II. Procedural Background
The Commission opened this rulemaking on April 27, 2004 to implement certain provisions of AB 117 (Chapter 838, September 24, 2002), which added Pub. Util. Code §§ 218.3, 331.1, 366.2, 381.1, and 394.25 and permits local governments the opportunity to aggregate energy procurement on behalf of the citizens and businesses in their communities. 1
AB 117 involves Commission-jurisdictional utilities by requiring them to continue to provide distribution, metering and billing services to the CCA's energy customers, among other things. AB 117 also directs the Commission to ensure that the utilities are able to recover certain costs, including those associated with energy contracts signed by the state's DWR and the costs of providing ongoing services to CCAs and their customers.
Following a prehearing conference on November 26, 2003, and with the agreement of all active parties, the Commission bifurcated the proceeding so that the Commission would first consider issues relating to certain utility costs that would be assumed by CCAs and later consider issues more concerned with transactions between CCAs, utilities, and energy customers.
A key issue in this proceeding is the level of the cost responsibility surcharge (CRS), which would permit the utilities to recover the costs of certain energy contract commitments. Utilities are concerned that the CRS be set so that they recover related costs. Utilities also want assurance that they are able to recover other discretionary costs incurred to implement and facilitate the CCA program. Entities that might become CCAs state that the level of the CRS and other utility charges will determine the viability of CCAs. Some state that the existing CRS exception for baseline residential Direct Access (DA) customers should also be applied to CCA customers.
Several parties also suggested that CCA information requirements should be addressed sooner rather than later. Parties generally agreed, however, that modifying Rule 22 and Rule 25 to govern transactions and operations of CCAs and utilities is an exercise that should follow resolution of cost issues.
Consistent with the parties' agreement and the record developed in hearings, this Phase I order addresses the following issues:
a. The cost responsibility surcharge - cost elements that should be included in this surcharge in fulfillment of AB 117; allocation of responsibility for the costs and whether they are nonbypassable;
b. CRS exception for baseline residential customers - whether the utilities should pass along these subsidies to CCA customers and, if so, how to accomplish that;
c. Utility transition, implementation and transaction costs - estimating, allocation and setting cost allocation mechanisms for creating and maintaining the CCA program;
d. Meter, billing and distribution costs;
e. Utility customer information - information CCAs and prospective CCAs need to determine viability of CCA service and promote good customer service and reliability costs.2
The Commission held hearings on these issues in June 2004. Parties that filed briefs are Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), San Diego Gas and Electric Company (SDG&E), Office of Ratepayer Advocates (ORA), Local Government Commission Coalition (LGCC), California Clean Energy Resources Agency and the City of Victorville (CalCLERA), Local Power, the County of Los Angeles and the City of Chula Vista (LA/CV), City and County of San Francisco (CCSF), Inland Valley Development Agency (IVDA), Toward Utility Rate Normalization (TURN), ElectricAmerica, and the King's River Conservation District (KRCD) filed briefs.3 The California Department of Water Resources provided extensive information about the cost of the state's electric contracts and models for estimating associated liabilities, and submitted a memorandum suggesting how the Commission should implement the cost responsibility surcharge.
This phase of this proceeding was submitted on July 23, 2004 when reply briefs were filed.
1 AB 117 also enables local government to pursue demand side management programs to reduce their community's energy usage, including increased coordination with Public Goods Charge (PGC) energy efficiency and conservation program administrators and the ability to apply for PGC administration and funding for energy efficiency and conservation programs on behalf of their customers. We address this issue in Rulemaking (R.) 01-08-028. 2 Phase 2 in this proceeding will address the following issues:3 Occasionally, this order refers to parties that are "CCAs or prospective CCAs." In so doing, the order is referring to all or some subset of LGCC, CalCLERA, LA/CV, CCSF, IVDA, Electric America and KRCD.1. Customer notices required of utilities and CCAs;
2. Customer protections and switching protocols;
3. Operational protocols and load balancing;
4. Billing, metering and distribution services;
5. Reentry fees and switching fees;
6. CARE - discounts to low-income customers; and
7. Other unresolved issues.
