3. Authorized Increases for Direct Access Cap

We herein authorize increased limits on the maximum level of DA transactions that may be allowed beginning effective April 11, 2010⁶. The basis for the increased allowances is prescribed by Sec. 365.1 which states that the maximum limit:

... shall be established by the commission for each electrical corporation at the maximum total kilowatt hours supplied by all other providers to distribution customers of that electrical corporation during any sequential 12-month period between April 1, 1998, and the effective date of this section. (Emphasis added.)

The statute defines "other provider" as any person, corporation, or other entity that is authorized to provide electric service within the service territory of the electrical corporation, but does not include sales to or by a community choice aggregator. Individual retail non-residential end-use customers in an electrical corporation's service territory will be allowed to acquire electric service from providers other than the electrical corporation up to a maximum total kilowatt hour (kWh) annual limit. In response to the Administrative Law Judge (ALJ) ruling issued November 18, 2009, each of the IOUs provided the relevant data identifying the applicable amount of DA load subject to the increased DA cap pursuant to the requirements of SB 695.

The IOUs and the Commission's Energy Division provided clarification at the workshop of the differences between the numbers in the December 3, 2009 and December 29, 2009, informational filings and the numbers provided in the IOUs' monthly DA activity reports. The general consensus among parties at the workshop was that formal independent verification of the data submitted by the IOUs was not necessary, and that the time required to implement such verification process could unduly delay the reopening of DA. The Commission already has the ability to verify the load data provided by the IOUs in case of a dispute.

The applicable new DA load increase relating to each of the IOU service territories is set forth as follows:

The new load eligible for DA service represents a relatively small portion of each of the utilities' portfolios, involving less than 10 million megawatt hours (MWh) of annual usage across the entire state. This amount is less than 6% of the entire load served, and is much less than the annual variation in electricity consumption across the state due to the weather and the economy.

The SB 695 cap limits any potential risk associated with reopening of DA by eliminating uncertainty associated with load migration. The adopted phase-in schedule will provide enough lead time for the IOUs to account for small shifts in load and thereby avoid unwarranted cost shifting and stranded load.

3.1. Discussion

We conclude that the utilities reported load figures reasonably comply with the criteria set forth in SB 695. We adopt those figures for use in this decision in implementing SB 695 caps. The SCE figures require some explanation.

In its opening comments, SCE set forth the overall DA cap under SB 695 and the baseline amount for SCE's service area,⁷ as follows:

· Based on kWh sales data maintained in SCE's billing system, the maximum recorded sales to SCE distribution customers by all other providers for any sequential 12-month period was 11,710 GWh from July 2003 through June 2004.

· SCE's current level of DA in its service territory, expressed as the annual load of those customers taking DA as of November 30, 2009, is 7,627 GWh.

Subsequent to the filing of these comments, SCE subsequently amended its initial calculation of DA baseline amounts to recognize the effects of the MWh set-aside granted for the City of Cerritos (Cerritos). The Commission issued D.10-01-012 determining the rights of Cerritos under AB 80. As a result of this decision, SCE revised its reported baseline of current DA load in its service territory to include the set-aside of MWh for Cerritos, which the Commission found to be required by AB 80.

In D.10-01-012, the Commission concluded that AB 80 authorizes Cerritos to enter into direct transactions with any retail end-use customer in its jurisdiction on an opt-in basis up to Cerritos' generation entitlement share of the Magnolia Power Plant (MPP) output.⁸ D.10-01-012 clarified that AB 80 does not require Cerritos to provide opt-out service, as is provided by community choice aggregators.⁹

Cerritos currently serves about 13.02 megawatts (MW) of opt-in, non-residential load. However, D.10-10-012 makes clear that Cerritos has a right "to sell all of its entitlement share [of MPP's output] on a retail basis."¹⁰ SCE has calculated Cerritos' share of the annual MPP output as 137.5 gigawatt hours (GWh).¹¹ Therefore, under D.10-01-012, Cerritos is entitled to serve 137.5 GWh of annual, opt-in load.

D.10-01-012 affects the implementation of SB 695 in the following manner:

· Because Cerritos is not a community choice aggregator, it is considered to be an "other provider" within Section 365.1 of the Public Utilities Code. Therefore, the maximum allowable total kWh annual limit in SB 695 should include customers' acquisition of electrical service from Cerritos.

· Unlike all other providers, Cerritos has been found by the Commission to have a right to sell a certain annual amount of energy via direct transactions to retail end-use customers. This necessitates a permanent "set-aside" for Cerritos under SB 695's overall annual kWh cap, thereby increasing the baseline for SCE's service area.

Accordingly, SCE's current level of DA in its service territory, expressed as the annual load of those customers taking DA as of November 30, 2009, plus Cerritos' set-aside of 137.5 GWh under D.10-01-012, is adjusted to 7,764.5 GWh. Cerritos' set-aside will not be available for other providers, even if Cerritos does not sell all 137.5 GWh annually to retail end-use customers in SCE's service area.

⁶ The implementation date of April 11, 2010 represents the time limit required to begin implementation under SB 695, representing six months from the statute's effective date.

⁷ See SCE Opening Comments at 7, citing its December 3 and December 29, 2009 data response filed in this proceeding.

⁸ See generally D.10-01-012, issued January 21, 2010 in A.09-06-008.

⁹ See id. at 7-8.

¹⁰ See D.10-01-012 at 13.

¹¹ SCE must file an advice letter to set forth Cerritos' share of the MPP output; therefore SCE's calculation is subject to Commission review for compliance with D.10-01-012.