 005, PG&E GRC. Got the CPUC to adopt
TURN/
standards for utility responses to major storms and
ORA
outages. Joint TURN/ORA testimony on
Emergency Response Standards. Create emergency
plan, train staff, coordinate with media and others,
and develop mutual assistance agreements.
2002 CPUC Decision 111 Baseline OIR – Commission adopted a number of
D.02-04-026 Gayatri’s recommendations to improve outreach
Disability
for medical baseline and simplify the application
Rights
process.
Advocates

Gayatri Schilberg Selected Documents and Decisions 8
Year/ Case or Page Description
Decision
Client
2004 CPUC Decisions, 126 PG&E 2003 GRC Phase I—A. 02-11-017
D.04-05-055 and
TURN In response to PG&E’s Phase I GRC request for
D.04-10-034
recovery of its storm related costs, Gayatri filed
testimony opposing that cost increase providing
testimony on PG&E’s proposed reliability targets
and subsequent incremental funding request. In D.
04-10-034, the Commission adopted nearly all of
TURN’s proposals storm response and other
reliability issues. The CPUC made the following
findings;
• It agreed with TURN that PG&E’s response
was not reasonable regarding outage information
on its system,
• PG&E’s prior value of service studies were
outdated and any new studies on value of
reliability should include a “willingness to pay”
element,
• Agreed with TURN that PG&E should
amortize a number of its outage information
investments as well as be denied funding for
certain aspects of its outage IT projects,
• Based on TURN’s testimony it denied a
PG&E/CUE request for $27 million in incremental
funding based on TURN’s analysis that PG&E
should meet and exceed proposed reliability
targets levels without any incremental funding.
• Also agreed with a number of other policy
recommendations concerning call center standards
and ratemaking treatment for storm related and
reliability investments.

Gayatri Schilberg Selected Documents and Decisions 9
Year/ Case or Page Description
Decision
Client
2005 CPUC Decision 147 SDG&E Catastrophic Event Memo Account A. 04-
D.05-08-037 06-035.
UCAN
During 1994 SDG&E applied to the CPUC to
recover its costs for catastrophic wildfires that
occurred in its service territory. SDG&E originally
applied to recover $62.7 million from its
distribution retail but reduced that figure by $21.9
million to reflect funds that it had already been
authorized for this purpose and sought recovery of
$40.8 million.
On behalf of UCAN, Gayatri intervened with
recommendations on ratemaking treatment as well
as a number of policy recommendations. The
proposed decision adopted most of UCAN’s
recommendations and found that SDG&E failed to
exercise reasonable control over its service vendors
and also failed to offset its incremental costs with
an existing rate allowance for those pole inspection
and replacement --costs. The proposed decision
adopted UCAN’s proposed disallowances for these
items. The final decision did not adopt these
recommendations but found that UCAN’s
contribution was substantial by insisting that the
Commission review the reasonableness of UCAN’s
costs estimates to ensure a more detailed review of
SDG&E’s cost wildfire cost estimates.
2006 Alberta Energy 187 Testimony for the Consumer Group caused the
and Utilities Alberta Energy and Utilities Board to reject giving
Alberta
Board Decision Enmax Energy an advance incentive payment for
CCA
2006-104. meeting service quality standards before those
and
standards existed and were adopted by the Board.
PICA
“The C[onsumer Group] also presented evidence
suggesting that under EEC’s proposal, there is a

probability that the existing levels of service would
be provided at a 30% increased cost, such that
“customers would pay more and get nothing in
return.” [citing Page 15 of Schilberg Evidence.]
2006 CPUC Decisions 196 SCE 2006 GRC – Got SCE to lower request by $40.8
D.06-05-016 and million due to stipulation on reducing Priority 5
TURN
D.06-10-018 maintenance costs.

Gayatri Schilberg Selected Documents and Decisions 10