OVERVIEW

This testimony is presented by Michael Shames, Executive Director of Utility Consumers' Action Network (UCAN) on issues relating to San Diego Gas & Electric (SDG&E). He has appeared before this Commission on numerous occasions and has been recognized as an expert on matters relating to both telecommunications and energy. His qualifications are attached in Attachment "A".

This testimony is presented to summarize UCAN's findings and recommendations and to address four important issues:

1. Explain how SDG&E's profits have increased during a period when its prices charged to customers have skyrocketed disproportionately and the quality of its customer service has declined;
2. Identify questionable practices and disallowable costs in SDG&E's lobbying, political and third-party vending practices;
3. Discuss SDG&E's Utility of the Future/OpEx 2020 program and how the Sempra Utilities' supplemental testimony misleads the Commission;
4. Present limited responses to the ALJ's questions posed in his June 21st ruling which complement those responses submitted by William Marcus, on behalf of UCAN as well as by other intervenors.

As will be explained below, UCAN's testimony in this case is presented by three consulting groups; JBS Energy, Overland Consulting, and Snavely King Majoros O'Connor & Lee, Inc. In its showing, UCAN proposes that SDG&E's revenue request be reduced by about $130 million dollars above and beyond the findings of the CPUC's Division of Ratepayer Advocates (DRA) which separately proposes a $145 million reduction from SDG&E's $230 million rate increase request.

Building on DRA's recommendation, UCAN is seeking a reduction of $60 million for operational costs as described in the JBS Energy Inc. testimonies commissioned by UCAN. Another $19 million in reductions are attributable to
unsubstantiated Sempra Corporate Center costs that have been wrongfully assigned to SDG&E customers, as set forth by Overland Consulting's audit performed on behalf of both UCAN and TURN. And the TURN/UCAN joint testimony on depreciation by Michael Majoros of Snavely, King recommends an approximate $51 million in revenue reductions due to SDG&E's overstated depreciation payments.

In total, UCAN is asking for a rate decrease in excess of $130 million from SDG&E's rate request. Because UCAN's work largely complements that of DRA, the UCAN recommendations, in tandem with the approximate $145 million reduction sought by DRA, effectively wipes out the entire proposed rate increase sought by SDG&E.2 Instead, the parties' joint showing will likely result in a recommendation for a revenue reduction in the tens of millions of dollars. Moreover, the cost-cutting potential in SDG&E's Utility of the Future blueprint, may convince the Commission to find that a significant rate decrease - as high as $100 million annually -- might be in the offing for long-suffering SDG&E
customers.