2. Procedural Background
On January 25, 2007, the Commission opened Rulemaking (R.) 07-01-041 to address several specific issues related to the Commission's efforts to develop effective demand response programs for California's three largest investor-owned electric utilities, Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and Southern California Edison Company (SCE). The Scoping Memo issued on April 18, 2007, divided the major work of this proceeding into phases. Phase 1, which began in spring of 2007, focuses on the development of evaluation, measurement, and verification protocols and methodologies related to existing and possible future demand response activities. Additional phases of this proceeding address state goals for participation in and load reduction from demand response activities, integration of "emergency-triggered" demand response activities with new California Independent System Operator (CAISO) markets, and direct participation of demand response resources in new CAISO markets. This decision focuses on the development of a method for estimating the cost-effectiveness of demand response activities, within Phase 1 of this proceeding.
The April 18, 2007 Scoping Ruling required SCE, PG&E, and SDG&E (together, the utilities) and allowed other parties, to develop and submit straw proposals on load impact estimation and cost-effectiveness for consideration in this proceeding. On July 16, 2007, three straw proposals on load impact estimation and two on calculating cost-effectiveness were filed. The utilities filed joint straw proposals on both load impact estimation and cost-effectiveness, as required in the scoping memo. Ice Energy also filed straw proposals on both load impact estimation and cost-effectiveness.
On September 19, 2007, the Commission received three filings addressing the possible need for evidentiary hearings on Phase 1 issues from SDG&E and SCE (filing jointly), California Large Energy Consumers Association (CLECA), and PG&E. PG&E and CLECA each requested evidentiary hearings on certain limited issues related to the development of cost-effectiveness protocols; CLECA did not see the need for hearings on load impact issues, and PG&E suggested two issues related to the utilities' load impact protocol that might benefit from further process. CAISO and the utilities filed separate responses to CLECA's request for hearings.
An Administrative Law Judge (ALJ) Ruling issued on October 15, 2007, denied these hearing requests, but extended the Phase 1 procedural schedule to allow parties to address several cost-effectiveness issues raised in the requests through individual or joint proposals and comments. Most, but not all, active parties in the proceeding filed a joint cost-effectiveness framework proposal (referred to as the Consensus Framework)1 in response to this ruling. Rather than answering the specific questions posed in the ruling, this Consensus Framework represented agreement by the various parties on approaches to many of the major cost-effectiveness issues previously in dispute. The Consensus Framework left many issues unresolved, which parties agreed would need to be deferred to the proceeding on the utilities' 2009-2011 Demand Response Applications.
In April 2008, the Commission adopted Decision (D.) 08-04-050 in this proceeding, resolving the load impact estimation framework portion of Phase 1 with the adoption of a set of load impact protocols. Also in April 2008, the assigned ALJ issued a ruling requesting comments on possible cost-effectiveness Protocols developed and proposed by Commission staff (2008 Staff Proposal).2 The 2008 Staff Proposal was based on the Consensus Framework, with several modifications to address concerns of staff and parties. Party comments and reply comments raised several concerns about specific aspects of the 2008 Staff Proposal, many of which are discussed in Section 3, below.
In June 2008, the utilities submitted their applications for approval of demand response activities and budgets for 2009-2011, consolidated as Application (A.) 08-06-001 et al. In conformance with directions contained in assigned Commissioner Chong's ruling in this proceeding issued on February 27, 2008, the utilities' applications utilized the Consensus Framework to estimate the cost-effectiveness of their proposed demand response activities. Parties to A.08-06-001 et al. questioned the accuracy and consistency of the cost-effectiveness results contained in those applications. In response to a ruling in A.08-06-001 et al., the utilities filed additional information on their cost-effectiveness calculations; various parties filed comments on this additional information. A ruling in this proceeding issued on November 19, 2009, transferred these additional filings from A.08-06-001 et al. into the record of this proceeding, and allowed parties to comment on the applicability of those filings to the development of cost-effectiveness protocols in this proceeding. The filings from A.08-06-001 et al. transferred by the November 19, 2009, ruling and parties' responses to that ruling complete the record for Phase 1 of this proceeding.
Section 3 of this decision describes the major areas of disagreement among parties about technical aspects of methods for determining the cost-effectiveness of demand response activities, and the resolution of these issues in the attached final protocol. Section 4 of this decision describes the protocols adopted in this decision. Section 5 provides information on when and how these protocols should be applied, and Section 6 describes the requirements for departure from and modifications to the protocols.
1 Joint Comments of CLECA, Comverge, Inc., Division of Ratepayer Advocates (DRA), EnergyConnect, Inc., EnerNoc, Inc., Ice Energy, Inc., PG&E, SDG&E, SCE, and The Utility Reform Network (TURN) Recommending a DR Cost-effectiveness Evaluation Framework, filed November 19, 2007 in R.07-01-041.
2 Administrative Law Judge's Ruling Setting Comment Period on Staff Cost Effectiveness Framework and Related Issues, R.07-01-041, April 4, 2008.
