2. Background

The utilities currently have six public purpose programs (PP programs) being funded through surcharges on their gas rates. These PP programs are: (1) California Alternate Rates for Energy (CARE), (2) Energy Efficiency (EE), (3) Direct Assistant Program (DAP) at Southern California Gas Company (SoCalGas) and Low Income Energy Efficiency (LIEE), (4) Research, Development, and Demonstration (RD&D), (5) Self Generation Incentive Program (SGIP), and (6) Commission and Board of Equalization administrative costs (BOE). In addition to these established programs, two new public purpose programs (PP programs)were considered being established while this proceeding was open. These new PP programs were(7) the California Institute for Climate Solutions (CICS) program and (8) Solar Water Heating (SWH) program, of which PP policy funding for the CICS program was subsequently vacated. A description of each of these PP programs is set forth in Appendix A to this decision.

The utilities recover the costs of their PP programs through various cost allocation methods. However, a majority of their costs are recovered through an equal cent per therm (ECPT) cost allocation method.² The other cost allocation methods used by the utilities to recover their PP programs costs are the direct benefit (DB) and equal percent margin contribution (EPMC) method.³⁴ The following tabulation shows the cost allocation methods currently being used by each utility to recover the cost of their individual PP programs.

PP PROGRAMS	SoCalGas	SDG&E	PG&E
CARE	ECPT	ECPT	ECPT
EE	DB	DB	DB
DAP & LIEE	DB	EPMC	DB
RD&D	EPMC	EPMC	ECPT
SGIP	ECPT	EPMC	ECPT
BOE	ECPT	ECPT	ECPT

² Equal cent per therm allocates program costs to each customer based on transported gas volumes, except customers that are specifically exempt from paying the costs of any given program.

³ Direct benefit allocates program costs to each customer class in proportion to the amount of program dollars dedicated to programs to serve that customer class.

⁴ Equal percent margin contribution allocates program costs based on a utility's marginal cost of certain customer, storage, and distribution costs.