26. Fund Shifting Rules

In D.06-03-024, the Commission approved fund shifting rules to be used throughout the 2006-2008 period. These rules provide the following:

· Utilities may shift up to 50% of funds of a program's funds to another program within the same budget category without filing an advice letter, as long as no program is eliminated without prior authorization from the Commission.

· Motions or advice letters are necessary for fund shifting that exceeds the 50% threshold, or to propose new programs to be implemented within the 2006-2008 funding level.

· Unused funds from one year may be carried over to the subsequent year, and the utilities may file requests for incremental funding for new or existing programs by advice letter or application.

· For SCE's Technical Assistance and Technology Incentives program only, fund shifting is limited to 25% of program funds. ³⁰⁹

26.1. Utility Proposals for Fund-Shifting Rules

SCE proposes to continue the fund-shifting flexibility authorized in D.06-03-024, in an effort to ensure that funds are deployed efficiently and focused on programs it views to be successful.³¹⁰ According to SCE, no party has made any showing that the existing fund shifting rules should not continue into the 2009-2011 program cycle.³¹¹

PG&E urges the Commission to provide the utilities with broader authority to shift funds among programs without advance Commission approval. SDG&E provides the most detailed proposals, contending that in order to maintain fund-shifting flexibility comparable to that authorized during the 2006-2008 period, the Commission should authorize the following rules for 2009-2011:³¹²

· Retain for the 2009-2011 program cycle the existing flexibility to reallocate up to 50% of authorized budget funds between programs within each of four budget categories. SDG&E proposes that these categories should be (1) specified programs, (2) statewide informational, educational, and developmental programs, (3) Technical Assistance/Technical Incentives/ automated demand response, and (4) other programs. As is currently the case, no program authorized and funded by the Commission would be terminated without prior Commission authorization.

· Up to 25% of authorized budget funding for a category may be shifted to programs in a different category.

a. Proposals to shift program budget funding within authorized budgets but exceeding these 25% or 50% guidelines may be requested by Advice Letter.

b. Retain the existing ability to carry unspent funds into subsequent years within the 2009-2011 program cycle.

SDG&E also proposes that it retain the right to file any proposals or requests for incremental funding for new or existing programs by Advice Letter; as discussed in Section 25, above, we do not approve this request, and require utilities to submit an application to request funding beyond the total budget approved in this decision.

26.2. Discussion

There were no significant party concerns about the utilities' fund shifting proposals. In their applications, the utilities assert that the flexibility to shift funds between program categories is essential to operating their demand response programs. The costs to operate effective demand response programs do vary over time and from year to year, along with weather conditions within the state and changes in enrollment. It is apparent from the utilities' applications, and especially from their proposals to transition demand response programs to function within the new CAISO market, that some program changes and budget flexibility will be needed during the 2009-2011 period to enable the utilities to adjust their programs for changes in electricity markets and other conditions.

The purpose of this application is to build a record on which to determine reasonable design characteristics and funding levels for demand response in 2009-2001. This proceeding has considered the factors that may lead to the need for flexibility in funding. Many parties have provided input during this proceeding, and these factors have been taken into consideration in determining the total funding level for the utilities' programs. While it is clear that good estimates are not yet available for some of the developments expected over the next two years, the budgets authorized in this decision take those developments into account, and Section 25, above, outlines a process for utilities to request additional funding through an application or petition for modification of a previous decision, if necessary.

It is reasonable to provide the utilities with some flexibility to shift funds among demand response programs, in order to provide the utilities with the ability to respond effectively to unforeseen developments that may occur, or to respond to changing conditions. As in the discussion of the appropriate process for requesting new demand response programs or additional funding beyond the total allocated in this decision, it is appropriate that major changes to the relative funding of specific programs be subject to thorough review and party comment. Providing utilities with broad authority to shift funds among programs without prior notification or approval of this Commission undermines the regulatory process through which this decision was developed. The program budgets adopted here become meaningless if large portions can be shifted to different programs or budget categories. We adopt the following rules for fund shifting in 2009-2011:

· The utilities may shift up to 50% of a program's funds to another program within the same budget category. Utilities will document the amount of and reason for each shift in their monthly demand response reports.

· The utilities must file an advice letter to eliminate a program. No program can be eliminated through multiple fund shifting events or for any other reason without prior authorization from the Commission.

· The utilities must file a Tier 2 advice letter before shifting more than 50% of a program's funds to a different program within the same budget category. If shift of more then 50% of a program's funds is necessary as part of the implementation of a new program, the fund shift should be included in application for approval for the new program.

· The following lists contain the ten program categories for fund shifting purposes, along with various programs authorized within each category. Utilities shall not shift funds between these ten categories:

SCE 2009-2011 Demand Response Program Categories	SDG&E 2009-2011 Demand Response Program Categories	PG&E 2009-2011 Demand Response Program Categories
Category 1 - Emergency Programs
Base Interruptible Program	Base Interruptible Program	Base Interruptible Program
Summer Discount Plan	Summer Saver Program	Smart AC
Optional Binding Mandatory Curtailment Program	Optional Binding Mandatory Curtailment Program	Optional Binding Mandatory Curtailment Program
Scheduled Load Reduction Program	Scheduled Load Reduction Program	Scheduled Load Reduction Program
Rotating Outages		DWR contract
Agriculture & Pumping Interruptible
Category 2 - Price Responsive Programs
Capacity Bidding Program	Capacity Bidding Program	Capacity Bidding Program
Critical Peak Pricing	Default Critical Peak Pricing	Critical Peak Pricing
Demand Bidding Program	Emergency Critical Peak Pricing	Demand Bidding Program
Energy Options Program	Peak Time Rebate Program	Peak Choice
Real Time Pricing
Category 3 - DR Aggregator Managed Programs
Proposed Contracts	(none)	AMP
Category 4 - DR Enabled Programs
Automated Demand Response	Technical Assistance	Integrated Energy Audits
Agriculture Pump Timer Program	Technology Incentives	Technology Incentives
Emerging Markets & Technologies	Demand Response--Emerging Technologies	Auto DR
Technical Assistance	Permanent Load Shifting (Gas A/C -- Cypress and Refrigerated Zone Modules -- EPS)	Permanent Load Shifting
Technical Incentives		DR Emergency Technology
Permanent Load Shifting
Category 5 - Pilots & Smart Connect Enabled Programs
Participating Load Pilot	Residential Automated Controls Technology	Renewable Pilot
SmartConnect Thermostats for CPP		Small Customer Load Aggregation Pilot
Smart Thermostat Customer Experience Pilot		Ancillary Service Pilots
Category 6 - Statewide Marketing Program
Flex Alert Network	Flex Alert Network	Flex Alert Network (Statewide DR Awareness Campaign)
Category 7 - Evaluation & Measurement
Evaluation & Measurement	Evaluation & Measurement	Evaluation & Measurement
Category 8 - System Support Activities
DR Forecasting		InterAct/DR Forecasting Tool
DR Resource Portal		DR On-Line Enrollment
DR System Infrastructure		Legacy DR Conversion
		Marketing Decision Support System (MDSS) Upgrade
		Capital - MDSS Upgrade
		Capital - Interval Meters
Category 9 - Marketing Education & Outreach
Agriculture and Water Outreach	Customer Education, Awareness & Outreach	DR Core Marketing and Outreach
Circuit Savers		Education and Training
Federal Power Reserve Partnership
Income Qualified Customer Outreach
DR Energy Leadership Partnership
Integrated DSM Marketing
Category 10 - Integrated Programs
Commercial New Construction Integrated Delivery		PEAK
Earth/Smart Student Program		Integrated Marketing and Training
Innovative Designs for EE Activities		Integrated Education and Training
Institutional Partnership Program		Integrated Sales Training
IDSM Pilot for Food Processing		IDSM Clearinghouse
Residential New Construction Integrated Delivery
Technology Resource Incubator Outreach

³⁰⁹ D.06-03-024, March 15, 2006. Decision Adopting Settlement, pp. 13-15.

³¹⁰ PG&E Exhibit 201, p. 13.

³¹¹ SCE Opening Brief, p. 51.

³¹² SDG&E, Exhibit 102, pp. 69-70.