ALJ/DKF/jt2 Date of Issuance 3/2/2010

Decision 10-02-032 February 25, 2010

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company for Approval of its 2009 Rate Design Window Proposals for Dynamic Pricing and Recovery of Incremental Expenditures Required for Implementation (U39E).

Application 09-02-022
(Filed February 27, 2009;
amended March 13, 2009)

DECISION ON PEAK DAY PRICING FOR
PACIFIC GAS AND ELECTRIC COMPANY

Table of Contents

Title Page

DECISION ON PEAK DAY PRICING FOR PACIFIC GAS
AND ELECTRIC COMPANY 2 2

1. Summary 2 2

2. Background 4 4

2.1. Procedural Matters 5 5

2.1.1. PG&E's Request for Expedited Partial Relief 6 6

2.1.2. Petition for Modification of D.08-07-045 7 7

3. PG&E's PDP Proposal 8 8

3.1. Applicability Guidelines 9 9

4. Opposition to PG&E's PDP Proposal 10 10

5. Rate Design - All Classes 11 11

5.1. Rate Levels for PDP Rates 11 11

5.2. TOU Rates 13 13

5.3. Number of PDP Events 14 14

5.4. First Year Bill Stabilization/Protection 14 14

5.4.1. Discussion 15 15

5.5. Allocation of Over- and Under-Collections 16 16

5.5.1. Discussion 22 22

6. Rate Design - Large C&I Customers 25 25

6.1. Discussion 27 27

7. Rate Design - Small and Medium Customers 27 27

7.1. Default Date for Small and Medium C&I Customers 27 27

7.1.1. Discussion 30 30

7.2. Options for Reducing Bill Volatility 31 31

7.2.1. PG&E 31 31

7.2.2. DRA 34 34

7.2.3. Discussion 35 35

7.2.4. Medium C&I Customers 36 36

7.3. Additional Bill Stabilization/Protection 36 36

7.3.1. Discussion 37 37

7.4. Up-Front Lump Sum Credit for Notification Information 39 39

7.4.1. Discussion 39 39

7.5. Multi-Year Amortization 40 40

7.5.1. Discussion 41 41

8. Rate Design - Agricultural Customers 41 41

8.1. Agricultural Customer Access to Information 41 41

8.1.1. Discussion 43 43

8.2. Other Agricultural Customer Issues 46 46

8.2.1. Discussion 47 47

9. Rate Design - Residential Customers 47 47

10. Tariff Revisions and Requirements 49 49

10.1. Opt-Out and Switching Proposals 49 49

10.1.1. PG&E 49 49

10.1.2. DRA 50 50

10.1.3. EnerNOC 51 51

10.1.4. Discussion 52 52

10.2. Dual Participation in PDP and Demand Response Programs 54 54

10.2.1. Discussion 58 58

10.3. Automated Demand Response 59 59

10.3.1. Discussion 60 60

11. Incremental Cost Recovery 61 61

11.1. PG&E 61 61

11.2. DRA 62 62

11.3. TURN 65 65

11.4. Discussion 67 67

12. Customer Outreach and Education - Foundational Activities and Costs Common to All Classes 70 70

12.1. PG&E's Proposal 70 70

12.2. Discussion 72 72

13. Customer Outreach and Education - Large Customers 73 73

13.1. PG&E's Proposal 73 73

13.2. Discussion 75 75

14. Customer Outreach and Education - Small and Medium Customers 76 76

14.1. PG&E's Proposal 76 76

14.2. Discussion 79 79

15. Customer Outreach and Education - Residential Customers 80 80

16. Customer Outreach and Education - SmartRate Customers 80 80

17. Small Commercial Customer Distinctions 80 80

17.1. Discussion 84 84

18. Outreach Advisory Panel 84 84

18.1. Discussion 87 87

19. Evaluation of Outreach and Education Efforts 89 89

19.1. Discussion 91 91

20. Incremental Customer Inquiry Activities/Costs 94 94

20.1. Discussion 95 95

21. Incremental Customer Notification Activities/Costs 97 97

22. Effect of D.09-08-027 on Incremental Customer Notification 97 97

22.1. Discussion 99 99

23. Notification of Event Cancellation 101 101

23.1. Discussion 102 102

24. Incremental Notification Equipment Development 103 103

24.1. PG&E's Position 103 103

24.2. DRA's Position 105 105

24.3. Discussion 106 106

25. Incremental CSOL Activities 107 107

26. Additional CSOL and Notification Requirements 109 109

27. Incremental Billing, Revenue and Credit Activities/Costs 111 111

28. IT Costs 111 111

28.1. Billing System Changes 112 112

28.2. CSOL Update Changes 113 113

28.2.1. PG&E's Position 113 113

28.2.2. DRA's Position 114 114

28.2.3. Discussion 116 116

28.3. CC&B Version 2.2 Upgrade 117 117

28.3.1. PG&E's Original Position 117 117

28.3.2. DRA's Position 118 118

28.3.3. PG&E's Revised Position 120 120

28.3.4. Discussion 122 122

29. Incremental Load Impact Study Costs 123 123

30. Project Management Activities/Costs 124 124

31. Contingency/Risk Based Allowance 125 125

31.1. PG&E's Position 125 125

31.2. FEA's Position 125 125

31.3. TURN's Position 126 126

31.4. DRA's Position 127 127

31.5. Discussion 128 128

32. Revenue Requirements 132 132

33. Revenue Allocation 133 133

33.1. PG&E's Position 133 133

33.2. DRA's Position 134 134

33.3. DACC's Position 135 135

33.4. CLECA's Position 136 136

33.5. TURN's Position 136 136

33.6. Discussion 137 137

34. Cost Recovery Mechanism 141 141

35. Report on Bill Impacts for Agricultural Customers and TOU 144 144

36. Request for Workshops on RTP 145 145

37. Cost-effectiveness Evaluation 146 146

38. Future Rate Design Proceedings 147 147

39. DRA Motion for Official Notice of Documents 149 149

39.1. Discussion 150 150

40. Comments on Proposed Decision 150 150

40.1. Scope of Reasonableness Reviews 151 151

40.1.1. Discussion 152 152

41. Assignment of Proceeding 153 153

Findings of Fact 153 153

Conclusions of Law 169 169

ORDER 179 179

DECISION ON PEAK DAY PRICING
FOR PACIFIC GAS AND ELECTRIC COMPANY

1. Summary

This decision continues implementation of the Commission's policy to make dynamic pricing available for all electric customers by adopting and implementing default and optional critical peak pricing and time-of-use rates (together, referred to as Peak Day Pricing) beginning May 1, 2010 for Pacific Gas and Electric Company. This decision also adopts appropriate customer outreach and education activities and measures to ensure customer awareness and understanding of the new rates and options.

Among other things, this decision determines that:

· Large commercial and industrial customers will be defaulted to Peak Day Pricing rates on May 1, 2010 unless they proactively choose to opt out to a time-of-use rate. Optional Peak Day Pricing tariffs will be available on that date for those small and medium commercial and industrial, and agricultural customers who have already received the necessary metering equipment.

· Peak Day Pricing will become the default tariff for large agricultural customers beginning February 1, 2011.

· Time-of-use rates will become the default tariff for small agricultural customers beginning February 1, 2011.

· Peak Day Pricing will become the default tariff for small and medium commercial and industrial customers beginning November 1, 2011.

· Small and medium commercial and industrial and large agricultural customers will not be defaulted to the Peak Day Pricing tariff until 12 months of recorded interval billing data is available for use in determining their best Peak Day Pricing options. They can also choose to opt out to time-of-use rates.

· The current SmartRate option available to residential customers will remain in effect until 2011 at which time SmartRate customers will either transition to residential Peak Day Pricing rates or revert to non-time differentiated residential tiered rates.

· There will be between 9 and 15 Peak Day Pricing event days per calendar year.

· All customers that are defaulted to, or choose, Peak Day Pricing rates will be afforded bill stabilization for the first year, unless they choose to waive such protection.

· The costs of bill stabilization and any under- or over-collections related to the variation in the number of Peak Day Pricing events will be allocated to all customers within specific customer classes.

· All Customers subject to Peak Day Pricing will have a hedging option to reduce bill volatility. The larger customers will have a capacity reservation option, while the smaller customers will have an option where they would be subject to Peak Day Pricing on alternating event days.

· Customers who are on Peak Day Pricing rates may opt out any time during the first year they are on such rates.

· Incremental cost recovery for Peak Day Pricing implementation, amounting to $123,585,000 for the years 2008 through 2010, is reasonable. The revenue requirement associated with these costs will be included in rates through Pacific Gas and Electric Company's Annual Electric True-up advice letter filing.

· Recovery of potential cost overruns, including those related to contingencies and the conversion of Customer Care and Billing Version 1.5 to Version 2.3 are deferred to after-the-fact reasonableness review applications.

· Peak Day Pricing implementation costs for 2008 through 2010 should be classified as distribution costs and should be allocated by distribution equal percentage of marginal cost allocators to all distribution customers, including direct access customers. Such allocation for 2011 and beyond should be decided in future General Rate Case Phase 2 proceedings.

· Pacific Gas and Electric Company should (1) work with the Commission's Business & Community Outreach group to determine how the group can assist in outreach efforts to small and medium customers and (2) hold quarterly meetings, two with Energy Division and two open to the public.

· Pacific Gas and Electric Company should be subject to a number of reporting requirements in order for the Commission and other parties to monitor PG&E's customer outreach and education efforts.