7. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Comments were filed on February 24, 2010 by ECS, PG&E, and DRA, and PG&E and DRA filed reply comments on March 1, 2010. The comments filed by DRA were generally supportive of the proposed decision; both ECS and PG&E filed comments supporting the contract modification as originally requested. These parties argue that the proposed modification is cost effective, and that it is not reasonable to expect a contract modification to comply with rules adopted after the modification was proposed. Clarifying language has been added to this decision to address these comments, where appropriate.

Findings of Fact

1. PG&E did not provide documentation of the total cost of this contract expansion.

2. It is not clear whether the cost effectiveness analysis on the record in this proceeding uses the same methodology or assumptions as the cost effectiveness analyses of demand response activities in A.08-06-001 et al.

3. Expanding the ECS contract would amount to the approval of additional demand response beyond that analyzed in A.08-06-001 et al. and authorized in D.09-08-027.

4. D.09-08-027 adopted a 10-in-10 baseline for demand response activities in 2009-2011.

5. The contract that is the subject of this Petition for Modification estimates demand response for settlement payment purposes utilizing a 3-in-10 day aggregated baseline.

6. D.09-08-027 adopted specific rules governing the situations in which a customer could enroll concurrently in multiple demand response activities.

7. The contract that is the subject of this Petition for Modification contains multiple program participation rules that are potentially inconsistent with the rules adopted in D.09-08-027.

Conclusions of Law

1. PG&E bears the burden of proof that the expansion of its ECS contract requested in this petition is reasonable, cost effective, and in the public interest.

2. In order to properly evaluate the cost effectiveness of new or modified programs, it is reasonable to require that they are analyzed in a consistent way with the bulk of the utilities' demand response activities, which were adopted in D.09-08-027.

3. It is reasonable to require PG&E to either use the baseline methodology adopted in D.09-08-027 in new or modified contracts entered during the 2009-2011 period, or to justify its departure from that adopted baseline.

4. It is reasonable to require PG&E to incorporate the multiple program participation rules adopted in D.09-08-027 in future contracts or contract expansions during the 2009-2011 period, or to justify a departure from those rules.

ORDER

IT IS ORDERED that:

1. The Petition for Modification of Decision 07-05-029 filed by Pacific Gas and Electric Company is denied, and the associated contract amendment is rejected.

2. Application (A.) 07-02-032 and A.07-02-033 are closed.

This order is effective today.

Dated March 11, 2010, at San Francisco, California.

Commissioners

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