4. Approval of the Amended and Restated EnerNOC Agreement

SDG&E's request is supported by the testimony set forth in the Commission-approved "RFO Solicitation Contract Approval Request" template (RFO Template). The RFO Template represents a means of providing the Commission with testimony in support of a request for approval of an RFO contract. The RFO Template provides information on the background, RFO design process, the bid selection process, consistency with Commission decisions, participation of the Procurement Review Group (PRG) and Independent Evaluator (IE), contingencies and milestones, requested budget and cost recovery mechanism.

With respect to the information provided in the RFO Template, SDG&E identifies the following factors to justify approval of the Amended and Restated EnerNOC Agreement:

· The Commission has authorized, via its approval of SDG&E's 2006 LTPP, a bundled customer SDG&E system need that will be filled, in part, by the Amended and Restated EnerNOC Contract.

· The agreement with EnerNOC was solicited via SDG&E's competitive 2010-2012 Supply RFO (2010-2012 RFO).
The 2010-2012 RFO was designed to be consistent with SDG&E's portfolio as presented in its Commission-approved 2006 LTPP.

· At all stages of the 2010-2012 RFO, SDG&E consulted with its PRG and also worked with its IE to ensure that the solicitation was open, designed and evaluated without bias and likely to garner a robust response from the market.

· Following a multiple step evaluation process, it was determined that the EnerNOC offer was one of the top two DR bids (negotiations with the other top bidder are on-going).

· A cost-effectiveness analysis performed on the EnerNOC Agreement indicates that the contract is cost effective for all performed tests,⁹ supporting the conclusion that it is a least-cost and best-fit opportunity for SDG&E's ratepayers. The reduction in capacity payment in the Amended and Restated EnerNOC Agreement makes the contact even more cost effective.

· As a DR program, the EnerNOC Agreement is consistent with the Commission's Energy Action Plan II loading order.

· As a DR program, the EnerNOC Agreement is compliant with both the Commission's greenhouse gas (GHG) standards and SDG&E's GHG reduction objectives.

· The requested regulatory accounting and cost-recovery mechanism are consistent with the established and previously authorized regulatory accounting and cost recovery for SDG&E's current DR programs.

Our review of the information provided in the RFO Template and the enhancements provided in the Amended and Restated EnerNOC Agreement leads to the conclusion that the request for approval of the Amended and Restated EnerNOC Agreement is justified and should be granted. Also, DRA has reviewed the Amended and Restated EnerNOC Agreement and has no objections.

⁹ Performed tests include the Total Resource Cost Test (Benefit/Cost (B/C) = 1.33); Rate Impact Test (B/C = 1.23); Program Administrator Cost Test (B/C = 1.33); and Participant Test (B/C = 1.09).