4. Discussion

We conclude that Stanford has reasonably demonstrated that it should be relieved of the obligation to pay additional CRS applied to power that was previously supplied by on-site customer generation facilities, and that was not supplied by PG&E as bundled service on a stand-by basis.

As discussed above, CRS components generally are imposed on a designated DA and departing load (DL) customers because (a) costs were planned for at a time when those customers took bundled service, and (b) related costs continue to be incurred after such customers depart bundled service. The costs incurred on these customers' behalf were based on their load at or about the time of departure, from bundled service or changes in load expected at that time. Nevertheless, the load on which CRS is imposed is not the load prior to departure or the load previously forecast. Rather, the CRS is applied to the DA or DL customer's current ongoing load. In other words, the load on which CRS is paid varies from month to month based on the customer's current actual usage.

As explained above, however, this method of calculating CRS obligations for Stanford does not make sense. That is because: (i) Stanford was self-generating most of its load long before any of the components of CRS were imposed; (ii) Stanford is now in the process of reducing self-generation and substituting DA service for that reduced self-generation; and (iii) has entirely ceased taking even stand-by service from PG&E, which it now also obtains from its provider. Under these specific circumstances, if the normal rules were to apply, which is what PG&E has done so far, Stanford pays CRS not only on (a) the quantity of electricity that it used to get from PG&E but now gets from its DA provider, but also on (b) the quantity of electricity that it used to self-generate, but now gets from its DA provider. However, there is no reason why Stanford should pay CRS on this latter quantity, because none of the costs that are recovered through CRS were ever incurred to serve that load. Since Stanford, only gets a single bill from its DA provider for all of its current usage, its current usage is not a proper basis for calculating its fair share of CRS obligations.

If Stanford's previously exempt customer generation load were to be required to pay CRS on every kilowatt hour of consumption after it switches to DA, the resulting CRS payments would be in excess of procurement costs undertaken by PG&E and DWR on behalf of Stanford, and would violate the principle of customer indifference. PG&E and DWR did not assume procurement obligations on behalf of the entire Stanford campus load historically served by on-site generation. Accordingly, PG&E should not now impose CRS charges on Stanford's DA energy purchases in excess of its historical purchases from PG&E.

As a remedy to eliminate the excess CRS, Stanford has proposed to use a fixed quantity of electricity as the basis on which its CRS will be imposed. More specifically, Stanford proposes that the quantity used as the basis for its CRS obligation be its average electric usage supplied by PG&E on a stand-by basis during the 36 months immediately preceding its switch to DA. We find this to be a reasonable proxy on which to base Stanford's CRS obligation. Because others pay CRS based on current consumption it is appropriate to look to a recent period. Because Stanford took only stand-by service from PG&E, it is appropriate to look at service over a long enough period to capture the variability of stand-by usage. We find that 36 months is a reasonably long enough period.

Stanford sought to implement this remedy by seeking a modification to D.03-04-030, with a corresponding change to PG&E's tariffs. While we will grant Stanford a deviation from the PG&E tariff in order to limit its CRS obligations, we decline to grant Stanford's request to modify D.03-04-030. In examining Stanford's proposed language to modify D.03-04-030, we found several areas that need revision to more clearly specify how CRS charges should be imposed. As we consider appropriate language to revise the tariff, however, it becomes apparent that the choice of language depends on the specific customer situations that would be covered. However, the only situation about which we have any specific facts is Stanford's situation (and as noted below, Tesoro's situation). Therefore, we decline to develop generic language to modify D.03-04-030 which could, in the absence of a better developed record, potentially produce unintended outcomes. Instead, based on the limited facts presently before us here we will grant Stanford the deviation from the PG&E tariff that it needs without deciding broader matters about which we lack sufficient facts.

One other customer of an investor-owned electric utility, Tesoro, filed comments in response to the Stanford application, indicating its situation was similar to that of Stanford. Tesoro owns and operates two refineries in California which receive a portion of their power supply from on-site customer cogeneration facilities. While Tesoro does not currently purchase power under DA agreements for its two California refineries, Tesoro indicates that it may seek to switch to DA in the near future for the provision of electric service to both refineries.

For Tesoro's Martinez facility, a cogeneration plant owned and operated by Martinez Cogen Limited Partnership has supplied power to the refinery since 1985, with PG&E supplying backup power. For Tesoro's Los Angeles facility, a cogeneration plant supplies a portion of electricity and steam to the refinery. Tesoro supplements on-site generation by purchasing electricity from the Los Angeles Department of Water and Power.

Based on the limited information supplied by Tesoro, it appears that Tesoro may be similarly situated to Stanford to the extent Tesoro relies on PG&E for backup power for its Martinez refinery, with its primary power needs supplied by an independently owned and operated cogeneration facility. As previously noted, different elements of CRS apply based on different time periods in which the corresponding cost obligations were incurred. Yet, assuming that the Tesoro Martinez refinery has been receiving bundled service limited to backup power from PG&E since 1985, the Tesoro Martinez refinery would not have been responsible for causing PG&E or DWR to incur any CRS cost elements.

To the extent that since 1985, an independently owned cogeneration plant has supplied power to Tesoro's Martinez refinery with only backup power from PG&E to supplement power supplied to its Martinez refinery by a cogeneration plant, we recognize that no procurement obligations would have been undertaken by either PG&E or DWR to provide bundled service to the Martinez refinery, except for backup needs. Accordingly, to the extent that Tesoro's situation is similar to that of Stanford, Tesoro should be entitled to a similar deviation from the PG&E DA-CRS tariff when or if Tesoro switches to DA to supply its Tesoro Martinez refinery. Otherwise, PG&E and/or DWR would unjustly receive CRS for load that it never served.

When or if Tesoro switches to DA for power supplied to its Martinez refinery, we thus direct PG&E to grant Tesoro a similar deviation from its DA-CRS tariff as the deviation granted for Stanford to the extent that Tesoro's power supply situation is similar. If, or to the extent that PG&E determines that the Tesoro power supply arrangement differs from that of Stanford, PG&E should file an advice letter to seek the appropriate CRS treatment for Tesoro. Since Tesoro's Los Angeles refinery only receives backup service from the Los Angeles Department of Water and Power, no CPUC-regulated CRS obligations would apply in any event.

If it should appear that there a significant number of customers who will find themselves in a situation like Stanford's then we would consider granting more generic relief, i.e. modification of our prior decision, in a separate proceeding with more participation by a greater number of parties. Otherwise, if a utility is presented with a customer whose situation seems similar to that of Stanford, the utility may file a request for a deviation from its tariffs by means of a Tier 3 advice letter, which should be served on all parties to the then current, or most recent, ratemaking designated to address direct access and departing load issues.

Although we are not modifying D.03-04-030, that was the form relief requested by Stanford. A petition for modification generally must be filed within a year of the effective date of the decision, unless the petition could not have been presented within that time frame. (See Rule 16.4(d) of the Commission/s Rules of Practice and Procedure.) Although Stanford did not file within that time frame, we find no unexcusable delay in Stanford's filing. Stanford filed shortly after it discovered that PG&E was imposing CRS on an inappropriate quantity of electricity. Until then, it was not clear that an IOU might seek to impose CRS charges (not relating to prior stand-by service) on energy used by a customer and otherwise subject to exemption from CRS, solely because the load has switched from on-site generation to service by an ESP. Customer generation accounts, as defined in D.03-04-030, did not have the option of switching to DA until the effective date of Senate Bill 695.

Until Stanford recently applied for and received a DA allocation under the procedures established in D.10-03-022, Stanford did not have a right to switch its campus account from customer generation to DA. Stanford only became aware of PG&E's interpretation of D.03-04-030 and Schedule DA-CRS after discussing its transition to DA with PG&E representatives. Stanford initiated efforts to resolve its dispute with PG&E informally immediately upon learning of PG&E's interpretation of the DA rules. Since those efforts were unsuccessful, Stanford filed the instant application to promptly resolve this question of policy interpretation.

In summary, we find that Stanford should be granted a deviation from the PG&E tariff as necessary to limit its CRS obligations in the manner requested. We accordingly grant Stanford a deviation from the PG&E tariff necessary to limit its CRS obligation to reflect only the quantities of electricity previously provided by PG&E bundled stand-by service, to be calculated based on the most recent 36-months of stand-by service prior to Stanford's switch to DA service. We decline to modify D.03-04-030 or order amendments to the PG&E tariff for the reasons discussed above.