20. Incremental Customer Inquiry Activities/Costs

PG&E requests $2.306 million in customer inquiry costs associated with the new TOU and PDP rates. PG&E states that additional inquiries are likely to be generated by the new rates from all customer groups, including calls about event notification and contact information updates, calls in response to marketing efforts, and calls to opt-in or opt-out of the new rates. Costs related to the increased contact center volumes amount to $1.947 million. PG&E also includes $0.358 million for training contact center and local office CSRs to handle all types of inquiries related to the implementation of dynamic pricing.

None of the parties oppose the customer inquiry activities proposed by PG&E. However, TURN objects to including $281,600 to fund calls from residential and small and medium C&I customers subject to SmartRate conversion. According to TURN, the Commission authorized the AMI project based on a projection of $2.7 million in annual benefits due to reduced "customer contact" costs, based on the notion that residential and small commercial customers would not need to contact the call center as often with billing inquiries after deployment of SmartMeters. TURN argues that funding this portion of PG&E's request, in the amount of $281,600 chips away at that promised benefit.

In disagreeing with TURN's proposed adjustment, PG&E states that while the Commission did approve $2.7 million for savings associated with the implementation of SmartMeter, these savings were based on the assumption that customers would make fewer calls regarding:

Also, there was an additional $301,000 in projected savings due to shortened calls associated with high bill complaints.

According to PG&E, TURN has incorrectly assumed that the $281,600 was part of the AMI funding, and the Commission should reject TURN's proposed disallowance.

20.1. Discussion

In general, we agree with PG&E's position that SmartRate conversion inquiries are new types of calls that were not anticipated when the Commission adopted the $2.7 million savings amount. PG&E has accounted for the majority of the savings, and the types of savings indicated do not appear to encompass savings related to SmartRate conversions. We will therefore not adopt TURN's adjustment or any portion of the adjustment for the reasons cited by TURN. However, we are concerned with the inclusion of the $281,600 amount for SmartRate conversion calls for another reason.

With respect to these particular inquiries, PG&E states the following:

As of December 1, 2008, PG&E had approximately 10,000 residential and small and medium C&I customers on the three current CPP tariffs (E-CPP, E-CSMART and E-RSMART). By May 1, 2010, PG&E estimates that approximately 61,900 residential and small and medium C&I customers will be on these rates. With the implementation of the new rates, all of the residential customers will have the opportunity to opt-in to the new PDP rate for summer 2010. Otherwise, they will default to the non-PDP tariff.

Either way, the transition from the existing SmartRate to the new PDP rate will generate customer inquiries. PG&E estimates that 75 percent of those customers on SmartRate as of May 1, 2010 (the date the new PDP rates would be available to customers), will make these calls. PG&E estimates these calls to be similar to an account inquiry call. Based on an account inquiry call averaging 3 minutes, 55 seconds (2007 average), this cost estimate is $281,600 for 2010. (Exhibit 3 at 3-5.)

PG&E's cost estimate for 2010 is premised on customer inquiries associated with a May 1, 2010 date for transitioning residential, as well as small and medium C&I, SmartRate customers to the applicable PDP tariff. However, based on the residential PDP rate design adopted by this decision, the existing residential SmartRate tariff will be extended by a year for both existing and new enrollees, and then the residential PDP for all residential dynamic pricing participants will begin in 2011. Since this transition for residential customers has been delayed by one year, it is reasonable to assume the associated costs would be delayed by one year as well. As such, it would be outside of the cost recovery timeframe requested by PG&E for this proceeding. However, it is not clear what incremental inquiry costs might be incurred in 2010 with respect to small and medium C&I customers who are not subject to the one year delay. Since there are significantly more residential customers than small and medium C&I customers, we will assume that most of the anticipated costs relate to residential customers and should be excluded. Without better evidence, we will include $50,000 for SmartRate conversion calls for small and medium C&I customers in 2010 and exclude the remainder from cost recovery in this proceeding.

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