6. Assignment of Proceeding

Dian M. Grueneich is the assigned Commissioner and Timothy J. Sullivan is the assigned ALJ in this proceeding.

Findings of Fact

1. On February 20, 2010, CAISO, CLECA, DRA, Enernoc, PG&E, SDG&E, SCE and TURN submitted a Joint Motion with an attached Settlement.

2. No party submitted comments on the Settlement.

3. The proposed Settlement resolves all outstanding issues in Phase 3 of this proceeding.

4. A settlement conference was noticed by the Settling Parties and convened on January 29, 2010.

5. The Settlement includes all active parties to the proceeding with the exception of AReM.

6. AReM does not oppose the settlement.

7. The Settlement Agreement was served on the service list in R.09-10-032, a proceeding concerning Resource Adequacy.

8. The Settlement Agreement:

a. calls for the development by the CAISO of a wholesale reliability-triggered demand response product that efficiently and effectively integrates with the CAISO procedures for managing the California grid;

b. will enable the CAISO to use reliability-triggered demand response resources before buying costly "exceptional dispatch" energy or capacity;

c. reduces the amount of power associated with emergency-triggered and reliability triggered-programs which counts for Resource Adequacy from the current level of 3.5% of system peak to 2.0% of system peak;

d. proposes a transition plan that moves demand response resources from reliability-triggered products to price-responsive products that are easily integrated into the MRTU market, a policy of encouraged by the Commission; and

e. takes into account the business needs of current participants in the emergency-triggered demand response program and develops new programs and transition products.

Conclusions of Law

1. The Settling Parties have complied with Rule 12.1(a) and 12.1(b).

2. The Settlement at Appendix A is reasonable in light of the whole record, consistent with the law, and in the public interest.

3. The Settlement should be adopted and should be effective immediately.

ORDER

IT IS ORDERED that:

1. The Settlement attached to this decision as Appendix A is adopted. As provided in the adopted Settlement:

a. The California Independent System Operator Corporation (CAISO) shall initiate a stakeholder process in 2010, with the objective of developing a wholesale reliability demand response product (RDRP) that is compatible with the reliability-based demand response programs of Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) and consistent with the Settlement.

b. In their Demand Response applications to be filed in January 2011, PG&E, SCE, and SDG&E each shall:

b. address and seek approval of its program marketing efforts; and

c. Propose a plan as to how it will limit enrollment in reliability-triggered Demand Response (DR) programs in accordance with the settlement caps as well as a regulatory mechanism for consideration by the Commission that ensures that no Resource Adequacy payments or other ratepayer funds will subsidize the tariff provision of reliability-triggered DR if an oversupply is determined.

c. In the event of a Commission decision approving PG&E's pending Application 09-08-018 filing, PG&E shall begin to transition its existing reliability-based Smart ACTM customers to a program that adds a price trigger as directed in that decision and, consistent with the provisions of the Settlement Section B-1, shall proceed with deliberate speed.

d. SCE shall file an application to create a price-responsive option for its AC Cycling program by the end of the second quarter of 2010 that will modify the program to include a proposal to allow the program to be bid into CAISO markets.

e. The freeze on demand response reliability-based program participation that was adopted in Decision 09-08-027 is removed and replaced with the following annual limits, as a percent of the CAISO's all-time coincident peak demand, which currently is 50,270 megawatts (MW):

c. For 2014 and later, the limit is 2%, unless revised in a future proceeding.

f. In their annual April 1st Load Impact Compliance Protocol reports, PG&E, SCE, and SDG&E each shall include a summary of its reliability-based demand response program (generally referred to as BIP, A/C Cycling, and AP-I) capacity and will compare the reliability-based capacity to its share of the overall limit (plus tolerance), consistent with Section C.2 of the Settlement.

g. PG&E, SCE, and SDG&E shall undertake reasonable efforts to promote customer participation in price-responsive demand response programs, consistent with Decision 09-08-027 (pages 30 - 31) and the Settlement.

h. Any A/C Cycling program for which a price trigger proposal is currently pending before the Commission is not restricted from recruiting customers at this time, subject to future Commission action that may limit the size of such a program.

Dated June 24, 2010, at San Francisco, California.

Commissioners

D1006034 APPENDIX A Sullivan

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