7. Comments on Proposed Decision
The proposed decision of the Commissioner in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and Rule 14.3 of the Commission's Rules of Practice and Procedure. Comments were filed on August 10, 2009 by PG&E, SCE, SDG&E, TURN, DRA, and CFC. Reply comments were filed on August 17, 2009 by SCE, DRA, PG&E, and SDG&E. In this section, we consider the major arguments made by parties.
TURN objected to our proposal to provide deference to DOE for several reasons. First, TURN argues that "[w]hile there may be circumstances that warrant some deference to other agencies, the question should be answered by considering at a minimum the expertise of the other agency and the purpose of the cost-effectiveness analysis in the other forum."79 TURN further states that "there is no indication that DOE will conduct a substantive review of the cost-effectiveness analysis."80
In response to TURN's first charge, we note that the United States Department of Energy, which oversees the national laboratories, does have expertise on energy matters. It is reasonable for this Commission to give significant weight to DOE's expertise in energy matters.
In addition, the DOE, as indicated above, is conducting a thorough review of these projects including the costs and benefits. Furthermore, we note that fraudulent presentations in the application are subject to fines and imprisonment under 18 U.S.C § 1001. Furthermore, the costs and benefits are central to the work of DOE, which includes the award of $4.5 billion in support of Smart Grid activities throughout the nation.
For the Smart Grid Demonstrations, Appendix A provides detailed notes on how to provide cost benefit data to DOE.81 Similarly, for the Smart Grid Investment Grants, DOE states that:
To ensure consistency in the estimation of overall and net benefits derived from all project awarded grants, DOE will apply a cost-benefit analysis (CBA) methodology. ... While the details of benefits estimation for each project might vary, the CBA methodology will be applied uniformly, and to the extent possible, DOE will use the same method, from project to project, to estimate each given type of benefit.82
Thus, it is clear that a standard and accurate cost-benefit analysis is of critical concern to DOE as it compares grants and makes awards.
It is also clear that DOE plans an active review. Furthermore, we note that this Commission will conduct its own analysis of a project's costs and benefits consistent with our statutory obligations. We do not need, nor do we rely upon, a cost benefit analysis of DOE, but will perform our own review of the costs and benefits as described in this decision.
In summary, there is no merit to TURN's arguments that we should not rely on information provided to DOE or to DOE's process for eliciting and analyzing project costs and benefits.
Second, TURN objects to the use of a rebuttable presumption in the review of IOU projects that have obtained a DOE award. We note that the approach we adopt today does not include a rebuttable presumption.
Third, TURN objects to the statement in this decision that "we believe that it is likely that the material submitted to the DOE will prove adequate to permit a determination by this Commission of the reasonableness of the rates required to support the non-federal share of project cost."83 TURN argues that it "is quite puzzled by this apparent promise from the Commission that the information submitted to another agency will be found reasonable for CPUC review."84 As a result, TURN argues that such a promise "is in conflict with ... statutory obligations."85
TURN's concern is misplaced. Even a cursory review of the DOE applications shows that DOE requires the submission of very extensive information. Moreover, giving guidance to IOUs concerning what information it should submit to the Commission is consistent with the guidance that the Commission routinely gives to IOUs in situations involving new programs subject to Commission review.86 Furthermore, our review of the sentence cited by TURN does not reveal any promise that the mere submission of data will lead to a finding that costs are reasonable.
Finally, TURN argues that the PD makes policy conclusions without record evidence. In particular, TURN states that it "is astonished" that the Commission could state that "many of the advantages of a Smart Grid will contribute to reducing greenhouse gas emissions."87 TURN further states that "helping to integrate renewable resources or electric vehicles ... will contribute to GHG reduction" is "a tenuous claim" that "should be substantiated by evidence, and more importantly, by an alternative analysis."
Once again, we disagree with TURN's assertion. Comments and workshops in this proceeding have focused extensively on ways in which a Smart Grid can help to reduce greenhouse gas emissions. For example, a smarter grid can support the use of wind and solar generation technologies that operate with an abrupt intermittency.
Parties have also provided comments in this regard:
Deployment of a smart grid will facilitate the following four mechanisms that contribute to reduced greenhouse gas (GHG) emissions.
· Increased use of renewable energy;
· Energy conservation;
· Load shifting; and
· Enabling electric transportation.88
And:
Based on conservative estimates, SCE expects Edison SmartConnectTM to create an annual reduction of 365,000 metric tons of carbon dioxide or about 1,000 metric tons per day within our service territory. 89
And:
The increased use of Plug-in Electric Vehicles (PEVs) supports greenhouse gas reduction goals by displacing fossil fuel emissions with electricity from an increasingly renewable utility generation portfolio. 90
TURN does not address this information, nor does TURN provide any data that rebuts this information. PG&E and SDG&E have also provided information indicating that Smart Grid technologies can reduce green house gas emissions.91
DRA raises several issues in its comments. First, DRA states that it is "interested in reviewing and commenting upon IOU proposals." We therefore require IOUs to provide all data to DRA that it provides to the Energy Division and have amended our decision accordingly.
Second, DRA also objects to the use of the rebuttable presumption. As we have noted, the approach adopted herein does not use a rebuttable presumption.
Third, DRA asks that the Commission clarify that "memorandum accounts may or may not be recoverable through rates and are subject to further scrutiny by the Commission."92 DRA asks that we clarify that "if the DOE does not reward Recovery Act funding for an IOU project, the IOU cannot recover costs tracked in a memorandum account without presenting a formal application."93 This is exactly what we had in mind, and we agree with this clarification.
DRA also asks that the Commission "direct the IOUs to track costs separately for each individual project."94 This is a reasonable request, and we so direct.
Fourth, DRA proposes that the protest period be amended and asks for an extension of the protest period to 60 days.95 Regarding the proposed shortening of the protest period for applications, DRA states "[p]rovided that DRA and other parties still maintain the right to conduct evidentiary discovery and prepare testimony, it may not be as necessary to extend the protest period as for the advice letter.96
We note that since the initial application deadlines to DOE are in the month of August, discovery by DRA and other parties on these matters can start well in advance of any filing made before this Commission. We also note that pursuant to this decision, DRA will receive all the information provided to DOE immediately, and can begin its analysis far in advance of the filing of an advice letter or application. Thus, we see little reason for extending the protest period.
On the other hand, given the short time frame to lodge a protest, we require the IOUs to make available in a timely manner all studies, evaluations and other reports on Smart Grid activities funded by the Recovery Act that are submitted to DOE, consistent with confidentiality protections. In addition, IOUs should provide all documentation that is necessary for an ALJ or the Energy Division to evaluate the Application or Advice Letter at the time of filing, and respond expeditiously to any data requests from Energy Division or parties, serving that information on all parties to the Application or Advice Letter.
CFC objects to the provision of matching funds "from ratepayers during a severe recession."97 Instead, CFC argues that "matching funds used to stimulate economic recovery should be provided by government, not ratepayers."98
In response, we note that the Commission will only approve ratepayer funding for projects that offer benefits to ratepayers.
CFC also objects to the use of an expedited review process and the use of an advice letter review process.99 CFC argues that the Tier 3 advice letter review "does not satisfy the requirements of General Order 96B ..."100
In response, we note that General Order 96B Energy Industry Rule 5.3 states that matters appropriate for a Tier-3 Advice Letter review include:
(2) A tariff change in compliance with a statute or Commission order where the wording of the change does not follow directly from the statute or Commission order. ...
(9) A change to a rate or charge pursuant to a methodology approved by the Commission for use in an advice letter, such as an annual performance review for performance-based ratemaking as approved by the Commission for the Utility submitting the advice letter.101
Thus, the proposed use of Advice Letter is perfectly consistent with General Order 96B.
CFC also argues the proposed decision "unlawfully shifts the burden of proof to anyone opposing the utility's project"102 and that under the proposed decision, "the Commission will delegate its authority to DOE."103
We have discussed this matter above. The Commission does not delegate its review to DOE. The Commission assesses the information that utilities provide to it and makes a determination on the reasonableness of committing ratepayer funds to Smart Grid projects.
SDG&E, and SCE provided short comments supporting the proposed decision.
PG&E provided supportive comments, but also argues that:
... the Commission must be willing to employ extraordinary and expedited decision-making procedures in order to meet the DOE's deadlines for approval of ARRA projects, because DOE is likely to significantly discount the merits of proposed projects for which required regulatory approvals and non-federal matching funding have not been timely secured.104
PG&E further argues that:
... the Commission should make clear that the requirement that utilities file a formal application for their projects under this process does not mean that the application should require evidentiary hearings, prepared testimony, or should require extensive discovery or even any discovery, if the application contains extensive information and factual support on its face. In addition, although limiting the protest period for such applications is helpful, it is equally important that the Commission direct the Assigned Commissioner and Administrative Law Judge presiding over the application to hold a prehearing conference and issue a scoping memo on an expedited basis, i.e. within a few days of the deadline for protests.105
And again, PG&E argues:
... it is essential that the Commission acknowledge DOE's 90 day deadline for deciding Smart Grid applications, and direct the Assigned Commissioner and ALJ to issue a proposed decision on a "fast track" schedule, e.g. no later than 60 days following the Prehearing Conference. In addition to the comments and revisions that we have discussed herein, we have made other changes and revisions as we deemed appropriate.106
In response, we note that although we see the need for timely processing of any application in this situation, we decline from adopting further case management requirements beyond the shortening of the protest period. Our experience with case management is that within a week or two of the assignment of a case, the assigned Commissioner and ALJ adopt a case management plan that serves the public interest. We see no reason to determine their case management plan in this proceeding.
79 TURN Comments on PD at 4.
80 Id. at 7.
81 See ALJ Ruling, July 8, 2009, Attachment B at 51ff.
82 See ALJ Ruling, July 8, 2009, Attachment A.
83 TURN Comments on PD at 11.
84 Id. at 11.
85 Id. at 11.
86 See for example the June 6, 2002 Joint ACR and ALJ Ruling in R.02-06-001 at 5, which provides guidance to utilities on the costs that IOUs should submit for the "Base Case AMI Scenario."
87 Id. at 12.
88 SCE Comments, February 9, 2009 at 70.
89 Id.
90 Id. at 71.
91 See also PG&E Comments, February 9, 2009 at 33 and SDG&E Comments, February 9, 2009, at 27, which also provide information on this issue, albeit with less detail.
92 DRA Comments on PD at 11.
93 Id. at 12.
94 Id. at 11.
95 Id. at 12.
96 Id.
97 CFC Comments on Proposed Decision at 3.
98 Id. at 4.
99 Id. at 6.
100 Id.
101 General Order 99B, Energy Industry Rule 5, Section 5.3.
102 CFC Comments on Proposed Decision at 7.
103 Id. at 9.
104 PG&E Comments of Proposed Decision at 1.
105 Id. at 2-3.
106 Id. at 3.
