5. Discussion
5.1. Voluntary CPP for Residential Customers
We envision CPP, along with RTP, as being essential elements of our long-term dynamic pricing program. That is not necessarily true for PTR. In D.09-03-026,5 which, among other things, adopted implementation of PTR for PG&E, the Commission stated:
We believe the PTR program will encourage residential customers to reduce their peak period usage on peak days. We also agree that the program is allowable while the AB 1X rate protection remains in place. However, the PTR program should be regarded as a transitional program that the Commission intends to review when the AB 1X rate protections change. (At 121.)
Also, with respect to the merits of PTR and CPP, the Commission noted:
PG&E has evaluated potential interactions between the CPP and PTR programs, with the expectation that customers may want guidance in helping choose between these two demand response participation options. Its analysis shows that customers who are believed to have significant central air conditioning (CAC) usage would divide almost equally between finding CPP vs. PTR participation most advantageous. Also, nearly 90 percent of customers who are not believed to have significant CAC usage would be better off on CPP than under PTR. Nonetheless, PG&E does not expect high levels of initial CPP enrollment from customers without CAC, because non-CAC customer savings under CPP would still be relatively modest and because PG&E's marketing efforts for CPP will be focused on customers with significant CAC loads. (At 117, emphasis added.)
The evidence in that proceeding indicates that CPP and PTR do not provide the same potential benefits to all residential customers, especially non-CAC customers. The Petition request would result in the undesirable consequence of precluding additional benefits to what appears to be a majority of residential customers, and potentially all benefits to certain non-CAC residential customers, for up to two years.
Also, we do not see the need to have customers on the PTR program for two years before they are given the opportunity to try a voluntary CPP rate that may be more advantageous than PTR.6
Regarding customer education, Petitioners are correct that, without the requested modification, residential customers will have to be educated about CPP and PTR at the same time.7 However, we do not believe this is sufficient reason to delay the implementation of voluntary PDP for these customers. All residential customers will need to be educated about the purpose and effects of default PTR and the availability, purpose and effects of voluntary PDP. However, those customers who do not wish to change their usage patterns do not have to do anything, and their current rate structure will remain the same. They do need to be made aware that in the long term, they will likely pay more to compensate for potential revenue shortfalls caused by those customers who do change their usage patterns through either PDP or PTR. On the other hand, customers who are willing to change their usage patterns will need to be educated in depth about both programs to determine which program is more advantageous with respect to potential benefits and risks. While this may be a formidable task, it is reasonable to expect that such education can be successful. We note that small commercial customers, who also have never been on time varying rates, will have to be educated about a default PDP rate and the new "otherwise applicable" TOU rate.8 We feel the customer education and protections ordered in D.10-02-032 can make the implementation work for small commercial customers and see no reason to think otherwise for the concurrent default PTR and voluntary PDP implementation for residential customers.
With respect to customer discontent in Bakersfield, the problem was a significant factor in the Commission's actions in D.10-02-032 regarding customer education and outreach efforts and reporting requirements. All aspects will be monitored by the Commission's Energy Division, and, as provided by D.10-02-032, the Director of the Energy Division may direct PG&E to make additions to its customer education and outreach plan if necessary. Also, regarding related customer concerns with the advanced metering infrastructure rollout, the Commission is evaluating PG&E's SmartMeter program. This includes meter testing, testing of the software and billing systems, and PG&E's management of the program. To the extent that problems are found and dynamic pricing implementation is affected, the Commission will, at that time, reevaluate the associated schedules for all new dynamic pricing related rates including both PTR and PDP for residential customers.
Regarding Petitioners' estimate of cost savings related to their request, it is not clear why costs in the long term will be any less than if the decisions are not modified. For instance, under either scenario, PG&E will, at some point, have to make the necessary billing changes that reflect PDP and default PTR. Also, we will not authorize duplicative funding. In general, we do not see substantial cost savings that outweigh our desire to implement voluntary residential PDP as scheduled.
Based on the above discussion, we conclude that the Petitioners' request to modify portions of D.10-02-032 to delay implementation of voluntary CPP, in the form of PDP, from 2011 to 2013 should be denied.
5.2. Transition from PG&E's SmartRate Program
Since this decision maintains the schedule to provide the voluntary PDP option to residential customers beginning February 1, 2011, there is no reason to delay the transition of E-RSMART customers to voluntary PDP, also scheduled for that date. Petitioners' request to modify portions of D.10-02-032 to delay the transition of E-RSMART customers to voluntary PDP from 2011 to 2013 should be denied.
5.3. Default CPP for Residential Customers
D.08-07-045 did not specify a date for implementation of default CPP for residential customers. It did order the following:
PG&E shall file an application proposing a default CPP rate for residential customers 30 days after any change in the law that changes the Assembly Bill 1X rate protections in a manner that could allow default or mandatory time-variant rates for residential customers. If the Commission approves a decision that interprets the Assembly Bill 1X rate protections in a manner that could allow default or mandatory time-variant rates for residential customers, then PG&E shall file an application proposing a default CPP rate for residential customers not later than 90 days after the Commission decision goes into effect and is no longer subject to rehearing or judicial review. PG&E shall propose an effective date that is no later than one year after the filing date unless PG&E can justify a later effective date as being necessary to allow time for customer education and system upgrades. (Ordering Paragraph 8.)
In discussion, the Commission stated:
By requiring that PG&E file a default TOU/CPP proposal for residential customers, we are not in this decision concluding that a default TOU/CPP rate will or should be adopted. We are not adopting post AB1X rate design in this decision. Rather PG&E's future proposal will trigger a thorough consideration of the policy and legal issues surrounding residential rate design. At that time, the Commission will be able to perform bill analysis, as recommended by DRA, and will be able to fully consider all relevant legal and policy issues. The Commission can also consider a transition plan as recommended by SCE.
To clarify once again, the only policy path we are setting in this decision is that the Commission will fully evaluate residential rates after the AB1X rate design protections are no longer in place or have materially changed. (D.08-07-045 at 39-40.)
We agree with Petitioners' position that the transition from voluntary to default CPP for residential customers should not be rushed. However, it is clear that the Commission intends to fully evaluate default CPP for residential customers in a yet to be filed application. Whether it is appropriate to be implemented at all, and, if so, when and how it should be implemented will be addressed in that proceeding. Petitioners have not provided a good reason to change that procedure. The request to begin default CPP for residential customers in 2016 is premature and should be denied.
5.4. Voluntary RTP for Residential Customers
In D.10-07-008, the Commission granted PG&E's March 22, 2010 Petition to Modify D.08-07-045, specifically PG&E's request that the D.08-07-045 timetable for PG&E's proposal for implementing RTP reflect a beginning date of May 1, 2012, or 12 months after a final Commission on the RTP rate design and cost recovery proposed in PG&E's 2011 Phase 2 GRC application, whichever is later, rather than May 1, 2011, as set forth in D.08-07-045. In granting the petition, the Commission noted DRA's support as well as DRA's request to further modify D.08-07-045 to implement RTP in stages. DRA stated that PG&E's request demonstrated the complexity of RTP, and PG&E should offer RTP in 2012 and 2013 as a pilot program limited to a manageable population of large customers. RTP should then be made available to the general population of nonresidential customers no sooner than 2014 and to residential customers no sooner than 2018. However, in D.10-07-008, the Commission stated:
At this time we will not consider DRA's proposal to begin RTP implementation with a pilot program and to make RTP available to the general population of nonresidential customers no sooner than 2014 and to residential customers no sooner than 2018. The recommendation goes significantly beyond PG&E's Petition request and should be examined through the evidentiary hearing process. DRA can make such recommendations in response to PG&E's RTP proposal in PG&E's 2011 Phase 2 GRC, A.10-03-014. (At 5.)
As already determined, RTP implementation issues, including the date to begin residential RTP, should be considered in A.10-03-014. Petitioners have not provided a good reason to change that procedure. Therefore, we conclude that the Petitioners' request to modify portions of D.08-07-045 in order to delay voluntary RTP for residential customers to 2018 should be denied.
5 The decision on PG&E's proposed upgrade to the SmartMeter program (A.07-12-009).
6 By the Petition request, the existing SmartRate Program, a form of CPP, will be closed to new entrants beginning February 1, 2011. Under the Petitioners' proposal, neither PDP nor the SmartRate Program would be available to residential customers during 2011 and 2012.
7 Since PDP includes CPP and TOU rates, customers choosing PDP will need to be educated about TOU as well.
8 See D.10-02-032 at 2.
