2. Background
Pacific Gas and Electric Company (PG&E) filed this application in compliance with Decision (D.) 08-07-045, which ordered PG&E to propose certain time-differentiated electric rates (generally called dynamic pricing) for customers as part of its 2009 Rate Design Window and to seek recovery of incremental expenditures required to implement dynamic pricing.1 The Commission's dynamic pricing principles seek to increase customer involvement in (a) managing California's energy supply, (b) reducing greenhouse gas emissions, and (c) managing future power plant development costs, by providing real economic incentives to reduce electric demand during peak periods.
As ordered in D.08-07-045, PG&E now proposes default and optional critical peak pricing (CPP) and time-of-use (TOU) rates, some of which will be effective for some customer classes by May 1, 2010 and others by February 1, 2011. PG&E will propose optional real time pricing (RTP) rates for all customer classes as part of its Test Year 2011 General Rate Case (GRC) Phase 2 Application that will be filed in March 2010.
PG&E estimates that the incremental costs in 2008, 2009, and 2010 for the dynamic pricing proposals contained in this application will total $160.2 million, of which $110.5 million is for capital expenditures and $49.7 million is for expenses.2 PG&E requests that the Commission find the estimated costs for its proposal to be reasonable.
2.1. Procedural Matters
A prehearing conference was held on April 22, 2009, and the Assigned Commissioner's Ruling and Scoping Memo was issued on May 5, 2009. Testimony in response to PG&E's application on issues other than information technology (IT) was served on or before July 31, 2009.3 Testimony on IT-related issues was served on August 5, 2009.4 Rebuttal testimony on non-IT-related issues was served on August 21, 2009.5 Rebuttal testimony on IT-related issues was served by PG&E on August 26, 2009. Evidentiary hearings were held August 31, 2009 through September 4, 2009 and September 8, 2009. Opening briefs were filed on September 28, 2009. Reply briefs were filed on October 5, 2009, at which time this proceeding was submitted for decision.
On March 26, 2009, PG&E filed a Motion for Expedited Decision for Partial Relief. PG&E indicated that it had been incurring dynamic pricing implementation costs as early as 2008 and requested that the Commission authorize PG&E to recover in rates, those related expenses recorded in the Dynamic Pricing Memorandum Account (DPMA) as of November 30, 2009, subject only to review and verification that such expenditures were for dynamic pricing compliant activities. PG&E estimated that it would incur approximately $7 million in the DPMA by late November of 2009. PG&E proposed to incorporate the actual DPMA expense balance as of November 30, 2009 into the end-of-year 2009 Annual Electric True-up (AET) process for rate recovery beginning January 1, 2010. PG&E further requested that the Commission adopt a case schedule providing for a final decision on dynamic pricing proposals by the end of 2009. The motion was opposed by DRA.
In D.09-07-001, the Commission denied PG&E's request for partial relief, indicating that PG&E's ratemaking proposal did not provide an appropriate opportunity for the Commission to determine the reasonableness of the expenses before they were included in rates. It was determined that rate recovery of 2008 and 2009 expenses would instead be based on the amounts determined to be reasonable in the final decision for this proceeding. The decision also indicated that PG&E's request for an end of 2009 decision was addressed in the May 5, 2009 Scoping Memo for this proceeding.
In D.08-07-045, among other things, PG&E was ordered to propose one or more default CPP rates6 for commercial and industrial (C&I) customers with maximum load less than 200 kilowatts (kW) (small and medium customers) that have had an advance metering infrastructure (AMI) meter for 12 months or more. The indicated effective date of the default rate(s) was to be on, or before, February 1, 2011.7
However, the Commission did leave open the possibility of changing the dynamic pricing timetable, as follows:
This decision does not itself adopt any rates and does not commit the Commission to approve specific rates. Instead, this decision establishes dates when PG&E will be required to propose specified rates. We refer to these dates as the timetable. In the proceedings in which the Commission considers PG&E's specific rate proposals, the Commission could decide to adopt different rates or a different timetable based on the information presented to the Commission at that time. (D.08-07-045 at 8-9.)
On April 3, 2009, DRA, the California Small Business Association and California Small Business Roundtable (collectively, Petitioners) filed a Petition for Modification of D.08-07-045 (Petition). Petitioners requested that the Commission postpone the date by which CPP and other new rates are to become effective, for medium and small C&I customers, to no sooner than February 2012.8 Petitioners further requested that the Commission bifurcate the PG&E Rate Design Window proceeding, A.09-02-022, with Phase 1 devoted to rate design for large C&I and all agricultural customers, and Phase 2 devoted to rate design for small and medium C&I customers. The petition request was supported by TURN and opposed by PG&E.
In D.09-07-002, the Commission denied the petition for modification. The request that the effective date for default critical peak pricing rates for small and medium C&I customers be postponed from on, or before, February 1, 2011 to no sooner than February 2012 was denied without prejudice to the determination of such appropriate date in PG&E's ongoing Rate Design Window proceeding, A.09-02-022. Also, it was indicated that the request for bifurcation of A.09-02-022, and consideration of rate design for small and medium C&I customers in the second phase, was not adopted in that proceeding's Scoping Memo, was moot and should be denied.
1 D.08-07-045 adopted a dynamic pricing implementation timetable and associated rate design guidance for PG&E. It was issued on July 31, 2008 in the dynamic pricing phase of Application (A.) 06-03-005, PG&E's 2007 General Rate Case Phase 2 filing on marginal costs, revenue allocation and rate design. Among other things, the Commission ordered PG&E to propose various dynamic pricing rates in a Rate Design Window Application to be filed no later than February 28, 2009.
2 Costs are those reflected in PG&E's opening brief.
3 Non-IT-related testimony was served by the Division of Ratepayer Advocates (DRA), The Utility Reform Network (TURN), the California Large Energy Consumers Association (CLECA), the Building Owners and Managers Association of California (BOMA), the Agricultural Energy Consumers Association (AECA), the California Farm Bureau Federation (CFBF), the Direct Access Customer Coalition (DACC), the Energy Producers and Users Coalition (EPUC), and the Federal Executive Agencies (FEA); and jointly by the California Manufacturers & Technology Association (CMTA) and Energy Users Forum (EUF). Testimony was also served by EnerNOC, Inc. (EnerNOC). However, that testimony was withdrawn at evidentiary hearing on August 31, 2009.
4 IT-related testimony was served by both DRA and FEA.
5 PG&E, DRA, TURN, CLECA, and EPUC each served non-IT-related rebuttal testimony.
6 In this Rate Design Window filing, PG&E refers to such CPP rates, in conjunction with TOU rates, as Peak Day Pricing (PDP) rates.
7 D.08-07-045, Ordering Paragraph 6.
8 Petitioners requested no change in the schedule for implementing dynamic pricing for large C&I customers, nor for agricultural customers.
