6. Comments on the Proposed Decision

Pursuant to Rule 14.6(b) of the Commission's Rules of Practice and Procedure, which allows for a shortened comment period upon stipulation of all the parties, this proposed decision was issued for a shortened comment period of five business days. A courtesy copy of the revised proposed decision was also being served on Rulemaking 07-05-025.

Comments on the proposed decision were filed by Stanford and Tesoro on February 13, 2012. In its comments on the proposed decision, Tesoro opposes the procedure requiring future customers who are similarly situated to Stanford to seek relief from CRS by relying on the utility filing an advice letter. Tesoro argues that such a procedure places customers at a disadvantage by having to convince the utility to file such an advice letter and which will produce delays and discourage competitive service options for such customers. Tesoro supports granting the original relief requested in Stanford's application, namely, modifying D. 03-04-030, thereby providing generic relief.

As noted above, we have provided for Tesoro to receive a deviation from the DA-CRS tariff similar to that granted to Stanford, to the extent that Tesoro's power supply situation is like that of Stanford, if Tesoro subsequently switches to DA and would otherwise be charged CRS related to power supplies in excess of the amounts previously supplied by PG&E as backup since 1985. For the reasons previously explained above, we decline to modify D.03-04-030 in response to Stanford's application. To address the concerns raised by Tesoro regarding the merits of authorizing generic modifications in CRS exemptions rather than using a case-by-case approach, we note that parties have the option of filing a petition for a new rulemaking as a vehicle to address this issue and to develop appropriate rules on a generic basis. We may also elect to open such a rulemaking independently of such a petition if we conclude that there is merit in doing so.

1. In D.03-04-030, the Commission adopted policies and mechanisms related to CRS applicable to "Departing Load" served by Customer Generation within the service territories of California's major electric utilities.

2. CRS components generally are imposed on designated 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.

3. In D.03-04-030, the Commission established various categories of CRS exemptions for loads served by customer generation based on the date that certain load departed bundled service with the goal of maintaining bundled customer indifference.

4. The Commission did not explicitly address in D.03-04-030 the situation where exempt customer generation load switches to DA, and utility tariffs do not enumerate an express exception for loads that switch from exempt self-generation to DA.

5. There is no dispute between Stanford and PG&E regarding the applicability of CRS charges during the years that Stanford purchased stand-by power from PG&E.

6. Since 1987, Stanford load for its main campus has been served by on-site generation. A gas-fired cogeneration plant located on the Stanford campus has served the campus' full electric and thermal energy loads, except for necessary backup service. PG&E supplied the backup power under Schedule S.

7. Stanford began self-generation at an early enough date that its self-generation has been exempt from all of the elements of CRS.

8. Pursuant to the Commission's rules implementing limited re-opening of DA, Stanford became a DA customer within PG&E's service territory in 2011 and switched its main campus stand-by account to DA service. Stanford is also now in the process of reducing self-generation and substituting DA service for that reduced self-generation.

9. As a DA customer, Stanford should be responsible for CRS charges under Schedule DA-CRS in an amount that reflects its historical stand-by purchases for the campus load. Such payment ensures that PG&E's ratepayers are made whole for PG&E and DWR procurement obligations entered into to provide stand-by power to the Stanford campus load.

10. If Stanford were required to pay CRS on its entire DA load, including the quantity of electricity that is used to self-generate, but now gets from its DA provider, the payments would exceed those required by the principle of customer indifference, because none of the costs that are recovered through CRS were ever incurred to serve the load that Stanford previously self-generated.

11. Stanford seeks a modification of D.03-04-030 to clarify customers who switch self-generation load that is exempt from CRS to DA service are only obligated to pay DA-CRS based on the amount of total annual power consumption (calculated by reference to historical usage) previously provided by the IOU, for example under stand-by service.

12. PG&E does not oppose Stanford's requested modification.

13. Stanford expressly limited its request for a CRS exemption so as not to apply to any subsequent switch to a municipal provider to supply its load.

14. Tesoro owns and operates two refineries in California which receive a portion of their power supply from on-site cogeneration facilities.

15. 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.

16. For Tesoro's Los Angeles facility, a cogeneration plant supplies a portion of electricity and steam to the refinery and supplements on-site generation by purchasing electricity from the Los Angeles Department of Water and Power.

17. 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.

18. 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 any CRS elements.

19. 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.

1. Stanford timely filed its Application for Modification of D.03-04-030.

2. Stanford has justified why its pleading was brought within a reasonable time even though it was more than one year after the effective date of D.03-04-030.

3. Stanford's requested methodology for calculating its CRS obligations would preserve the principle of bundled ratepayer indifference while providing appropriate clarity with respect to its cost responsibility for its customer generation that subsequently switches to DA.

4. Stanford's proposed language to modify D.03-04-030 would need revisions to more clearly specify how CRS charges should be imposed.

5. The choice of language to modify D.03-04-030 in order to ensure appropriate CRS charges depends on the specific customer situations that would be covered

6. In this application, the only customer situation about which any specific facts have been presented is Stanford's situation. Without further information and analysis concerning differently situated customers, the record is not sufficiently developed to adopt generic language to modify D.03-04-030, as requested by Stanford.

7. Stanford's substantive concerns can be adequately addressed by granting it a deviation from the PG&E tariff necessary to implement the methodology for calculating CRS that Stanford proposes, i.e., calculating its CRS based on a fixed quantity of electricity, namely the amount of total annual power consumption previously provided by PG&E.

8. 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. 36 months is a reasonably long enough period.

9. Stanford's request to modify D.03-04-030 and for an amendment to the PG&E tariff should be denied.

10. The Stanford Application for Modification of D.03-04-030 should be granted, in part, and denied, in part, as set forth in the Ordering Paragraphs below.

11. Since Stanford served a copy of its Application for Modification on the service list in R.07-05-025, reasonable notice and opportunity to be heard on the deviation granted has been provided to interested parties.

12. To the extent that Tesoro's situation is similar to that of Stanford, Tesoro should be entitled a similar deviation from the PG&E DA-CRS tariff when or if Tesoro switches to DA to supply its Tesoro refinery.

13. When or if Tesoro switches to DA for power supplied to its Martinez refinery, PG&E should grant Tesoro a similar deviation from its DA-CRS tariff as the deviation granted for Stanford to the extent that Tesoro's situation is similar.

14. 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.

15. 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.

16. If it should appear at a future time that there are a significant number of customers who will find themselves in a situation like that of Stanford's, then a more generic form of relief should be considered (i.e., modification of a relevant prior decision in a separate proceeding with more participation by a greater number of parties).

17. If a utility is presented with a customer whose situation seems similar to that of Stanford, the utility may file a request for deviation for its tariff by means of a Tier 3 advice letter, which should be served on all parties to the then-current, or more recent, ratemaking designated to address direct access and departing

load issues, in addition to any other required service.

ORDER

IT IS ORDERED that:

1. The application of Stanford University for Modification of Decision 03-04-030 is hereby granted in part and denied in part.

2. Stanford is hereby granted a deviation from the Pacific Gas and Electric Company (PG&E) tariff Schedule DA-CRS methodology for calculating its Cost Responsibility Surcharge (CRS) obligation. With regard to its load previously served by self-generation, Stanford shall pay all applicable CRS charges based on a fixed quantity of electricity. That quantity shall be calculated by determining the average quantity of power actually delivered to Stanford's campus account under a PG&E tariff during the 36 months preceding the month in which Stanford switched to direct access service.

3. This deviation shall apply only insofar as Stanford is substituting direct access service for self-generation. No deviation is hereby granted with respect to any load previously served by self-generation that subsequently switches to service from a municipal utility.

4. The application is denied with respect to the request to modify Decision 03-04-030, and to incorporate corresponding language in Pacific Gas and Electric Company tariff Schedule DA-CRS.

5. Within 45 days from the date of issuance of this decision, Pacific Gas and Electric Company shall implement changes to Stanford's prospective billings and also adjust Stanford's prior payments under Schedule DA-CRS billed since March, 2011, reflecting the provisions adopted herein.

6. When or if Tesoro switches to direct access for power supplied to its Martinez refinery, Pacific Gas and Electric Company (PG&E) shall 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 to that of Stanford. If, or to the extent that PG&E determines that the Tesoro power supply arrangement differs from that of Stanford, PG&E shall file an advice letter to seek the appropriate cost responsibility surcharge treatment for Tesoro.

7. Application 11-10-021 is hereby closed.

This order is effective today.

Dated February 16, 2012 in San Francisco, California.

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