6. Rate Design - Large C&I Customers
As required by the Rate Guidance, PG&E has proposed a capacity reservation option for customers that take service on Schedules E-19, E-20 and AG-5C.16 The capacity reservation option allows customers to pay fixed charges for a portion of their usage, while being exposed to higher PDP prices for only the portion above their fixed reservation level. This allows the customer a means to mitigate bill volatility, by choosing the degree of exposure to high PDP-period prices that is most appropriate for its own business.
PG&E states that its approach is similar to the approach taken by San Diego Gas & Electric Company's (SDG&E) default CPP tariff. This approach limits the application of the capacity reservation charge option to those schedules that include generation demand charges that recover all (or nearly all) assigned generation capacity costs. Therefore, the capacity reservation option is limited to C&I and agricultural customers or customers served on Schedules E-19, E-20 and AG-5C. These customers will be able to elect a capacity reservation level anywhere from zero to 100% (limited to an integer). For customers who make no election, the default capacity reservation subscription will be 50% of the customer's most recent average peak-period maximum demand during the summer billing months before they are assigned to the new tariff.
By PG&E's proposal, the capacity reservation may not be changed for 12 months. In its prepared testimony, EUF/CMTA proposed to allow the customers to change their capacity reservation before 12 months has passed on a one-time basis, in order to allow the change to take effect prior to their second summer season on PDP.17 PG&E opposes this EUF/CMTA proposal. According to PG&E, maintaining the 12-month period before the capacity reservation subscription level can be changed is necessary to align the timing and messaging to customers concerning other features such as bill stabilization and to reduce the volume and impacts of too many changes. PG&E also argues that the proposal would adversely impact costs and schedule.
6.1. Discussion
With the exception of the EUF/CMTA proposal that would allow customers to change their capacity reservation before 12 months have passed on a one-time basis, there is agreement among the affected parties that PG&E's capacity reservation proposal should be adopted.
Generally, the EUF/CMTA proposed change is not necessary, since most customers will have made their initial capacity reservation choice prior to the May 2010 implementation of PDP and would be able to change their capacity reservation prior to the 2011 summer season or any time after that. For the relatively fewer new customers that take service during the summer season and who would not be able to change until some time during the next summer season, that inconvenience must be weighed against the additional costs and potential delays that might be incurred in implementing the EUF/CMTA proposal. After taking these factors into consideration, we determine that PG&E's capacity reservation proposal, including the condition that the capacity reservation may not be changed for 12 months, is reasonable and should be adopted.
16 Customers on these schedules are generally larger, but customers less than 200 kW may take service on Schedules E-19 and AG-5C.
17 While this recommendation was not included in EUF/CMTA's opening brief and EUF/CMTA did not file a reply brief, it is assumed that EUF/CMTA still supports this recommendation.
